The Research On Accounting Firms Acting Chinese Village-level Accounting Services

Rural financial problems have been the key issues in the process of developmentof the rural economy. Especially since the1990s, with the initiation and establishmentof the socialism new countryside construction, the scale of rural assets expandedunceasingly, and the resulting phenomenon such as cash management chaotic, villagecadres withhold and pocket agricultural taxes, emerged in endlessly. In order topreclude petitions from the masses, and build a trust of village-level financialmanagement environment for the people, under the call of the party, many localgovernments are looking for countermeasures. Among them,"the village accountingprincipal-agent system" was introduced creatively in Shangyu city, Zhejiang province.Then the system quickly spread across the whole country. Practices show that the modeis definitely a very useful innovation to strengthen the rural accounting management,standardize basic accounting work in some of the realistic contradiction. However, inthe process of implementation the system also produced some problems, such as thevillager autonomy becoming a mere formality and the contradiction between thevillagers and the government. Therefore, how to effectively develop the real meaningof the system has become imperative of financial work at present. Coincidentally, in2005, accounting firm was introduced to participate in the village-level financialmanagement in Foshan city, Guangdong province. To some extent, the implementationof the "village accounts by proxy" model just can make up for the inadequacy of the"village account town agency" model. Therefore, this article puts forward thataccounting firms participation in the village-level accounting principal-agent operationwill be more legal and orderly, more in line with the reality and current of ruralfinancial management in China.This article, using the institutional change theory and evolutionary game theory,analyzes the argument. On the basis of two main lines of the village governancestructure and rural financial management, the institutional change theory sorts out thehistorical change path of rural financial management in China. Then this article putsforward the "village accounts by proxy" model will be more in line with the reality andcurrent of rural financial management in China. In addition, this article, based on theperspective of evolutionary game theory, analyzes the relation of participants (the villagers, the village committee and accounting firms). The results indicate that theevolution game will eventually reach a stable equilibrium,"the village committeeaccording to solid accounting, accounting firms fulfilling its duties". The "villageaccounts by proxy" model is also in line with the evolutionary game theory.This article selected parts of administrative villages of Zhejiang province assamples, made a survey from three aspects which are the status quo of the "villageaccount town agency" model and village-level audit, the feasibility of the "villageaccounts by proxy" model. It turned out that the latter has certain operability in theconcrete implementation by using spss16.0and excel2010. What’s more, this articleanalyzes that the "village accounts by proxy" model will be a direction to the reform ofrural financial management in China.The conclusion is that social accounting firms in the village-level accountingprincipal-agent operation will be the trend of the development of rural financialmanagement in China. Therefore, the article puts forward corresponding suggestions topolicy and practice as follows,(1) The "village accounts by proxy" model should beadvocated actively, government functions should be positioned accurately;(2) Thefunction of agencies should be changed, the cost of restructuring should be reduced;(3)Transformation efficiency should be enhanced to ensure the system run smoothly.It has two innovative points,(1) This article puts forward that the "villageaccounts by proxy" model, namely accounting firms participation in the village-levelaccounting principal-agent operation should be the development trend of rural financialmanagement in our country. It has a certain novelty on angle and conclusion.(2) Theanalysis method of this article is innovative. It discusses the feasibility of the "villageaccounts by proxy" model by trying to use evolutionary game theory.