Accounting Firms In China Large-scale Study

Accounting firm's expansion in scale is a basic strategy of the development of Certified Public Accountant (CPA) profession. The economy of scale in accounting firms, which can be found mainly in staff training, experience accumulating, services providing, and risk avoiding and undertaking, is the motivation of expansion. And there are complicated interactions among the scale of an accounting firm, the quality of audit and the organization of accounting firm.A Scientific and rational organization form is the institutional base for scale expansion of accounting firms, and is a prerequisite and safeguard of building up a good mechanism of self-motivating and self-regulating by the CPA profession.From the viewpoint of the macro aspect, the choice of organization form must be good for the functioning of independent audit. From the viewpoint of micro respect, an ideal organization form of accounting firm must be advantageous to reducing transaction cost and improving efficiency of organization. However, if an ideal organization form is to be a rational choice of involved agents, it should be a Nash's equilibrium at least. The government, the regulation and supervision organizations of CPA profession should guide accounting firms' choosing of the organization forms through the change of rules or the players' pay-off of the game.The diversification of services is an important impetus of accounting firm's scale expansion. The inner inclination of risk avoiding and the change of the economic environment are fundament driving forces of accounting firm's scale expansion. And that non-audit services undermine audit independence is not yet supported by empirical evidence and theoretical analysis. In light of the experience of big foreign accounting firms and according to the present situation of China, the author suggested the right direction of service diversification of Chinese accounting firms.Internationalization is the advanced stage of accounting firm scale expansion. The fundamental motivation of internationalization of accounting firms is to satisfy the demand of clients. Besides, to develop promising overseas markets and to win an international fame are important factors to accelerate the process of internationalization of accounting firms. After detailed analysis of economic environment, the author then provided his own viewpoints of carrying out the internationalization strategy.