As the Chinese Institute of Certified Public Accountants continues to play an important role in helping China become increasingly internationalized, its President, Feng Shuping, talks to A Plus about what that means for the nation’s CPAs.
If there is a word to sum up what has been on the mind of the Chinese Institute of Certified Public Accountants in recent years – and particularly in 2015 – it is “internationalization.”
In response to China’s “going out” strategy and the “One Belt, One Road” initiative, the organization is encouraging accounting firms to join global networks, or develop member firms overseas, in order to raise their core competitiveness, and increase their capacity to serve their clients internationally.
“Last year, we launched some activities that not only further consolidate the convergence of certified public accountants’ practices with international standards, but also enhance their professional education, accounting firms’ internal governance and modernization of their professional service to match the needs of the market,” says Feng Shuping, President of the CICPA, in an interview with A Plus.
Indeed, this concept of “going global” has been one of the objectives under the five core development strategies launched in 2010 by the CICPA following its fifth National Assembly of Delegates, which asserted the focus of building professional integrity and internationalization as the guiding principle for growth.
The five strategies include talent development, promoting bigger and more competitive accounting firms, convergence of international standards, developing non-audit service, and information technology system construction.
As part of this, the CICPA has been instrumental in securing the policy support of the Chinese government. In 2007, nine government departments under the State Council, including the Ministry of Commerce and the Ministry of Finance, jointly issued “Opinions on Supporting Accounting Firms in Expanding Exports of Accounting Services” followed by the State Council’s issuance of MoF’s “Opinions on Accelerating the Development of China’s Accountancy Profession” in 2009.
“Both documents showed Beijing’s determination to execute its national ‘going out’ strategy and its full support for the accountancy profession to facilitate it,” says Feng.
Currently, more than 70 Chinese firms provide various professional services to support the “going out” of Chinese enterprises. These include 41 firms that offer services to Chinese enterprises listed in the United States and 11 firms that provide audit services to H-share enterprises in Hong Kong. In 2014, these firms recorded 7.64 billion yuan in revenue from their international service, up by 18.74 percent from last year, according to CICPA.
In addition, 72 Chinese accounting firms have established 45 overseas branches, member organizations and affiliated organizations by the end of 2014. Nine firms have joined the top 10 international accounting networks. Meanwhile, among those with securities-related businesses, 18 have joined 17 international accounting networks.
“Some big home-grown firms have moved from solely joining international accounting networks to developing their own brands and networks by setting up overseas. Their influence in international accounting networks has increased accordingly,” says Feng.
ShineWing, as an example of a Chinese firm that has gained increased recognition in the global market, became the first Chinabased accounting network to win the “Rising Star Network” award organized by the International Accounting Bulletin in October last year. According to IAB’s world survey 2014 and 2015, the firm ranked 19th among all the global accounting networks with a revenue of US$263.8 million, followed by Reanda International, which ranked 22nd with US$144.1 million in revenue.
Also, senior executives of the China offices of BDO, Baker Tilly, Crowe Horwath International and Grant Thornton now play an important role in the decision-making process within these international networks.
Despite the Chinese profession’s increased influence and input, Feng believes there is still much work to be done. The profession, she says, must reform and upgrade its services to capture the new opportunities presented by China’s innovation and development strategies as part of the 12th Five-Year Plan.
“That includes the ‘One Belt, One Road’ infrastructure investment, reforming the government accounting system, developing the financial market and implementing the so-called Internet Plus action plan,” says Feng. According to a government work report issued at the National People’s Congress in March last year, Internet Plus action plan seeks to drive economic growth by integration of Internet technologies with manufacturing and business.
The country has now formulated its 13th Five-Year Plan, the first under President Xi Jinping, which aims to realize its 100-year goal of building a “moderately prosperous society.” According to a statement issued after the meeting of the Political Bureau of the Communist Party Central Committee, the plan also acknowledges that “China is entering a ‘new normal’ of economic development and facing not only great strategic opportunities but complicated and tough challenges.”
“That lays down the CICPA’s blueprint for development to further expand the importance of CPAs in the country and reinforce our profession’s development and direction,” says Feng.
To cope with the new challenges and opportunities presented by China’s “new normal” economy and the national “going out” strategy, the CICPA aims to speed up its integration with the rest of the world, with a focus on the following four areas:
- Enhancing accountants’ practice capabilities, professionalism, professional ethics and level of professional judgment.
- Promoting the establishment of professional services market, studying the market demand and enhancing business development and innovation services to enlarge market supply.
- Leveraging on the country’s new and open economy to promote the profession’s internationalization; enhancing firms’ internal governance to reach international level through serving the Chinese economy and capital markets; helping firms adopt international advanced concept, standards and methods to render services; and strengthening the profession’s influence on international matters.
- Applying Internet Plus and big data technology, as well as leveraging on information technology trends and prospects to set up the next five-year plan on the profession’s IT construction.
These highlighted areas will have an effect on the CICPA’s more than 200,000 members (as of June 2015), 100,601 of whom are practising CPAs. Together with other accounting personnel in the profession, it brings the total to more than 300,000. They provide professional services to more than 4.2 million enterprises and public institutions, including more than 2,600 listed companies.
Over the past few years, the growth rate of the profession has consistently surpassed its global counterparts, according to the organization.
In 2014, the profession accumulated 60.3 billion yuan in revenues. One of the fastest growing areas was consultancy, which saw its proportion surge to 30 percent in the same year, up from 16 percent in 2009.
Similar to other firms worldwide with the rapid expansion of their consulting businesses, firms in China have been rapidly transitioning from doing traditional audit work to offering clients non-audit services.
“These include internal control design and appraisal, strategic management, merger and acquisition, due diligence, result assessment, investment decision, accounting, training and other areas that help corporations enhance internal control, strategic planning, capital utilization, risk aversion and financial risks management,” says Feng.
She believes firms have to upgrade their management models, strengthen internal controls, quality controls and IT system, as well as create their own culture and brand in the process of helping clients “going out.”
“Accounting firms should leverage on this special opportunity brought by the national ‘going out’ movement and speed up their own processes to build an international network,” says Feng.
“They have to develop overseas branch offices, get familiar with international market operations and international standards, and enhance credibility in international markets so as to provide more thoughtful, efficient and professional services.”
Learning for life
To achieve such capabilities, it is important to invest in education, especially lifelong learning, says Feng. After more than 27 years of development, and especially after implementing a talent development strategy in 2005, she says the CICPA has managed to build up a lifelong learning system that provides continuing education to its members through long-distance (visual) training courses, face-to-face training classes, study classes and workshops.
Nowadays, through 31 local offices, the CICPA achieves nearly 20,000 enrolments to its training programmes every year, while the three national accounting colleges reach more than 6,000 enrolments yearly.
Through different levels of continuing education initiated by local offices, coupled with encouraging capable member firms to set up their own internal training, Feng believes that CICPA members have been effectively trained up to perform with the utmost integrity and professionalism. “The institute itself sets a good example of a continuing professional development system for lifelong learning,” she says.
In addition, the CICPA has been working closely with the education sector to foster a new generation of quality professionals. Since 1994, it has been setting up CPA professional courses in, and providing guidance and sponsorship to universities and colleges. Currently the CPA professional courses are operating in 19 universities and colleges with more than 6,000 students and more than 30,000 graduates.
“In order to speed up the internationalization process, we take the job of training the next generation of accounting professional very seriously,” says Feng.
To foster fresh, international-compatible accounting talent, the organization has sent a total of 841 top CPA graduates for overseas training in 10 batches and trained up more than 280 teaching personnel since 2005.
It regularly helps organize international exchanges for the profession’s top management and young accounting professionals, and also sponsored or subsidized members to secure overseas qualifications. Up to now, the CICPA has selected 350 leading talents in 12 batches for further training in order to foster a high-level of accounting talent with a global perspective and enhanced strategic thinking.
While the road to internationalization may be long and winding, Feng is confident that her organization is moving towards the right direction.
This article is developed and translated with permission from an original set of Chinese questions and answers provided by the Chinese Institute of Certified Public Accountants which is available from the A Plus website www.hkicpa.org.hk/aplus/2016/01/ index.php. If there are different interpretations between the English version and the Chinese version, the Chinese version shall prevail.
This article was originally published in the January 2016 edition of A Plus. You can also read the digital version of this article.