IntroductiontotheGuidanceonCompetenceofChineseCPAsByDr.ChenYugui

at the Joint Seminar of

Professional Education and Progress of Accounting Profession

Morning   Oct. 25^th, 2007   Beijing

Respected Chairman Henry Saville,

Respected President Liu,

Distinguished Guests and Friends:

Good morning! Now, I would like to give you a brief introduction to the recently issued Guidance on Competence of Chinese CPAs (hereinafter referred to as “Guidance”).

I. Background of Formulating the Guidance

Since the restoration and reconstruction of the Chinese accounting profession, great importance has been attached to the construction of professional talents, with unceasing exploration to the internal regularity and continuous proposition to the new measures for the construction of professional talents.

-- At the beginning of the restoration and reconstruction of the Chinese accounting profession, we have actively carried out cooperation with overseas professional organizations, overseas educational institutions and international accounting firms, through which a group of experts who are proficient in the international accounting practices were cultivated. They have become the backbone of the professional talents.

-- In 1991, the National Uniform CPA Examination system was initiated. By the end of 2006, the total number of people who have passed all of the requested subjects of the examination has exceeded 140,000, with 600,000 person-times taking the examination each year. The National Uniform CPA Examination has become one of the practicing qualification examinations, which has the largest number of applicants and wins the highest recognition.

-- From 1994, we set up the “CPA major” in 22 institutions of higher education in China and cultivated over 14,000 university students of CPA major, which is an exploration to the new way of pre-qualification education.

-- In 1996, we issued and implemented the Training System of Continuing Professional Education for CPAs, and established the organizational system of continuing professional education, with the CICPA as the head, the provincial institutes of CPAs as the pillar and the accounting firms as the foundation. In addition, after constantly summarizing the experience, we issued the System of Continuing Professional Education for CPAs in 2006, to further improve the implementation and assessment mechanism of continuing professional education.

-- We actively drew support from the three National Accounting Institutes in Beijing, Shanghai and Xiamen, with educational institutions for high level accounting personnel further improved.

In accordance with the new trend of the Chinese economic and social development, as well as the new requirement of the development of the accounting profession, the CICPA issued the Guiding Opinion on Reinforcing the Cultivation of Professional Talents in 2005, and organized the overall implementation of the strategy of cultivating professional talents. This document is known as “30 articles for cultivation of talents” and is very well received by the whole profession and the general public, which has made a comprehensive program on the construction of professional talents in the next 10 years. It sets the explicit targets: comprehensively enhance the professional competence, practicing capacity and professional ethics of the practicing CPA force, and endeavor to cultivate high-level professional talents and accounting firm managers that are competent for international engagements and capable of meeting requirements of internationalization within next five to ten years; at the same time, develop a sound scientific mechanism for cultivation of professional talent reserves so as to train a force of reserve talents that meets the needs of professional development in the future.

Carrying out and implementing the “30 articles”, as well as promoting various work on construction of professional talents in aspects of education, examination and training, all hinged upon the basic question of professional competence. For this reason, the “30 articles” proposes that a scientific CPA competency framework shall be established to provide effective theoretical foundation and practice guidance for the cultivation of professional talents. Thus, the task of formulating the Guidance on Competence of Chinese CPAs is brought forward clearly.

During the process of formulating the Guidance, we have summarized the practical and theoretical research achievements obtained since the restoration and reconstruction of Chinese accounting profession; collected and studied relevant overseas research literature; organized the translation of literature, research papers and competence diagram concerning the competence of CPAs of the relevant state-level professional organizations and international accountants organizations, including the International Education Standards issued by the IAESB. After the completion of the drafting of the Guidance, we extensively solicited comments throughout the whole profession for 3 times. At the same time, special studies and seminars were organized for several times. I would like to take this opportunity to express our sincere appreciation to the experts and CICPA members, who have participated in and given support to the research project, as well as the relevant organizations, including the IAESB, which have provided important references.

The Guidance is in full compliance with the requirements set out in the International Education Standards, with all important aspects, like conceptual framework, overall structure, key contents and elements, objects of regulation and managerial methods, etc., maintaining consistency with the International Education Standards. Meanwhile, we have taken into account the stipulations of the existing Chinese laws and regulations in terms of the specific requirements.

Just as President Liu has mentioned, it is our hope that the CPA talent cultivation and education system will be continuously guided and improved by the issuance and implementation of the Guidance, and the CPA competence will be cultivated, maintained and enhanced by employing the scientific and normative professional accounting educational standards, so as to provide strong support to various entities of education and training, including institutes of CPAs, accounting firms, National Accounting Institutes and institutions of higher education, in their design and determination of the contents, patterns and measures of professional education and training, as well as to provide strong support to the accomplishment of life-long learning and the maintenance of competence of CPAs.

II. Main Contents of the Guidance

The main contents of the Guidance comprise the following aspects:

-- Building up a general framework for professional CPA career life competence.  Having identified rules in CPA cultivation and development, the Guidance outlines the general requirements, basic elements and core contents of the professional CPA career life competence. It makes reference to the International Education standards and puts the competence of a CPA as the following four key components: professional knowledge, professional skills, professional values, ethics and attitudes, as well as practical experience. It also puts forward a proposal to maintain and improve the competence by continuing professional education.  Moreover, it sets forth special requirements upon people responsible for auditing program and audit engagement in a specific environment and industry. These provisions are expected to bring forth a kind of comprehensive guidance for talent construction, including CPA pre-qualification education, qualification examination, practice registration, continuing professional education, etc.

-- Spelling out the fundamental elements and core contents of the CPA professional quality. To meet increasingly diversifying, complicated and internalized demands on a CPA and to completely follow the requirements of International Education Standards on CPA competence, it defines the "professional knowledge" that a CPA should have in the following subjects: accounting, auditing, finance, taxation, related laws and information, organizational and corporate knowledge, IT and so on. It clearly specifies the five professional skills that a CPA needs to face the ever increasingly complex career environment and requirements, including intelligent skills, technology and application skills, personal skills, inter-personnel communication skills, and organization and corporate management skills. The Guidance lists out the fundamental qualities that a CPA must possess, including the essential professional values, ethics and attitudes.

-- Establishing the organic relationship between academic education and professional education in the CPA competence cultivation. In line with the International Education Standards, the Guidance specifies the irreplaceable role that the academic education plays in competence cultivation and development, emphasizes the indispensable relationship between academic education and professional education, and clearly positions their respective roles in CPA cultivation and selection. It sets forth requirements on professional qualities and practical experiences, including professional knowledge, professional skills, professional values, ethics and attitudes, and provides a helpful guidance to the improvement of relevant academic education reforms and education quality.

-- Emphasizing the role of practical experience in the competence cultivation, maintenance and improvement of a CPA. The International Education Standards puts emphasis on the essentially important role that practical experience can play in the CPA competence cultivation. To be consistent with these rules, the Guidance indicates that to meet the pre-qualification requirements, a CPA must have at least two-year practical accounting experience, and such experience must be attained in the audit of historical financial data. It also requires establishing the pre-qualification experience supervisor system, planning record system and assessment system. These systems will definitely help CPA applicants, accounting firms and institutes of CPAs to attach great importance to cultivate the competence of CPAs through the practical working experience.

III. Plans on the Implementation of the Guidance

-- Great efforts will be made to carry on the promotion, training and interpretation of the Guidance. By leveraging every possible means of communications to expound its significance and contents, efforts will be made to help the CICPA members have a good understanding of the Guidance spirit and requirements so as to consciously foster, maintain and improve their competence, and enhance the understanding and confidence of the society in accounting profession. By putting it high on the continuing professional education agenda, CICPA will request all the relevant training institutions to pay great attention to the training on it. Moreover, CICPA will prepare additional documents on the interpretation and implementation of the Guidance.

-- Efforts will be made under the direction of the Guidance to improve the CPA examination system by revising the CPA examination syllabus. In this revision process, necessary modifications will be introduced to the examination contents and structure in accordance with the requirements of the Guidance on professional knowledge, professional skills, professional values, ethics and attitudes, and practical experience.

-- A CPA classification examination and continuing professional education classification evaluation system will be devised under the direction of the Guidance with a view to promoting the establishment of a membership classification management system. Following the Guidance''s requirements, we will combine the classified  examinations with the continuing professional education, and include the classification assessment system in the continuing professional education. Such an examination assessment system is designed to conduct assessment of CPA competence, such as the competence of a department manager, or a partner of an accounting firm, etc., so that a membership classification management system at various career stages can be built up step by step.  

-- Under the direction of the Guidance, efforts will be made to improve CPA education quality by moving forward CPA major teaching and learning reforms in institutions of higher education. The Guidance specifies the explicit requirements for CPA pre-qualification education and would serve as an important reference to institutions of higher education that offer the CPA major in their reforms of education contents, methods and means.  In accordance with the Guidance, CICPA will improve education quality assessment system for the institutions of higher education that offer the CPA major in a bid to improve the education/learning reform and quality.

Summarizing the practical experience in the construction of the profession and making useful reference to international experiences, the Guidance on Competence of Chinese CPAs now puts us in a new starting point in the promotion of talent cultivation and development.  I am looking forward to the continuous support and help from all of you present today in its implementation.

Thank you all!