Regulators announce accounting sector shake-up

Chinese regulators announced new rules requiring foreign auditors to, among other things, appoint a Chinese national as their chief partner in China, the Financial Times reported. The new laws aimed at localizing audit operations in China are wide-reaching, some effectively forcing firms to replace their foreign partners with Chinese partners. However, regulators are expected to allow a long transition period and some flexibility in implementation. Up to 40% of current partners in China will be allowed to continue working without Chinese qualifications this year, a limit which will be lowered to 20% by the end of 2017. “The normal situation in the world is that accounting firms must be owned by locally qualified accountants … China is actually being more open to non-qualified foreigners participating in their practices,” said Paul Gillis, a professor of accounting at Peking University.