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Certified public accountants are known as the "gatekeepers" of the capital market, responsible for maintaining the order of the capital market and safeguarding the interests of the public. Since the beginning of this year, with the amendment of the Certified Public Accountant Law, coupled with the popularization of artificial intelligence (AI) applications and the increasing pressure on talent transformation, the CPA industry has entered a critical period of pattern reshaping. How to seize opportunities, respond to challenges, and promote high-quality development of the CPA industry? The reporter recently interviewed several industry insiders, experts, and scholars.

 

Strengthen the defense line of the rule of law

 

Currently, the breadth and depth of services provided by the certified public accountant industry are constantly expanding. According to statistics, there are currently 579 service projects in the industry, serving over 4.2 million enterprises and institutions annually, and helping capital market entities raise over 220 trillion yuan in financing. However, in recent years, there have been frequent cases of financial fraud and illegal activities such as inflated profits and fraudulent issuance in the capital market, reflecting that some accounting firms have failed to effectively play their role in auditing and verification, and have not fulfilled their duties as gatekeepers. How to curb audit fraud, standardize financial audit order, and promote the healthy development of the industry has become a core issue that urgently needs to be solved in the entire industry.

 

On June 26 this year, the 23rd meeting of the Standing Committee of the 14th National People's Congress voted to pass the decision on amending the Certified Public Accountants Law, which will come into effect on January 1, 2027. The current Certified Public Accountants Law was formulated in 1993 and revised in 2014. After more than ten years, it has undergone a systematic overhaul. What changes have it brought? Chen Hanwen, Director of the Audit Department at Nanjing Audit University, analyzed that the newly revised Certified Public Accountants Law focuses on the long-standing problems of audit fraud, irrational competition, and relatively single supervision mechanisms in the industry. It aims to build a full chain regulatory system with strict access to practice in the front-end, strengthened supervision and inspection in the middle, and increased punishment in the back-end, providing powerful and effective institutional tools to promote the healthy development of the industry.

 

Specifically, the newly revised Certified Public Accountants Law strictly regulates professional behavior. At the level of certified public accountants, relevant prohibitive regulations should be added, such as clarifying that certified public accountants are not allowed to issue false reports; Inappropriate audit opinions or reports shall not be issued without maintaining due professional skepticism and failing to perform necessary audit procedures or obtaining sufficient and appropriate audit evidence. At the level of accounting firms, the management of practice permits has changed from "licensing before certification" to "licensing before certification", which means that applicants first apply for a practice permit and then obtain a business license based on the practice permit. At the same time, further clarify the scope of business that limited liability accounting firms are not allowed to engage in, such as securities service business.

 

Chen Hanwen stated that the practice of certified public accountants is subject to legal constraints and more specific legal provisions for protection. External pressure that interferes with professional judgment will be correspondingly reduced, and the practice will have more confidence; Accounting firms implement admission management, stratified according to their professional abilities, to match their business scope with their ability to assume responsibilities. These measures will drive the certified public accountant industry towards quality competition.

 

The newly revised Certified Public Accountants Law reflects strict supervision, precise punishment, and appropriate punishment for excessive penalties. For example, the penalty for issuing reports in violation of regulations will be increased from the current maximum penalty of 5 times the illegal gains to 10 times the fine; If the circumstances are serious, suspend part or all of the business operations until the practicing license is revoked; Newly added certified public accountants who have been held criminally responsible for intentionally issuing false reports will be permanently banned from work; Expand the responsibility from accounting firms and registered accountants to the entire financial fraud chain, with no omissions in collusion or cooperation with counterfeiters.

 

Du Yuanhang, an assistant professor at the School of Civil and Commercial Economics and Law of China University of Political Science and Law, stated that the newly revised Certified Public Accountants Law has made the allocation of responsibilities more scientific, linking administrative, civil, and criminal responsibilities according to the severity of the circumstances. Administratively, from regulatory talks, warning letters, fines, suspension of business to revocation of qualifications and lifetime ban, civil compensation and criminal accountability are gradually increased, and excessive penalties are equally imposed, which not only consolidates responsibilities but also stabilizes professional expectations. The establishment of accounting firms has been changed to "certification before licensing", and access management has been implemented for auditing of listed companies, in order to curb the chaos of shell recruitment, affiliated practice, and low price competition from the source.

 

The newly revised Certified Public Accountants Law will urge certified public accountants and accounting firms to strengthen quality control and integrity construction, provide more authentic and reliable accounting information to all parties, effectively create a fair and orderly capital market environment, and better fulfill the glorious mission of serving the country's economic construction and integrity construction, "said Yan Shanshan, Professional Ethics and Training Management Partner of ShineWing Certified Public Accountants.

 

Accelerate the transformation of digital intelligence

 

Currently, AI technology is profoundly influencing the service model and development ecology of the certified public accountant industry, bringing new opportunities for transformation to the industry. The reporter learned from multiple accounting firms that many firms have deeply integrated artificial intelligence big models into the core audit process, reducing repetitive labor for practitioners, improving audit efficiency, and guiding the professional role of certified public accountants towards higher value creation.

 

However, related controversies and hidden concerns are becoming increasingly prominent. On the one hand, there is a significant shortage of professional talents with both certified public accountant qualifications and digital capabilities; on the other hand, when basic and repetitive work is taken over by AI, the traditional growth path of young practitioners starting from the basics and accumulating practical experience is facing reshaping. ”Zhang Yansheng, a partner at KPMG Huazhen Certified Public Accountants (Special General Partnership), said that AI is both a challenge and an opportunity, and practitioners should move from "knowing how to use tools" to "human-machine collaboration", completing the role transition from "digital verifiers" to "intelligent navigators".

 

In practice, the use of AI by accounting firms can indeed improve efficiency, but it often involves multiple risks, including business, data, security, models, compliance, third-party, and other areas. Many industry insiders admit that the management is concerned about the cost and long-term returns of investing in AI; The business department is concerned that the "AI illusion" and "algorithm black box" may affect data accuracy and trigger audit program execution risks; The technology and data departments are concerned about the stability and anti attack capabilities of the large model, how to securely use and store customer data privacy, where the action boundaries of the intelligent agent are, and how to control identity permissions; The legal department pays attention to regulatory requirements and accountability

 

Faced with complex new problems, the industry is also exploring solutions. Regarding the risk prevention issues of accounting firms using artificial intelligence technology in annual report audits, in March of this year, the Chinese Institute of Certified Public Accountants advised that in audit work, it is necessary to have sufficient communication with the audited entity regarding the use of information technology, and if necessary, relevant clauses can be stipulated in the audit engagement letter; For abnormal situations identified by artificial intelligence tools, certified public accountants need to take further audit procedures to confirm whether there is a significant risk of misstatement; The information provided by artificial intelligence tools can be verified through information data obtained from official platforms.

 

In terms of protecting customer data security, Zhang Cuiling, Partner of Risk and Data Intelligence Services at Ernst&Young Huaming Technology, suggests that "data classification management can be implemented, sensitive business data can be privately deployed, data usage boundaries can be clarified, customer data can be properly managed, and a balance can be struck between technology application and compliance bottom line

 

Industry practice has fully demonstrated that AI transformation is not a multiple-choice question, but a necessary answer for the survival and development of the industry. While using AI technology safely and efficiently, the professional judgment of certified public accountants cannot be ignored, which does not reduce their responsibility for audit opinions. Although artificial intelligence can handle a large amount of standardized verification work, it cannot replace certified public accountants in completing professional skepticism judgments, identifying implicit risks in business scenarios, or reducing the responsibility of certified public accountants for audit opinions. "Fan Wei, Managing Partner of Deloitte China Artificial Intelligence Research Institute, believes that the core value of certified public accountants will shift from basic data verification to complex scenario judgment, and professional responsibility will push human value to a higher level.

 

Optimize the industry ecosystem

 

In the context of continuous regulatory efforts and the coexistence of opportunities and challenges in artificial intelligence, the key to truly fulfilling the duty and mission of the "gatekeeper" of the capital market is to create a better ecosystem for talent growth and development.

 

According to data from the Chinese Institute of Certified Public Accountants, as of June 30th this year, there were approximately 107700 practicing certified public accountants and 11400 accounting firms (including branch offices) in China. Although the number of employees is steadily increasing, there are still problems such as a shortage of high-end composite talents and a high turnover rate of young employees in top law firms.

 

Dong Changling, Chief Data Officer of KPMG China, frankly stated that the core pain point of the industry at present is not "how to cultivate future partners", but "whether the industry is still able to continuously attract excellent talents". It is suggested to fully utilize the opportunities brought by artificial intelligence, optimize the audit work mode, significantly improve the level of intelligence, enhance the attractiveness of the industry to young people and outstanding talents with higher per capita efficiency and better professional experience, and form a vivid situation of talent emergence, full utilization of talents, and full utilization of talents.

 

Universities should base themselves on the trend of economic and social development and the forefront of technological advancement, reform their teaching models, strengthen the interaction between industry and practice, cultivate students' understanding of artificial intelligence technology and accounting, calibrate their value recognition as gatekeepers of the capital market, and cultivate qualified talents for the industry, "suggested Wang Pengcheng, a professor at the School of Business of Beijing Technology and Business University.

 

Accounting firms are important fertile ground for talent growth. Yan Shanshan believes that the entire life cycle work system of selecting, nurturing, managing, employing, and retaining industry talents should be continuously optimized, and registered accountants should be scientifically and systematically trained. She suggested that on the one hand, incentive mechanisms should be established, assessment and reward and punishment methods should be improved, and the weight of professional ability assessment should be enhanced with quality as the guide, to stimulate the subjective initiative and self-improvement drive of practitioners, and to enhance their sense of professional identity and honor; On the other hand, in order to form a talent pool, we can draw on the ideas of cultivating high-end talents, build a long-term advanced career development path, and track the training of business backbones in a long-term manner, so that they can truly grow into leading talents and even important management teams. Through the improvement of talent pool construction, we can ensure the healthy, high-quality, and sustainable development of accounting firms.

 

It is worth noting that the newly revised Certified Public Accountants Law has elevated the requirements for the association to strengthen industry development planning and talent construction work to legal provisions. Regarding this, Fu Xuehua, Director of the Human Resources Department of the Beijing Institute of Certified Public Accountants, stated, "The amendment to the law provides us with a solid legal guarantee for carrying out various work. In terms of talent cultivation, we need to deepen the integration of industry and education, build a tripartite linkage platform between associations, accounting firms, and universities, connect theoretical teaching and accounting practice scenarios in universities, and explore and reserve young reserve talents. In promoting the high-quality development of the industry, we should strictly implement the requirements of the new law's self regulatory supervision, improve the professional inspection, integrity files, and self disciplinary punishment mechanisms, consolidate professional responsibilities, safeguard the legitimate professional rights and interests of industry members, and build a solid foundation for industry integrity

 

Looking ahead to the future, experts unanimously believe that professional judgment, professional ethics, and decision-making ability are the core of the inheritance of the certified public accountant industry. The theme should be to serve national construction, with integrity construction as the main line, fully leveraging the audit and certification functions of certified public accountants, and acting as the "gatekeeper" of the capital market.

 

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