The reform of the mainland's Certified Public Accountants examination is intended to accelerate the development of China's accounting profession in order to support its economic development and ensure that the profession is on a par with other professional accounting bodies worldwide. As part of the reform process, the Chinese Institute of Certified Public Accountants (CICPA) conducted research overseas to understand the examination and qualification processes of the major professional accounting bodies. 'Revamping the exam is intended to enable the CICPA to seek mutual recognition of its qualification with other accounting bodies,' said Georgina Chan, executive director (qualification & education) at the Hong Kong Institute of Certified Public Accountants (HKICPA). 'It makes sense that auditors supporting the development of Chinese business overseas can operate in a foreign environment.' The CICPA exam reform project was led by the Ministry of Finance, which formed a national examination committee. Under this was a working group chaired by the CICPA, which oversaw two advisory panels, one domestic, the other overseas. The domestic panel comprised people from universities, local accounting firms and lawyers. The overseas panel comprised people from foreign accounting bodies and the six largest international firms and was chaired by Ms Chan. Daniel Li, a Shanghai-based assurance partner with PricewaterhouseCoopers, represented PwC on the overseas advisory panel. 'We had several face-to-face meetings with the CICPA and other panel members. As a firm we provided three rounds of comments on the draft proposals. In terms of the consultation process, it went very well. The CICPA took the comments, response and feedback from the panel members seriously,' he said. The HKICPA already has in place a mutual examination agreement with the CICPA. Under this agreement, members who were registered with the institute on or before July 29, 2008 (when the mutual recognition agreement was signed) and graduates of its qualification programme who have passed all four modules and the final examination are exempted from three papers under the current CICPA examination system. This has been extended under the new system to include an additional paper exemption for eligible candidates who will be able to apply for exemption from four papers under the new system and can choose whether to attempt the exam under the old or new system. The finalised examination reform scheme was issued in January, and the new system will be implemented from this year, running in parallel with the current system for one more year as a transitional arrangement. What this means in practice is that CICPA and HKICPA members who register to take the exam before May 15, 2009 may sit the old examination; those who register afterwards, have never attempted the CPA examination previously or are not holding a valid pass in any paper under the current system can only register for the new examination. In essence, the five papers under the current system will be split, expanded and combined into seven papers and offered at two levels under the new system. The papers in the first, or professional stage, comprise: accounting, auditing, financial management and cost accounting, economic law, tax law, and a new subject, corporate strategy and risk management. The second so-called comprehensive stage is one paper that tests the integration of all the six subjects from the first level plus the ability to apply that knowledge. The latest syllabus in terms of the content of each subject is yet to be confirmed. Certificates will be given to successful candidates after each level and only those who have passed the professional-level examinations can progress to the comprehensive stage. Examinations will be held once a year for both levels at CICPA examination centres in Beijing and Shanghai and in Hong Kong, where the HKICPA is the agent for the exams. Compared with the current system, the new examination is intended to focus more on the basic theories and their application. The CICPA hopes to reduce the complexity of the six subjects while broadening their scope. For example, the new subject, corporate strategies and risk management, combines some of the content from financial and cost management under the current system with additional topics. It is aimed at assessing knowledge about organisations and businesses. The comprehensive stage examination will require candidates to apply their knowledge to practical situations. It will test their professional and legal knowledge, professional values, ethics and attitudes, intellectual and communication skills and the ability to manage an organisation/business. 'The reform is a very positive change even though we haven't seen the outcome yet,' Mr Li said. 'The major difference is that under the current system the first part of the papers requires some basic knowledge and the latter part is based on a comprehensive case study. 'Under the new system, the comprehensive case study will move to the second level, which is closer to the current structure of HKICPA examinations. This is positive and good news for the Hong Kong examinees. 'It's a better structure in my opinion. In the past, the pass rate for the Chinese examination was extremely low. The reform is not meant to raise the pass rate, but after this structure is implemented, the first level of the examination paper will focus on the basic knowledge and skills for practical application. 'When the examinees have more experience, more practice and accounting and auditing skills, they will have a better chance at the second comprehensive level.'