Reuters: Regulatory News: UPDATE 1-China restructures local operations of "Big Four" auditors

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UPDATE 1-China restructures local operations of "Big Four" auditors May 10th 2012, 03:08 Wed May 9, 2012 11:08pm EDT By Koh Gui Qing BEIJING May 10 (Reuters) - China released new rules for the world's top four auditing firms on Thursday that include a requirement for their local operations to be led by Chinese citizens within three years. The rules released by the Finance Ministry said that Chinese operations of the Big Four global audit firms must be "localised" to comply with laws that will set requirements on the ages, experience and training of executives. China said the four auditors - Deloitte Touche Tohmatsu, Pricewaterhousecoopers, Ernst & Young and KPMG - must comply with the new rules by the end of 2017. The rules were released "to specify the work that must be done by auditors in localising their operations, to promote China's legal framework and to unify market rules for fair competition," the ministry said in 23-page document. The foreign joint venture arrangements currently used by the Big Four were signed 20 years ago and allowed foreign-qualifed accountants to dominated their China practices. Since then, the firms have come to dominate the country's accounting industry, having won much of the lucrative work to audit the books of state-owned enterprises when they first listed. In 2010, their audit practices, excluding their consultancy businesses, had combined revenue of more than 9.5 billion yuan ($1.5 billion), according to the Chinese Institute of CPAs (CICPA). However, their market share has slipped in recent years to about 70 percent of the revenue among the top-10 auditors, down from 85 percent in 2006. Including consulting, the four firms say they each employ around 10,000 people in mainland China, Hong Kong and Taiwan. Link this Share this Digg this Email Reprints

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