Analysis Of The Internal Governance Issues Of Limited Liability Partnerships In China

As the market of Chinese economy continues to develop, the demand for CPAs are increasing, the importance of CPAs profession are also growing and CPAs in China are becoming increasingly stronger. To make CPAs bigger and stronger, our country gradually promoted to change medium-sized CPAs with Limited Liability Partnerships. And it achieved significant breakthroughs. But after they restructured, due to the short history of CPAs, internal governance issues of LLPs are still prominent, which to some extent hindered the development and growth of CPAs in China. The problems exposed in the development process of CPAs are mainly attributed to questions of their internal governance mechanism, leading to poor audit quality, damaging the overall reputation of CPAs, hindering process of Chinese CPAs becoming bigger and stronger.Strengthening internal governance of CPAs, establishing and improving the firm internal decision-making and management mechanism, improving the capacity of risk management and quality are the foundation for CPAs to be bigger and stronger. With the development of CPA and the restructuring process of CPAs, the internal governance issues of CPAs are still hot topics in academia. At present, the research in internal governance problems of firms has been more thorough, but the study includes extensive CPAs, and the scope is rather wide. Now, CPAs restructuring has been put on the agenda. We need to find and pay attention to the new internal governance issues. In this paper, taking LLPs as the object of study, and comparing with the internal governance of the international Big Four CPAs, we analyze the internal governance of Certified Public Accountants and propose the corresponding measures.Therefore, this paper uses the normative research method to research. First, this paper introduces the background and significance of the study and summarizes the study of domestic scholars, which is about internal governance issues of CPAs. In recent years, the development of CPAs in China is rapid. But after comparing with the development of international "Big Four" CPAs, this paper finds that the development of CPAs in China still lag behinds the international "Big Four" CPAs. The existence of this problem makes this study significant. Chinese Association of Certified Public Accountants is also aware of the importance of the internal governance of CPAs and issues the guide of the internal governance of CPAs, which further enhances the significance of studying this topic. Second, this study introduces the basic concepts of LLPs and the theoretical basis of internal governance, such as the principal-agent theory, stakeholder theory and the theory of human capital. This paper introduces LLP, which is different from the ordinary partnership. It introduces the basic concepts and theoretical basis of internal governance, to support for the later study. Again, from the perspective of structure, profit distribution system, internal quality control and risk management execution, human resource management and partnership culture, this article raises the internal governance problems of LLPs. For example, the ownership structure and profit distribution system is not reasonable, internal quality control and risk management are not effective, human resource system is not perfect, the partnership culture construction is not sound. Then it analyzes their causes. Next, it introduces the internal governance of PWC and the enlightenment to our country. Finally, this article proposes countermeasures to improve the internal governance of LLPs, such as properly dispersing ownership structure, establishing the profit distribution system based on performance, establishing and enforcing the strict quality control and risk management system, improving the professional risk awareness and occupation moral level, establishing reasonable incentive and constraint mechanism, strengthening professional quality training of practitioners, strengthen the partnership culture construction, paying more attention to the partnership culture construction and so on. Mainly bases on normative research, this paper use a series of research methods, such as induction, analysis and so on. Referring to the domestic and foreign research achievements about the internal governance of accounting firms, this paper analyzes the internal governance issues of LLPs.