BEIJING, Jun 24 (Reuters) - China has told companies to favour government-designated accounting firms as their auditors for sake of “fair and orderly competition” in the sector, according to a notice published by the Ministry of Finance on Friday.
The notice came as a string of accounting problems and stock plunges has hit publicly traded Chinese firms in overseas markets and sparked deep concerns across auditing quality in China.
According to Ministry of Finance notice, large and medium-sized companies should prefer accounting firms that are allowed to provide auditing for H-share listed companies.
Overseas-listed state firms in sectors of finance, energy, communication and military equipment should obtain services from large accounting firms that can “ensure the safety of national economic information”, the Chinese ministry said, without elaborating.
As China is crowded with accounting firms of various sizes, auditing quality is often sacrificed for sake of business.
Auditing partnerships known as the Big Four: KPMG , Ernst & Young , Deloitte Touche Tohmatsu and PricewaterhouseCoopers , are the most important auditing service providers for Chinese companies going public in overseas. (Reporting by Zhou Xin and Don Durfee)