'Big Four' auditors to become local firms

Authorities in China on Thursday began implementing a new program that orders the "Big Four" global auditing companies dominating the Chinese market to practise as local firms after their joint venture agreements expired.

The new rule applies to KPMG, Deloitte Touche Tohmatsu, Ernst & Young and PricewaterhouseCoopers (PWC), noted a joint statement from the Ministry of Finance, the Ministry of Commerce, the State Administration of Industry and Commerce, the State Administration of Foreign Exchange and the China Securities Regulatory Commission.

According to the new regulation, the auditing giants should form special group partnerships with limited liability to continue their business in China when their joint venture terms end.

The new localized accounting offices should each have at least 25 qualified partners, 100 Chinese Certified Public Accountants and a registration capital of 10 millon yuan (about 1.6 million U.S. dollars).

In most countries, the Big Four are owned by local partners, operating more like a franchise than a typical multinational corporation.

Deloitte, KPMG and Ernst & Young will see their 20-year joint venture arrangements expire later this year, while PWC's joint venture agreement will come to an end in 2017.