Monday, March 23, 2015, 09:34

By Huang Ying

Shortage of high-end talents in accounting firms is huge, even as the sector is poised to become a key growth engine. (Pro vided to China Daily)

Traditional accountancy and audit services currently make up less than half the total business of accounting firms, while non-traditional advisory functions, especially management advisory services, are gaining in importance, according to an industry report released in 2014.

Latest data from the Chinese Institute of Certified Public Accountants show that, by the end of 2014, the number of accounting firms on the mainland totaled 8,295, among which 40 firms were qualified to deal with companies in the securities and futures sectors, and 11 had approval to handle audit services of enterprises listed in the H-share market.

Chen Yugui, Institute secretary-general, said the mainland economy has entered a “new normal” phase, which signifies that industrial structure upgrades, low-carbon activities and innovation will increasingly drive economic growth. The certified public accounting industry, as an integral part of the high-end services sector, will undoubtedly become a new growth engine in the new normal economy, due to its nature of expertise, intelligence and environment-friendly qualities, Chen said.

Statistics from the Institute show that certified public accounting business on the mainland offers services to more than 4.2 million enterprises and administrative units, including more than 2,500 listed companies.

According to a report on the top 100 accounting firms, released by the Institute in mid-2014, accumulated revenue at these 100 firms in 2013 reached 34.8 billion yuan ($5.6 billion), or 61.81 percent of revenue earned by the industry nationwide.

That was slightly higher than 61.63 percent generated in the previous year. Revenue at the top 100 firms grew at a rate of 10.48 percent, marginally lower than the growth rate of the whole industry, which stood at 10.51 percent.

And among the accounting firms listed in the report, 46 generated revenue of more than 100 million yuan, while 15 others produced more than 500 million yuan.

In 2012, for the first time, a mainland accounting firm made it into the top four of the list, breaking the pattern of its being dominated by the Big Four professional accounting firms — PricewaterhouseCoopers, Ernst & Young, KPMG and Deloitte.

The Big Four peaked in the mainland market in 2007, when they held 55 percent of the market share, but their share dropped to 34 percent in 2013, according to comments made at the time by Paul Gillis, professor of practice and co-director of the IMBA program at Peking University’s Guanghua School of Management.

In 2012, Ministry of Finance and other government departments jointly issued the Sino-foreign Joint Venture Accounting Firms Localization Transformation Program, and so far the Big Four have completed the localization transformation.

In 2013, two mainland firms made the top four of the list, with PricewaterhouseCoopers Zhongtian, the mainland unit of the accounting firm, and Deloitte Huayong, the mainland unit of the US-headquartered firm, ranked first and second respectively.

Ruihua Certified Public Accountants ranked third in the list, and it was established through the merger of two mainland accounting firms in 2013.

The biggest clients of the Big Four accounting firms are primarily the mainland units of multinationals and large-scale mainland enterprises listed overseas.

The shortage of high-end talents in the accounting firms is huge, especially with the improvement of the supervision system of the industry and the rapid growth of demand in accountancy, audit and advisory services, driven by deeper economic cooperation between China and other countries.