Mainland regulators hope shareholder lawsuits and tighter stock market regulation will help lift professional standards in China's accounting industry. 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. 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. They authorise the stock exchanges to suspend any listed stock whose financial report draws a qualified opinion from its auditor because of 'any apparent breach of accounting rules and relevant information disclosure requirements'. The rules appear harsher than those in more developed economies, where suspension is rarely triggered by a qualified audit opinion alone but usually follows a regulatory probe, analysts say. The same regulations require listed companies to disclose compensation paid to accounting firms. Meanwhile, the hearing of a shareholders' lawsuit against Shanghai-listed Daqing Lianyi Petrochemical - the first after Beijing last month lifted a four-month moratorium on such cases - is expected to begin after the Lunar New Year break. Daqing Lianyi's auditor has been named one of 15 defendants - including the listed firm, its former directors and listing sponsor - for allegedly providing false audit reports when the firm floated in 1997. Regulators hope the new rules and the court cases will help shake the mainland's complacent accounting and auditing industry culture. However, an official at the Chinese Institute of Certified Public Accountants, under the Ministry of Finance, was quick in noting the rules' deficiencies: 'An accounting firm risks losing a client if its qualified opinion results in a customer's failure to gain a listing or suspension from trading.' Chinese accountants face the same conflict of interest as Western counterparts in juggling auditing and consultancy services - especially in tax advice.