November 26, 2022


local businesses

Evolving developments in China’s accounting landscape

Shanghai National Accounting Institute (SNAI), set up in 2000 as an accounting schooling and research institute affiliated with China’s Ministry of Finance, has its eyes set on education and upskilling China’s accounting professionals. It also advises on countrywide accounting policymaking.

Its pursuits array from quick-phrase courses for senior accounting and finance executives and on the web seminars for accounting practitioners to whole-fledged postgraduate programmes in accounting. Its Belt and Highway Economic Growth Analysis Middle is investigating accounting apply and criteria to lay the tracks for Chinese companies’ ongoing growth overseas.

Liu Qin, professor and vice-president of SNAI, spoke to FM magazine lately on the results of SNAI’s 2020 study (in Chinese) on major systems impacting accounting practitioners in China, his views on evergreen techniques for accountants, and the achievable outcomes of China’s central bank digital currency on finance teams.

Could you share some highlights from SNAI’s survey on the leading accounting technologies in China this 12 months?

Liu: In the fiscal providers marketplace, there’s fintech. In accounting, we are increasingly wondering about “accountech” (systems for accounting). What are they specifically? That is what we required to obtain out and have been accomplishing so given that 2017 when we very first performed this yearly study.

We seen that the AICPA has finished this sort of surveys in the past, and we normally appear at the survey results in our lessons. But systems that China’s accountants treatment about might be distinct, and that’s why it is required for us to perform identical surveys for China. These annual survey benefits provide as a signpost for modifications in the country’s accounting marketplace.

The leading ten systems for 2020 voted by additional than 5,300 contributors are cloud accounting, e-invoicing, massive data technology (data management, analytics), electronic data files, RPA (robotic method automation), future technology ERP (company source arranging) units, blockchain, cellular payments, facts mining, and on-line audit applications.

How are this year’s success different from previous years’ outcomes?

Liu: Cloud accounting and e-invoicing have been in the very first and 2nd spot for the previous three many years. In previous a long time, RPA was not even in the prime 10, but this year, it entered the major five listing. This reveals how RPA has grown in relevance and in adoption charge.

A purpose that cloud accounting and e-invoicing are main systems in China’s accounting marketplace is mainly because several shared provider centres, which these two technologies participate in a central purpose in, are staying established up by a lot of Chinese providers.

Due to technological adjustments, shared provider centres turned a big craze right after 2010. Nowadays, most substantial enterprises in China have their have shared support centres. Some would have operate [centres] for three to four a long time, and the before kinds would have run them for seven to eight decades. The introduction of shared company centres not only enabled enterprises to help you save on headcount, but it also begun an evolution in administration products.

SNAI also launched a new category this year to obtain out about rising technologies in accounting. Tell us a lot more about that.

Liu: A new group we introduced this yr is the best rising technologies the place blockchain invoicing, digital currency, net of issues automation, 5G, and distributed ledger were voted as the top rated 5 by leading accounting gurus in China.

These are systems that have however to be adopted greatly but are expected to gain greater significance in the next a few to 5 a long time. And if you seem at these emerging technologies, 3 out of the leading 5 are related to blockchain technologies. That just tells us that accounting industry experts take into account blockchain as a important video game changer in China in the coming couple years.

With these types of quick technological adjustments in accounting observe, how has accounting training in China stored up?

Liu: From doctoral to bachelor’s levels in accounting, there are pretty much a million graduates each year. China’s tertiary accounting training has been undergoing adjustments the earlier two a long time. You will discover universities now are providing programs relating to accounting and major information or accounting and IT.

In our master’s programme, we also have incorporated big information as a important ingredient of the curriculum.

In continuing schooling these kinds of as CPDs and trainings on accounting criteria, the present curriculum is truly not maintaining up with improvements for the reason that accounting specifications and the small business setting are transferring too promptly. Most universities and institutions have continuing education and learning programs to help accounting specialists hold up with variations, but some are continue to unable to provide such curriculums.

We’re a bit unique in that we’re focused on software. So we use scenario reports. We search at frameworks in course and then appear at case studies jointly to apply these frameworks. Since the truth of the matter is, manufacturing a thorough curriculum that requires into account the lots of alterations happening is a extremely complicated endeavor.

The engineering equipment utilised in accounting are modifying quickly. Are there evergreen techniques that accountants can keep on to amidst this flurry of modify?

Liu: This is a worry for numerous, isn’t it? Will we eliminate employment in the accounting profession? We have analysed this, and when it arrives to management accounting work, we consider the extent of automation is still limited. The conversation for a great deal of management accountants in China is generally focused on how the transformation in this digital era will look like for us what will an accountant do in the upcoming?

When it arrives to techniques for the potential, I would like to advise 4: analytical techniques, innovation, devices considering, and bottom-line contemplating.

Facts assessment expertise will not grow to be irrelevant. Accounting is the language of enterprise. It is also a way to control and supply information and facts. Knowledge investigation is an incredibly critical talent in this context. Seeking at shared assistance centres’ future development, they will create to turn out to be major info centres. When that comes about, what do accountants do? They will analyse the facts. This will be core to an accountant’s skillset, and it does not go away. It’s just that the tools employed will be unique. In the earlier, it may be Excel in the long run, it could be an AI resource or a facts mining tool to perform analysis.

The 2nd ability is innovation. Why is this important? Several industries are undergoing changes, innovative alterations, that for some are destroying their individual business enterprise products. Seem at financial institutions. Numerous of their counter workers have been lessened. If this kind of personnel are no more time obtainable at banking companies, they have to have to think about other solutions to meet customers’ needs. In this surroundings, an essential ability for accountants is to innovate continually and to introduce reforms. For instance, in our classes, learners are taught on the most recent technologies, and they are asked to come across use cases for them. If you can discover a appropriate use situation, then you’re an innovator and you will endure and stay in the match lengthier than other individuals.

The 3rd skill is methods contemplating. The most regular look at of an accountant is a single who information numbers, a bean counter. But the truth is, accountants now have to know the small business and enterprise technique. If you never fully grasp the company’s course, if you do not comprehend its price chain, its provider chain, you just can’t be a very good accountant. To fully grasp all these, you want devices wondering, a macro view, and see the company as a entire. This will enable accountants see what roles they are enjoying and what roles they must participate in in the firm. If you’re a soldier and you really do not even know what the main commander is imagining, how can you do your job very well? It will be an automatic defeat.

The final is base-line thinking. Accounting can guide to better economic efficiencies and enhance top quality of everyday living. But if accounting is managed wrongly, it can direct to falsified accounts and fraud. The previous Chinese premier Zhu Rongji gave our institute a motto: “Do not falsify accounts”. We have taken this to heart and produced it a core factor of our accounting education and learning.

If we are unsuccessful to prepare accounting experiences according to what’s taking place in reality and in accordance to accounting criteria, it will guide to inaccurate information. Accountants are managers and providers of info. If the facts offered is incorrect, it can mislead traders or strategic leaders in an organisation. Which is why an accountant requires to have these moral base strains that they will not cross. Not tampering with the publications is one particular illustration of this, and it’s a main talent of a excellent accountant.

The People’s Bank of China is screening its central financial institution digital currency in many cities close to the region. How do you feel the adoption of electronic currencies will change accountants’ operate?

Liu: How the digital yuan will go on to create is nevertheless unclear given that testing is even now ongoing. But even in advance of this digital forex, the use of funds for payments is by now very small simply because of cell payment platforms this kind of as Alipay and WeChat Spend. To consumers, digital currencies would be just a different Alipay or WeChat Fork out. So it would not be as well major of a change for them. The change, however, could be in other regions this sort of as data encryption and privacy phrases. For finance industry experts, it will probably be just another digital payment channel.

The greater challenge from noncash electronic payments is their influence on accountants’ get the job done. As far I know, a ton of accountants are even now hoping to determine this out. In the earlier, we recognized cash and these payments go through the financial institution or, if it’s a postal order, through the post business office. When third-bash payment platforms emerged, finance groups experienced to take care of so numerous far more channels of incoming payments. If an intelligent procedure is not in place to guidance this modify, it would be a dreadful occupation taking care of these electronic payment channels.

For instance, at our institute, we supply on line schooling to about 700,000 persons just about every 12 months. The schooling costs are typically on the internet, and the total is small, say about CNY 100 ($15). In the previous, they would pay back this by the financial institution. Now they use Alipay or WeChat Pay back. We have to use a distinct process to determine out how a man or woman paid and for which schooling, to reconcile the quantities.

This obstacle is enormous. If I do not have automation or new units, then this task will be very labour-intensive. So new payment solutions will need a new method to aid them.