Study On The Regulation System Of CPAs Industry In China

The regulation of Certified Public Accountant (hereafter 'CPAs') profession refers to the oversight and control, by regulators as a whole, over the CPAs industry at micro-levels that include entrance qualification, behavior restraint, supervision & punishment and adjustment of auditing fees. In fact, there are three models of regulation: government-regulation, self-regulation and independent-regulation, all of which point to maintain the independence of CPAs. Among them, the independent-regulation shares the advantages of the other two theoretically. However, the selection of CPAs regulation model depends on factors such as history, market economy models and social condition, etc. In the second part of this paper, we further analyze the regulation models of CPAs profession of western developed countries. The institution change of Britain and US CPAs industry regulation witnessed a history from non-regulation to self-regulation, on the basis of which the government interference was increasingly strengthened, and finally to independent-regulation by now. As to the government-regulation model of Japan and Germany, the market and self-discipline proportion is also increasing. So, the change of CPAs industry regulation model will direct to the integration of government and market, which could be reflected by independent-regulation.The historical change of CPAs industry regulation of New China underwent three stages: full-govcrnmcnt-oriented stage before the establishment of the Chinese Institution of Certified Public Accountant (hereafter 'CICPA') in 1988; quasi-governnient regulation stage from 1988 to 2002; government-regulation after 2002.At the first stage, accounting firms were functioned as internal parts of the national finance department. After the establishment of the CICPA, China's CPAs profession regulation was trying to copy the "self-regulation" model of American. As a result, CICPA became the actual regulator at that time, however, as CICPA's position as a quasi-government department, and the right of punishment, core of the profession was enforced by national finance departments, the Chinese CPAs profession failed to realize "self-regulation" in real sense. With the disclose of series of scandals like "Zhongtianqing" and "Anderson" and the change of US CPAs industry regulation begun from 2002, China's Financial Ministry decided to take back the rights of regulation over CPAs which were ever entrusted to the CICPA. So far, the profession regulation of Chinese CPAs is again back to government-regulation in full sense.The model selection of CPAs industry regulation is key to the development ofChina's CPAs profession. The principle of the model selection lies on whether or not it could accord to the national situation, protect the citizen's interest to maximum degree, promote the substantial and rapid and healthy development of CPAs profession. Despite its imperfection both in theory and practice, the government-regulation model comply with the on-stage national situation in China. In the long run, the independent-regulation integrated by government and market force will be a necessary choice. The final part of this paper further analyzes that the realization of regulation model is of equal importance to the model selection, which requires the construction of excellent institutional environment including the strengthen of trust construction in CPAs profession, the promotion of limited partnership reform of accounting companies, improvement of CPAs civil liabilities system, etc. Besides, regulations over entrance qualification, operating order and punishment are also crucial to the realization of CPAs profession regulation model.