China 'isn't even close' to where it needs to be in terms of corporate governance standards, according to the chief executive of global accounting giant Andersen.
However, mainland government officials had sent clear signals that they understood the challenges and recognised the need for change, Joseph Berardino said during a visit to Hong Kong.
'They need better-trained accountants; they need better-trained directors; they need to have clearer standards. The infrastructure isn't in place,' he said.
China has won praise recently from investment commentators and fund managers for its commitment to improve regulatory and governance standards. However, abuses remain rampant. About 98.7 per cent of Chinese companies falsified their earnings in annual reports for last year, according to a Ministry of Finance survey reported by the China Reform Daily last week.
Mr Berardino was speaking before heading to Shanghai, where Andersen has funded a new institute to train accountants. The United States-based company has been active in the mainland market for 15 years.
Andersen had begun by advising and providing services for multinationals making investments in China, but its work was now evenly split between foreign firms and domestic state-owned enterprises, Mr Berardino said.