Five of the largest audit firms in China are likely to be domestically owned rather than foreign owned in the next five years, according to Baker Tilly International CEO Geoff Barnes.
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He told the 250 attendees at the accounting firm network’s annual world conference this week in Beijing that the Chinese government is encouraging a greater local presence in the auditing profession.
“The accounting profession in China is relatively young but it is on an accelerated upward trajectory,” said Barnes. “It is not unrealistic to expect a number of Chinese firms to be challenging the dominance of established international networks in the near future.”
China wants to require auditing firms to have a greater share of Chinese partners (see China Tells Big Four Audit Firms to Hire More Chinese Partners).
“The Chinese government is keen to create domestic audit firms with sufficient scale to audit the country’s huge state-owned enterprises and rapid growth businesses, especially as they increasingly look overseas for growth opportunities,” said Barnes.
“Recent regulation mandating that audit firms are comprised of a minimum of 60 percent of Chinese partners by 2014 will encourage domestic firms to speed up the cultivation of talented Chinese professionals with the international vision, skills and experience that the market expects,” he added. “At Baker Tilly China we are some way ahead in this regard—all of our senior partners and management team are Chinese nationals—and our active program of secondments is providing newly qualified CPAs with valuable international experience. Great progress has been made towards the convergence of national and international accounting standards, which is helping Chinese firms to meet international requirements, and boosting the overseas development of Chinese companies.”
Baker Tilly China has seen significant recent growth and continues to make substantial investments, he noted.
“We have a strong commitment to China, where we are investing for our people, for business and for the profession,” said Barnes. “We are helping Chinese companies to respond to challenges and opportunities both at home and abroad, for example by providing access to local mandarin speakers within our member firms in the markets they are looking to enter. Ultimately, our clients in China have access to our world-leading international network, with the capabilities to serve them wherever in the world that they do business.”