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Hooking‐up: a unique feature of China Public Accounting Firms

Hooking‐up: a unique feature of China Public Accounting Firms Explains why, following China‘s implementation of a market economy, public accounting firms were required to affiliate (hook‐up) with existing government or educational institutions until 1993 when partnerships and limited liability firms were also allowed. Describes the rules relating to independent accounting firms and changes which should foster their development but reports that, in fact, most firms are still affiliated. Discusses the reasons for this and the resulting problems, e.g. lack of competition and independence, low quality of service and increases in fraud, misrepresentation and under‐disclosure. Reveals that despite the 1995 exposure draft on eliminating the hooking‐up structure few de‐affiliations have taken place and identifies four problems which need solving if full de‐affiliation is to be achieved. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Managerial Finance Emerald Publishing

Hooking‐up: a unique feature of China Public Accounting Firms

Xinmin Dai; Amy H. Lau; Ji‐liang Yang
Managerial Finance , Volume 26 (5): 10 – May 1, 2000
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Publisher
Emerald Publishing
Copyright
Copyright © 2000 MCB UP Ltd. All rights reserved.
ISSN
0307-4358
DOI
10.1108/03074350010766657
Publisher site
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Abstract

Explains why, following China‘s implementation of a market economy, public accounting firms were required to affiliate (hook‐up) with existing government or educational institutions until 1993 when partnerships and limited liability firms were also allowed. Describes the rules relating to independent accounting firms and changes which should foster their development but reports that, in fact, most firms are still affiliated. Discusses the reasons for this and the resulting problems, e.g. lack of competition and independence, low quality of service and increases in fraud, misrepresentation and under‐disclosure. Reveals that despite the 1995 exposure draft on eliminating the hooking‐up structure few de‐affiliations have taken place and identifies four problems which need solving if full de‐affiliation is to be achieved.

Journal

Managerial Finance – Emerald Publishing

Published: May 1, 2000

Keywords: Accounting industry; Accounting profession regulations; China

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