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China will beef up supervision of certified public accountant firms to avoid fraud, an official with the Ministry of Finance said.
"The ministry is conducting a nationwide inspection on the firms' implementation of accounting laws,'' the official revealed. "Accounting firms and their accountants who are found providing false financial figures will be severely punished.''
Li Yong, assistant minister of finance, said any attempts to cook the books will have to be curbed from the outset.
The Zhongtianqin Accounting Firm, which is involved in auditing the financial documents of scandal-hit Guangxia (Yingchuan) Industry Co Ltd, a domestic listed company, will be punished if their alleged misdeeds are verified, said Li, who is also secretary-general of the China Association of Certified Public Accountant.
The association has formed a special team working with other departments to carry out an investigation after the media disclosed Guangxia had been issuing false financial documents over the past few years, Li said.
Guangxia later issued a statement admitting it had found problems, ranging from product output, the level of exports, foreign exchange settlement and financial information at its subsidiary, Tianjin Guangxia.
The Guangxia scandal suggests that China's certified public accountant firms lag far behind their foreign counterparts in aspects such as personnel quality, risk control and operation, Li said.
But that did not mean this professional service would be of no help to China's economic development, he made clear.
"The country will pay special attention to the development of the service during the 10th Five-Year Plan (2001-05) period,'' Li said.
Meanwhile, the demand for certified public accountants will surge in the coming several years.
"I am sure that the service will become mature in five years,'' he said.
According to Li, China's professional service industry has developed rapidly in the past 20 years, contributing greatly to safeguarding the country's sound economic development.
However, some government departments used their power to influence the work of professional service companies, which is against the principles of fairness and objectiveness.
Some government departments also set up professional service companies to use their administrative power to pursue economic benefits.
In the past two years, the government reorganized the professional service industry by severing the ties between these companies and government departments in a move to ensure that the work of certified public accountants is independent and unbiased.
The regularized professional service industry will play an important role in maintaining the country's economic order and improving the economic efficiency under a market economy, Li said.
(China Daily 08/21/2001)
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