The world’s top four accounting firms will have to bring in Chinese citizens to run their operations in China and end the dominance of foreign partners under new rules announced by the Finance Ministry on Thursday.
The Big Four auditors – Deloitte Touche Tohmatsu, PriceWaterhouseCoopers, Ernst & Young and KPMG – must start to convert their practices this August and comply with all the new rules by the end of 2017.
The rules require them to “localise” their operations so that they are led by Chinese citizens and dominated by accountants holding China’s accountancy qualifications.
The changes come at a difficult time for the Big Four, grappling with the fall-out from a string of accounting scandals at Chinese companies listed in the U.S. that has left investors questioning the quality of auditing in China.
On Wednesday, U.S. securities regulators charged Deloitte’s China practice for refusing to provide audit…
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