How important is it for China to train a substantial number of Essay

How important is it for China to train a substantial number of accountants in the near future - Essay Example The need to train more would continue because China would be relentless in pursuing economic reforms. The pursuit would attract more foreign investments and encourage more Chinese companies to expand overseas. China President Hu Jintao indicated that there will be no turnabout from the economic reforms and opening - up in the past three decades that made China achieve "the historic transformation from a highly-centralized planned economy to a robust socialist market economy and from a closed and semi-closed society to one that fully embraces the world." President Jintao spoke before the 13th economic leaders meeting of the Asia-Pacific Economic Cooperation in Peru in November 2008. "We are keenly aware that China remains the largest developing country in the world," Jintao said, "and the difficulties and problems we face in the course of development are rarely seen elsewhere in terms of both their scale and complexity." (Xinhua, http://english.peopledaily.com.cn/90001/90776/90785/6538647.htm, accessed December 6, 2008) Rapid economic growth would require companies to hire external auditors, financial consultants, tax experts and their own internal accounting staff. Training more accountancy manpower would be part of the financial infrastructures of corporations, said Cui Jianmin, president of the Chinese Institute of Certified Public Accountants (2004). "As China adopts a more pro-active approach to attracting foreign investment, there will be a need for auditing, asset valuation and financial advisory services. As China adopts international practice in the field of banking, securities and insurance, it will lead to an increase in demand for accounting firms with a competitive edge. And as China's capital market and bank loans market for small- and medium-sized enterprises also develops, there will be a need for more auditing, capital verification, asset valuation and consulting services. " (Cui Jianmin, interviewed, April - June 2004, Australian CPA Network, , http://www.cpaaustralia.com.au/cps/rde/xbcr/SID-3F57FECB-A56CA432/cpa/network_cui.pdf, p. 18 - 19, accessed December 6, 2008) The importance of training more accountants is illustrated in China's stock exchanges. Listed companies need accountants who can render credible financial information and disclosures for the use of investors and not for taxation authorities. Until 2007 when government mandated new accounting rules, accountants were influenced by tax regulations designed to make sure corporate taxpayers would not minimize their tax payables. Consequently, according to the International Finance Corp. in a study, incomes were overstated and allowable deductions were disallowed. "This explains the apparent paradox that despite a rigid accounting system, enterprises have strong incentives to use loopholes in the system to meet profit targets," the IFC reported. (IFC, Role of Stock Markets and Information Disclosure in the Corporate Governance of Listed Companies http://www.ifc.org/ifcext/publications.nsf/AttachmentsByTitle/CorpGovernanceinChinaChp5/$FILE/CGinChina_Chp.5.pdf, p. 14, accessed December 6, 20 08) A broker, interviewed by the Financial Times, complained about the low quality of financial information available to investors. "The level of disclosure is not good," said