As more accounting firms expand to China, they could find themselves in an awkward position with their Hong Kong and mainland Chinese operations.

A recent article in The Economist highlighted the problems bedeviling the Chinese and Hong Kong affiliates of BDO and Grant Thornton. Last month, BDO’s Hong Kong office announced it was absorbing Grant Thornton’s 500-employee operation there. Instead of playing up the deal as a way for GT to better focus its operations, however, the firm said the employees had been “expelled” because they had resisted a request to integrate with GT’s affiliate on the Chinese mainland.

The reasons for their reluctance could be several. One might be that Hong Kong auditing firms enjoy special protected rights requiring companies whose stock trades on the Hong Kong exchange to have a Hong Kong-based auditing firm. Hong Kong firms apparently also enjoy a better reputation for the quality of their audits, although the mainland firms are known to charge less.

The Chinese Ministry of Finance would like to allow firms on the mainland to audit the books of Hong Kong-based public companies, and BDO is already preparing for this possibility by having its Chinese affiliate undergo an inspection by the government.

Once it is able to outsource some of the auditing work to the mainland, BDO still plans to have a Hong Kong-based auditor sign off on the audits, while employees on the mainland do the grunt work. That could be an efficient model for other firms in the region, but much will depend on how well the employees on the mainland are trained, and how strictly they abide by the auditing rules.