Deloitte has set up its own firm in China to replace the joint venture it formerly operated there.

The firm announced last Friday that it had established Deloitte Touche Tohmatsu Certified Accountants LLP, which became legally effective on Jan. 1, 2013, to replace the former joint venture in China.

Deloitte noted that the conversion does not change the range or features of services that it offers. The new LLP structure is similar to that under which other large and midsize local accounting firms in China are operating, and reflects Deloitte's ongoing localization strategy and sustained commitment to China, the firm noted.

Like other large U.S. firms, however, Deloitte has run into problems in recent years from its Chinese member firm. The U.S. Public Company Accounting Oversight Board has pushed for access to inspect the Big Four’s Chinese auditing affiliates in China, and the Securities and Exchange Commission has begun to pursue Deloitte and the other firms for not producing audit work papers and other documents (see SEC Charges China Affiliates of Big Four Firms and SEC Charges Deloitte with Refusing to Produce China Work Papers). Audit firms like Deloitte, however, have pointed out that they need to comply with Chinese law, and it is up to U.S. and Chinese regulators to resolve their differences.

At the same time, U.S.-based auditing firm networks have come under pressure from the Chinese government to increase the number of partners who come from China.

Meanwhile Deloitte is moving ahead with its new structure in China, which may help insulate the firm from some of the legal entanglements.

"We are excited about the inauguration of the new partnership structure, which signals a new era for our firm in China in this priority marketplace for Deloitte,” said Deloitte China CEO Chris Lu in a statement. “It will also support our business plan to further invest US$160 million in China over the next three years and to expand our workforce to 15,000 people by 2015, following our total strategic investment of US$250 million made between 2004 and 2012.”

"For the past few decades, we have witnessed the rapid growth of the Chinese economy and the continuing growth and evolution of the accounting profession in China,” Lu added. “We have been privileged to have played a part in the development and internationalization of China's accounting industry – from contributing to the establishment of the new set of Chinese Accounting Standards that conforms to international accounting practice, to attracting and nurturing new talent into this important profession. We are deeply committed to playing our part in supporting the needs for professional services of China inbound and outbound business opportunities, as well as ensuring that the ongoing growth of China's economy is well supported by the ongoing growth and maturity of the Chinese accounting industry.”

Deloitte said it had received guidance and support from China’s Ministry of Finance and other government authorities in helping it convert into the new partnership structure.