The strategic significance of the CICPA in the making of a Chinese home-grown public accounting profession

Abstract

This paper provides a detailed, longitudinal study of the role and strategies of the Chinese Institute of Certified Public Accountants (CICPA) in building a Chinese home-grown public accounting profession since the late 1980s. Drawing on previously unaccessed archive materials and a series of interviews with senior representatives of the Chinese public accounting profession, this paper reveals a more nuanced empirical story of professional accounting development in China, in which the CICPA has had more strategic influence than is currently represented in the extant accounting literature. While the CICPA's position vis-à-vis the state is a fragile one and necessitates on various occasions following specific state requirements and instructions, it has still been able to pursue its strategic intention of securing a nationalistic approach to professional accounting development. This paper analyses the shifting nature of the CICPA's capacity for agency across three thematic areas of activities, including the CICPA's efforts to counter the power and influence of the Big Four in China, promote the growth of indigenous accounting firms and support the establishment of the Communist Party branches in accounting firms.

The interplay between global accounting firms and national institutional contexts: The establishment of the Big Four in China from 1978 to 2007

“…As the circumstances changed, the state could both provide and remove the favourable conditions critical to the expansion of the Big Four in China. This latter aspect is particularly evident since 2007 when the Chinese state has sought to disrupt the established presence of the Big Four by prioritising the development of indigenous accounting firms to directly compete with the Big Four in both domestic and foreign audit markets (Wen et al, 2021). In light of the rising nationalistic stance of the state, the Chinese institutional context has become constraining to the Big Four's current activities in China (Wen et al, 2021).…”

“…Such positioning was of great significance in that, as shown in the archival CICPA documents, it further ensured the Big Eight International the possibility of being invited to participate in the CICPA's strategy discussions (in April 1989) over future professional accounting development in China (CICPA, 1989; see also Wen et al, 2021). As the national 'professional body', the CICPA was established under the auspices of the MOF in November 1988 to organise the then increasing number of indigenous accounting firms and practitioners (Wen et al, 2021). According to its first Charter, the CICPA's core mission was to facilitate the development of the Chinese public accounting profession to meet the needs of building a socialist country (CICPA, 1988).…”

“…50/50 ownership), arguing that the new organisational form would greatly benefit the Chinese public accounting profession (Ding, 2006b). The CICPA was receptive to this joint-venture proposal given that it was very much in line with the CICPA's intention of using foreign accounting firms as a source of 'advanced accounting and auditing technology' to develop a home-grown profession (Wen et al, 2021). The MOF also considered this joint-venture proposal but remained sceptical as it regarded the signing of statutory audit reports by foreign accounting firms in China as an invasion of sovereignty (KPMG, 2005).…”

“…In this study, the term institutional arrangement specifically refers to the organising rules, norms and values, as well as cultural-cognitive assumptions of public accounting in China. Actors endogenous to this institutional arrangement primarily entail the Chinese state – that is ‘the Chinese government controlled by the Communist Party of China which, through the mediation of the Ministry of Finance (MOF) and China Securities Regulatory Commission (CSRC), has the authority to decree the practices that public accountants must follow, while also maintaining an enforcement mechanism’ (Wen et al, 2021: 5). Additionally, the Chinese ‘professional body 4 ’ – the Chinese Institute of Certified Public Accountants (CICPA) – has also exerted significant strategic influence on the institutional arrangement of public accounting in China (Wen et al, 2021).…”

“…These training sessions ultimately served as a mechanism by which the Big Eight International successfully positioned themselves as the knowledge experts that controlled ‘advanced accounting and auditing technology’ in China. Such positioning was of great significance in that, as shown in the archival CICPA documents, it further ensured the Big Eight International the possibility of being invited to participate in the CICPA's strategy discussions (in April 1989) over future professional accounting development in China (CICPA, 1989; see also Wen et al, 2021). As the national ‘professional body’, the CICPA was established under the auspices of the MOF in November 1988 to organise the then increasing number of indigenous accounting firms and practitioners (Wen et al, 2021).…”