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Beijing has lashed out at criticism of its proposal to ban foreign accountants from auditing mainland firms listing overseas, saying the new rule will improve the quality of accounting and reduce audit risks.
The Ministry of Finance said last week that it planned to bar international accounting firms, including those from Hong Kong, from sending staff to audit mainland companies.
Instead, the accounting firms would be required to team up with mainland accounting firms so that the domestic partners' accountants would do the audit.
Overseas firms, however, would still be responsible for issuing audit reports and be held accountable for the auditing.
That has sparked widespread criticism, with many experts seeing the new rule as a roadblock to financial reform that is likely to increase the risks posed by dodgy mainland companies.
Some have also accused Beijing of shutting the door on all Hong Kong-based accountants.
The ministry said those views were "seriously incorrect" and "irresponsible".
"The original purpose of the new rule is to prevent foreign accounting firms from partnering with unqualified, less experienced onshore firms, in order to avoid or eliminate auditing risks as much as possible. That is a responsible move for investors onshore and offshore, and also for offshore audit firms," the ministry said in a statement issued late on Thursday, quoting an unnamed ministry official.
"We should respect the listing companies' business decisions, but we won't allow the auditing business to become a 'regulatory vacuum'," the official said.
Some foreign accounting firms had audited mainland firms without central government approval, the ministry said, and worse still, they had taken audit reports out of the mainland, which breached the law. Meanwhile, many foreign audit firms had outsourced business to onshore firms, it said.
The world's 20 biggest accounting firms already had partners or corresponding firms on the mainland, the official said, and the mainland also had 20 home-grown accounting firms that were well qualified to audit firms listing overseas.
Edward Au, a partner and co-leader at the national public offering group at Deloitte, one of the Big Four accounting firms, told the South China Morning  Post that the firm was still looking at possible strategies to cope with the change.
"This rule provides a catalyst for many Hong Kong-based accountants to rethink their long-term career path … and look for more opportunities on the mainland," he said.


Beijing defends ban on foreign accountants

China's Ministry of Finance said last week that it planned to bar international accounting firms, including those from Hong Kong, from sending staff to audit mainland companies. Photo: Simon Song

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China Business

Move to exclude them from audits on listing candidates will cut risks, Finance Ministry says


Beijing has lashed out at criticism of its proposal to ban foreign accountants from auditing mainland firms listing overseas, saying the new rule will improve the quality of accounting and reduce audit risks.


Beijing defends ban on foreign accountants

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Move to exclude them from audits on listing candidates will cut risks, Finance Ministry says

Move to exclude them from audits on listing candidates will cut risks, Finance Ministry says