The global audit firms already have a bad reputation for doing whatever the client asks them to do (as long as the money is right - think Enron), so this is just a step in that direction. Time after time, this supposedly conservative and proper industry has glossed over or ignored serious problems on the books of shady businesses. Add this mix to what is widely considered to be one of the most corrupt countries in the world and you have a potentially devastating problem.
It's already dangerous enough for an outsider to invest in China, but this is worse. If I didn't know better, I might think that China wants to guarantee close ties to business so they can be more open to corruption. Surely that's not it, is it?
China released new rules for the world's top four auditing firms on Thursday that include a requirement for their local operations to be led by Chinese citizens within three years.
The rules released by the Finance Ministry said that Chinese operations of the Big Four global audit firms must be "localized" to comply with laws that will set requirements on the ages, experience and training of executives.
China said the four auditors — Deloitte Touche Tohmatsu, Pricewaterhousecoopers, Ernst & Young and KPMG — must comply with the new rules by the end of 2017.
