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Lawsuits generate pressure to change

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Mainland regulators hope shareholder lawsuits and tighter stock market regulation will help lift professional standards in China's accounting industry.

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However, analysts warn this will be tempered by a lenient legal system and conflict of interest stronger than that in a more mature market.

The most effective way to alter sub-standard practices in China was the increased use of international accounting firms, a lawyer with a Shanghai-based international law firm said.

The comments were in response to a flurry of regulations to more clearly delineate the professional responsibilities of certified public accountants.

The new rules came after regulatory probes into a rash of stock market scandals found auditors to have aided rogue companies to cook the books or to have turned a blind eye to transgressions.

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The unfolding Enron saga in the United States further highlighted the fragile independence of auditors even in better regulated markets.

Early this month, the Shanghai and Shenzhen stock exchanges released implementation rules for a set of China Securities Regulation Commission regulations announced in December.

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