Discussion On The Restructuring Of Accounting Firms

Due to the urgent requirements of economic and social development and the CPA industry’s development status,China’s accounting firms are eager to break through the bottleneck of the existing organizational form of the system.And this is done to achieve bigger and stronger and system innovation under the background of internationalization drive.To implement the document <<Several Opinions on Accelerating the Development of the CPA industry>>(The General Office [2009] No.56)which the office of the Sate Council forwarded from the Ministry of Finance,Ministry of Finance and the State Administration for Industry and Commerce,jointly promulgated the <<Provisional Regulations on the promotion of medium-sized accounting firms with special general partnership form of organization>>(Finance And Accounting [2010] No.12)on July 21,2010.The provisional requirements large accounting firms should to complete the restructuring of the special general partnership efforts before December 31,2010 and encourage medium-sized accounting firms to complete the restructuring of the special general partnership work before December 31,2011.In the end of 2011,eight large local accounting firms which engaged in H-Share audit services finished restructuring.In March 2013,the "big four" Sino-foreign cooperative accounting firms completed the restructuring localization.In December 31,2013,more than 30 Securities qualified accounting firm remaining completed the restructuring as required.As of June 2014,among the “Hundred accounting firms” which the Chinese Certified Public Accountants announced,there were 40 special general partnership accounting firms,the top 29 were all special general partnership.There were 59 limited liability accounting firms and just one general partnership accounting firms.In China,the special-general partnership was a relatively new form of partnership organization,essentially equivalent to the LLP of British,American,French series.Because of its obvious advantages compared to a general partnership and limited liability,China began pushing special general partnership in the CPA firm industry in recent years.As an institutional innovation,the special general partnership accounting firm has its own characteristics.In the course of practice,a partner or several partners for intentional or gross negligence who cause the debts of the partnership will accept unlimited liability or unlimited joint and several liability.take responsibility on limited liability.And the no fault partner will accept limited liability with capital contribution for limit.In contrary,all partners shall bear unlimited joint and several liability.It should be said it’s the major change after the CPA organizational form changes.The change means that the organization of accounting firms has been a fundamental shift.And some problems to be solved arise in the transformation process.As is known to us,in recent years China’s accounting firms transfer from general partnership and limited liability accounting firms to special general partnership accounting firms,lots of problems such as the partner gross negligence criteria are not clear arise.This paper follows from theory to practical research route,by using a combination of methods between normative research and case research,it discusses listed accounting firm’s form converting problems.Base on clarifying the writing intention and the significance of the study,this thesis expounds the research status and theoretical basis of listed accounting firm’s form converting problems,and then comes into the case analysis of X Accounting Firms.First of all,this paper introduces X Accounting Firm’s background by consulting numerous company information,and points out its form converting problems: the Partner’s responsibility vaguely defined;the distribution of benefits not normative;the lack of protection of the interests of creditors;the defects of internal governance;the shortcomings of the construction of partnership culture.Then it explains the consequences of these problems from five aspects orderly: the shortage of the legislation and the lack of responsibility appraisal;the lack of income distribution mechanism and the defects of performance evaluation mechanism;the lack of compensation mechanism for replacement and the lack of supporting system;the lack of quality control level and the not perfect organizational structure;the lack of institutional guarantee and scientific values for the construction of the partnership culture.Finally,corresponding with these causes,it puts forward countermeasures to improve the situation.(1)Calls for strengthening the legislation and establishing responsibility appraisal organization.X Accounting Firm should stand in the perspective of certified public accountants industry,Calling for strengthening the legislation.At the same time,the partners should call for establishing responsibility appraisal organization to clear the responsibility of the partner.(2)Improve the income distribution mechanism and performance evaluation mechanism.First of all,according to the firm’s situation,X Accounting Firm improve its income distribution mechanism and determines the amount of retained in the firm’s interests.Next,X Accounting Firm should improve the performance evaluation mechanism to make partner interests allocation more reasonable.(3)Improve the compensation mechanism for replacement and the supporting system.X Accounting Firm should improve the compensation mechanism for creditors to protect the interests of creditors.Next,to establish a complete personal property declaration system and to perfect the personal credit system of certified public accountants industry will improve the supporting system.(4)Strengthen the accounting firm’s internal governance.By strengthening the risk control and management,X Accounting Firm use a series of measures to improve its own quality control system,thus effectively improve the level of quality control.Then,the firm should form a reasonable set of their own organization by drawing lessons from the international accounting firm’s organizational structure.(5)The construction of the partnership culture.By improving the basic system specification,X Accounting Firm will establish institutional basis for the partner culture.Then,the firm should set up the scientific values to guide partnership culture building on the right route.