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Overall Plan for Informatization of

Chinese Accountancy Profession

（Released by CICPA on September 13, 2006）

Information technology (“IT”) is a prominent feature in the trend of economic and social developments

across the world. IT is a key driver of economic and social reforms and a major factor in enhancing

productivity and realising economic transformation. For the Chinese accountancy profession, IT would

increase competitiveness, boost practice development, foster the building of a professional integrity

monitoring system, and drive globalization of the profession. As a result, the Chinese accountancy

profession must put IT at the forefront of its development in order to achieve a high level of performance

through increased IT proficiency and applications.

I The importance of IT to the Chinese accountancy profession

Since its reconstitution, the Chinese accountancy profession has placed great importance to the

application of IT through investing a significant amount of resources in hardware configurations, software

use and personnel training, all of which have laid the foundation for the further development of IT

applications in the profession. In terms of the overall supervision and servicing of the profession, the

Chinese Institute of Certified Public Accountants (hereinafter referred to as “CICPA”) together with local

institutes of CPAs (hereinafter referred to as “local institutes”) have established a two-tiered IT system

that currently provides 7 on-line systems to accounting firms and individual practicing and non-practicing

CPAs, including online examination registration and result enquiry, online membership registration,

on-line training, and online business and financial reporting. An online professional integrity monitoring

system has also been introduced to provide information to the general public relating to recording of

practice information of accounting firms and CPAs, disclosure of their integrity status, warning of

violations and other relevant information.

At the practice level, Chinese accounting firms have made progress in their IT systems. Large accounting

firms have established service and office management systems, and small to medium-sized practices

(“SMPs”) have implemented simpler versions of service management systems. However, there is plenty of

room for improvement on the part of the Chinese accounting firms in order to measure up to their

international counterparts. The current predicaments faced by Chinese accounting firms are due to the

following factors including a general lack of IT awareness and knowledge, a lack of appreciation of the

importance and urgency of digitization, a relatively low usage of IT applications, relatively poor IT research

and development capabilities as compared with international counterparts, under-investment and

frequent upgrades and revisions which result in slow progress in IT application, low level of data

integration and exchanges which result in a significant amount of redundant data and information, and

the shortage of IT personnel which results in the poor establishment and maintenance of IT operations.

In order to fully tap into the opportunities and benefits brought by IT, the Fifth National Assembly of the

CICPA decided on a five-year strategy to promote the informatization of the Chinese accountancy

profession with the goals of transforming professional practices, overcoming current developmental

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stalemate, and driving the profession to a new height. As IT has already played a crucial role in social and

economic reforms, quickening the construction of IT system has become a priority for accounting firms to

enhance their competitiveness, boost productivity, improve standards of governance and management,

streamline processes, enhance service quality, and increase client value.

From the CICPA perspective, as a professional supervisory body, accelerating the construction of its IT

system would greatly enhance its supervision of and service for the Chinese accountancy profession.

Since its reconstitution, the accountancy profession has progressed in leaps and bounds in terms of the

number of professional accountants and accounting firms, as well as the scale of revenue, which presents

increasing challenges to the traditionally manual supervisory approach. Quickening the construction of IT

system would enable the CICPA to adopt innovative solutions, expand the scope of supervision and

service, and optimize its processes so as to meet the society’s increasing demand.

IT plays a crucial role in Chinese accounting firms’ ambition of globalization. Although Chinese accounting

firms are late-comers in the modern accountancy world, they are able to take this advantage by adopting

best global practice in terms of IT governance, infrastructures, applications and supports, which are

particularly helpful for large Chinese accounting firms in building service and office management IT

platforms that would be instrumental in achieving their globalization strategy.

Enhancing the role of IT in the Chinese accountancy profession would also contribute to the

macro-economic management of the nation. It would first of all improve the quality of assurance and

advisory services provided by accounting firms, which in turn increases the quality of data and

information generated from these services. That would then provide good quality inputs into the

macro-economic statistics which would lead to a better understanding of the nation’s economic

performance and thus assist in the country’s planning for economic growth.

2. Guiding philosophy, overall objective and principles

(1) Guiding philosophy

IT system construction should be based on maximizing the accountancy profession’s competiveness and

ability in meeting the needs of the country and society, through optimizing the supervisory framework

and processes in a manner that enhances the ability of supervising and serving the profession, through

intensive investment in IT infrastructures and extensive deployment of IT applications in order to raise the

international standards of informatization, and through using IT intensively as the means to make

continuous management and service innovations for the benefits of the country and society.

(2) Overall objective

The overall objective is to exploit and maximize the use of IT in the accountancy profession through the

establishment and operation of solid IT infrastructures, extensive deployment of IT applications, together

with a high level of connectivity between IT systems and sharing of open data and information.

Specifically speaking, by 2015, the CICPA and local institutes should establish world-class IT infrastructures

and online platforms that provide a comprehensive range of web-based supervisory and service facilities

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to the profession and general public. Large accounting firms should have IT systems with functionalities

that match those of international accounting firms, and SMPs should establish their websites and use

audit software in delivering their audit assignments.

(3) Principles

(i) The “Four Uniforms” principle

(a) Uniform planning: The profession should design the overall framework and plan the undertakings in

a systematic manner.

(b) Uniform standards: The profession should develop uniform standards for design of data exchange

protocol, core applications, hardware configuration and IT personnel competency requirements.

(c) Uniform structure: The profession’s IT framework should consist of an integrated system where the

CICPA’s applications platforms serve as the core, local institutes’ applications systems as the hubs, and the

accounting firms’ application systems as the foundation.

(d) Uniform implementation: Based on the planning requirements, implementation of IT systems should

be carried out in an organized manner and properly appraised at key stages.

(ii) The principle of process re-engineering

Based on an extensive evaluation of current business processes, and in the context of IT design and

implementation, re-engineer business processes in a comprehensive, organized and innovative manner

with the aim to ensure proper compliance with rules and regulations as well as the establishment of

effective and efficient business processes.

(iii) The principle of globalization

The profession’s IT framework should be based on international best practice in terms of concepts,

governance, technology, applications, and systems, and updated at appropriate intervals in order to

ensure the realisation of the profession’s globalisation ambition.

(iv) The principle of differentiated guidance

Accounting firms of different size and nature should be guided on a differentiated basis in relation to the

construction of their respective IT systems. Firstly, to the extent that home country security rules and

regulations are complied with, large Chinese accounting firms that are members of international networks

may either adopt their international networks’ IT systems or develop IT systems that emulate those of

their international networks. Secondly, other large Chinese accounting firms that are authorized to

provide securities and futures related assurance services may either adopt world-class IT systems

recommended by the CICPA or develop their own IT systems up to global standards. Thirdly, SMPs should

adopt world-class IT systems selected and recommended by the CICPA.

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(v) The principle of inter-connectivity

The construction of IT systems within the profession involves those of the CICPA, local institutes, large

accounting firms and SMPs. As a result, it is imperative that, through mutual cross-validation, these IT

systems maximize their inter-connectivity in terms of hardware and software as well as optimizing data

exchanges with the aim to creating an open system with minimum data redundancy.

(vi) The principle of joint initiative

The success in constructing a world-class IT framework depends on mobilizing the active participation of

all parties. In particular, the CICPA shall play a leadership role in designing the overall framework,

establishing the project and planning its implementation, setting relevant standards and policies,

providing guidance and illustrations, arranging appropriate training, and promoting the initiative. Based

on the overall blueprint and plan, local institutes shall enhance their IT systems in order to improve

supervision of and service for local members, guiding IT implementation initiatives of local accounting

firms, and arranging appropriate local training. Accounting firms shall increase investment in terms of

human and financial resources with the aim to combine process re-engineering and IT initiatives to

construct world-class IT systems.

3. The overall framework for informatization of the profession

The profession’s IT system construction framework should be built from comprehensive studies and

analyses conducted by the CICPA, local institutes and accounting firms on the profession’s key processes

and data flows. The outcome shall be the establishment of a framework that covers the “four major

constituents and four major components”, namely the CICPA, local institutes, large accounting firms and

SMPs as the “four major constituents” and applications, support, data and facilities as the “four major

components”.

Each IT system construction initiative shall adhere strictly to the standards of core applications and data

exchange so as to ensure data consistency and connectivity between systems in order to connect the

whole profession effectively and efficiently.

(1) The CICPA’s IT framework

(i) The application component consists of “supervisory and service applications for the profession” and

“internal management applications.” The former includes twelve online applications for managing

examinations, membership registrations, supervision of the profession, continuing professional

development, and financial reporting. The latter includes six applications that manage cooperation affairs,

human resources, finance, fixed assets, international affairs and communication affairs with the aim to

achieve an optimized internal management and office operating environment.

(ii) The support component refers to the core technologies and activities that ensure the normal, safe

and stable operation of the systems, including maintenance and security.

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(iii) The data component structure refers to the uniform database for the profession that provides a

consistent data format, structure and exchange protocol that minimises data redundancy and promote a

high degree of connectivity between systems within the profession.

(iv) The facility component refers to the hardware infrastructures that provide for the stable and safe

operational of the IT systems that consist of main servers, storage devices, back-up medium, internet

facilities, security facilities, computer rooms etc.

(2) Local Institutes’ IT framework

(i) The application component consists of “supervisory and service applications for the profession” and

“internal management applications.” The former category is an extension of on-line applications

established by the CICPA. The latter category consists of four applications that manage co-operation

affairs, human resource, finance, and communication affairs.

(ii) The support component refers to operation, maintenance and security support.

(iii) The data component refers to the profession supervision and service database and internal

management database that should be fully connected with those of the CICPA.

(iv) The facility component includes main servers and internet facilities. Storage, backup, security

facilities and computer room should be installed according to local needs.

(3) Large accounting firms’ IT framework

(i) The application component comprises of “service management applications” and “office

management applications.” The former includes client management, independence management, project

management, assignment management and follow-up management applications. The latter includes

finance management, human resources management, training management, administrative services and

policy support applications.

(ii) The support component includes knowledge search, operation and maintenance support and

security.

(iii) The data component comprises of four databases for financial information, client projects, human

resource and working papers.

(iv) The facility component includes main servers, and storage, backup, network and security facilities,

and computer room.

(4) SMP’ IT framework

(i) The application component shall comprise of “service management applications” and “office

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management applications.” The former includes independence management, project management,

assignment management, and follow-up management applications. The latter covers financial, human

resources, training and administrative services management applications.

(ii) The support component includes operation and maintenance support and security.

(iii) The data component comprises of four databases for financial information, client projects, human

resources and working papers.

(iv) The facility component includes main servers and internet facilities. Storage, backup, security

facilities and computer room should be installed according to local needs.

The overall IT system construction framework should be promulgated through the publication of a guide

to the profession.

4. The profession’s IT system construction phases

It was planned that the profession’s IT system construction would take a period of five years. The

establishment of the IT framework that covers the “four major constituents and four major components”

should be accomplished through a three-phase strategy consisting of the establishment of four directives

during the planning phase, achievement of six breakthroughs during the implementation phase, and

consolidation of the three major application platforms during the operation phase.

(1) The planning phase (2011)

The four following directives were enacted with the aims to identify obstacles, set direction, determine

approach and set implementation steps:

(i) Establishing the overall framework for the construction of the profession’s IT systems in order to

promote the importance of utilizing IT and disseminate the overall construction objectives, principles,

framework, steps and safeguards.

(ii) Establishing construction guidelines with the aim of setting clear objectives, implementation

methodology, technical standards, core applications, construction requirements, and providing procedure

manuals to guide the institutes and accounting firms on the construction of the four major components

of applications, support, data and facilities.

(iii) In order to maximize the collection and sharing of common open data and information, establishing

standards for core applications that ensure the four major constituents could establish IT platforms that

collect and share data and information in relation to examinees, members, general evaluation and

business reporting in an efficient manner.

(iv) Establishing data exchange standards, especially for core applications data, by drawing on

international data exchange standards such as XBRL and establishing common communication protocols,

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universal reporting formats and standard data capturing timeframes in order to maximize

inter-connectivity between the systems within the profession.

(2) The construction phase (2012)

With the “four major constituents and four major components” as the foundation, the profession saw

breakthroughs in several key IT construction areas in 2012, namely examinations management,

supervision of the profession, servicing the profession, practice management and servicing the economy

and society, as indicated below.

(i) Breakthroughs in the management of professional examinations

Based on the principle of “applying IT in a safe and secured manner”, the profession accelerated the

automation and digitization of its professional examinations management processes and took the

opportunity to take measures to manage and prevent examination frauds and other key risks effectively in

order to improve the quality of the examinations in a secured manner.

Improvements that covered aspects of the national, provincial, examination site, online registration and

payment, second generation ID card verification and examination office levels were made to the

professional examinations management system with the aims of facilitating online registrations,

confirmations and result enquiries made by examinees, optimise allocation of examination premises and

facilities, as well as collection of data and information in a secured manner.

Following feasibility studies were conducted on online examinations frameworks, related IT platforms and

service providers within the country and in developed countries. Pilot online examinations in selected

regions were also conducted.

(ii) Breakthroughs in the supervision of the profession

The CICPA established an IT system to manage its memberships from registration to resignation more

comprehensively and effectively, covering aspects such as members’ registration, continuing profession

development, financial reporting, supervision and inspection.

The CICPA introduced an online members’ annual declaration system in order to enhance the verification

and validation of documents and information submitted by members.

The CICPA introduced an online training platform with the objective of improving members’ access to a

wider range of continuing professional development programs and opportunities.

The CICPA enhanced its financial reporting platform with the aim of streamlining reporting process by

accounting firms in order to enhance collection and analyses of data and information in an accurate and

timely manner, as well as providing a channel for accounting firms and members to pay their dues

through online banking.

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The CICPA introduced an IT system to facilitate its quality reviews of accounting firms and members, the

submission of annual financial statements of listed companies audited by members, and key supervisory

responsibilities.

(iii) Breakthroughs in service

The CICPA initially built an online knowledge database and communication platform to serve the

profession in a more productive manner.

Aiming to provide the profession with a coordinated source of information, the CICPA populated the

online knowledge database with contents relevant to the profession, such as accounting and auditing

standards, laws and regulations, audit and management cases, professional newsletters, and

macro-economic data. The database is accessible by the profession. The CICPA also established an online

platform for market participants to exchange ideas and information and gain support from fellow

professionals.

A communication system that consists of video and audio conferencing, instant messaging, text

messaging, digital fax and email facilities was established by the CICPA, providing a multi-channel and

visual communications platform between the CICPA and its members as well as between members.

The CICPA enhanced its website facilities to promote greater public disclosures, online services,

discussions of technical issues, and members’ participation in key initiatives, with the aim of enabling

consultation, reporting, administrative and enquiry activities to be conducted through the extranet, and

approval and disciplinary activities carried out through the intranet.

(iv) Breakthroughs in practice management

Based on the principle of “differentiated guidance”, large accounting firms were given priority which

would in turn help to promote SMPs to higher levels of IT construction.

The first and foremost priority was to established an independence management IT system concentrating

on establishing and maintaining a list of clients in which partners and staff are not permitted to invest in,

a set of procedures on conducting periodic reviews of investments, if any, made by partners and staff, and

the request for independence declarations from partners and staff, with the aim of effectively managing

professional independence through automation and demonstrating a high standard of compliance with

professional conducts and ethics.

IT system was constructed on project management to cover functionalities such as project acceptance

and continuance, project human resource management, project service quality control, and project

performance,. with the aim of assisting accounting firms in managing their project risks and effective

planning, execution and conclusion of projects.

As a subject of project management, assignment management IT system was constructed to cover

activities such as performing risk-based audit, identifying risks of material misstatements and errors, and

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conducting peer audit review and other key audit activities.

Accounting firms built or enhanced their websites with the aim to promote their brands, disseminate

information, develop business opportunities, provide on-line services, consultation and enquiries, and

recruit staff.

Accounting firms qualified to audit H-share companies were required to be the first to complete

construction of the four major components of their IT systems which would form the benchmark for the

profession.

Other firms qualified to provide securities and futures related assurance services were required to

establish independence management system and utilise audit software and project management

software to conduct their audit activities. Half of SMPs should use audit software and project

management software to conduct their audit activities.

(v) Breakthroughs in servicing the economy and society

An anti-fraudulent reporting system was implemented. The system gathers personal details of members

and the reports audited by them and carries out real-time analyses and monitoring of the information

with the aim of preventing and monitoring counterfeiting, and reporting instances of fraudulent to the

general public in order to promote the credibility of the profession and its contribution to the proper

functioning of the market economy.

(3) The application integration phase (2013 - 2015)

Having enshrined the four major components into the construction of IT systems in the preceding

construction phase indicated above, it is time to standardize applications and data exchange related to

the three major platforms of “supervising and servicing the profession”, “service and office management”

and “servicing the economy and society” so as to create a set of three-dimensional, comprehensive, well

established and inter-connected IT systems. At the same time, the CICPA has been encouraging

accounting firms to take this opportunity to learn from world-class management concepts and

re-engineer key processes as part of their IT construction initiatives in order to ensure sustainable and

effective utilisation of IT.

(i) Refining the platform for the supervision of and service for the profession

Based on established data standards, the CICPA constructed databases on examinees, members, general

evaluations, laws and regulations and internal management, and accounting firms constructed databases

on finance, client projects, human resource and working papers. The data was then gathered, processed,

analyzed and integrated with the aim of supporting management and policy making decisions.

Based on established data standards, the CICPA worked with local institutes and large accounting firms on

establishing a common data exchange interface, with SMPs readily adopting the established protocol, in

order to connect the IT systems of the four major constituents of the profession to maximise data

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exchange.

The CICPA constructed IT systems for managing collaborative activities, human resources, finance, fixed

assets and international affairs in order to optimize internal and external working environment, realise

the workings of mobile office and paperless office, and improve standards of administration and

efficiency of collaborative undertakings.

Based on “certification” as the key driver in constructing its IT systems, the CICPA continued to refine its IT

systems related to professional standards, CICPA Magazine, professional examinations, membership

management, continuing professional development, supervision of the profession, financial reporting,

and expert pool. The CICPA also worked with local institutes to establish high connectivity with the aim of

enabling comprehensive supervision of and service for the profession through the extensive use of IT.

(ii) Refining accounting firms’ platforms for managing service and office activities

Accounting firms established a client management system covering features such as client file

management, client marketing management and client care management, and use such functionalities to

manage clients, serve clients at various value levels, promote client loyalty and retention, and perform

client risk assessment in accordance with auditing standards.

Accounting firms also established post-audit management systems to manage working papers, quality

control, regulatory reporting in accordance with the laws and regulations, and to provide a coordinated

and automated facility for reporting to supervisory bodies.

Accounting firms constructed office management system to manage internal affairs and processes, such

as finance, human resources, training, administration and policy making in order to maximize internal

sharing of knowledge and information and support decisions making.

Through the issue of guidelines on IT system construction and using firms qualified to audit H-share

companies as role models, large accounting firms have been encouraged to continue refining their IT

systems, with SMPs adopting feasible features of these models, in order to achieve the comprehensive

inter-connection of the profession that is based on international best practises.

(iii) Refining the platform for servicing the economy and society

In conjunction to the anti-fraudulent reporting system, a business report reference system would be

established and be connected to systems of relevant authorities in order to provide information inquiry

services to report users and the public.

Enhancements were made to the professional integrity monitoring system enabling the general public to

gain access to information about accounting firms, and members’ qualifications, experience and

capability in a comprehensive and timely manner.

The CICPA implemented a comprehensive evaluation system of accounting firms that provides the basis of

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evaluation and ranking of the top-100 accounting firms on an annual basis in order to provide the general

public with in-depth information about the development trend of the profession on a year to year basis.

5. Safeguarding measures for the profession’s IT systems construction

(1) Strengthening leadership and organization

It is imperative that the CICPA and local institutes lead the charge towards establishing effective IT

systems for the profession through establishing well defined working groups, roles and responsibilities,

and policies and procedures, as well as guiding accounting firms with the right credentials to participate in

that collective leadership.

(2) Ensuring proper funding for IT implementation and operation

The CICPA and local institutes are committed to earmarking adequate IT spending into their annual

budgets and increasing IT funding on a year-on-year basis. Accounting firms are also required to commit

adequate IT funding, particularly in application development and staff training. The profession should pay

particular attention to and draw on any national, provincial and local support (in the form of, for example,

general financial grants, technical grants, grants for the construction of the professional integrity

monitoring system, or low interest loans.) to construct or modernize IT systems.

(3) Introducing the right incentives to achieve the desired outcomes

IT system construction would be part of the evaluation of local institutes’ annual performance. The CICPA

would evaluate progress made by local institutes in constructing their IT systems on a periodic basis.

Those local institutes that make good progress would be rewarded and given public commendation. Local

institutes would appraise progress made by accounting firms, and where necessary, clarify requirements

and guide implementation.

Accounting firms making good progress would be rewarded and given public commendation. Software

providers are encouraged to participate in the construction of the profession’s IT systems, and those who

contribute productively would be enlisted as preferred suppliers.

(4) Intensifying IT training to raise competency

The CICPA would intensify its promotion of IT training to the profession, increase the number of IT

subjects within the continuing professional development program, expand IT contents within the CICPA

examinations, and run IT related seminars on a regular basis. By the same token, accounting firms should

intensify their recruitment of a good mix of personnel who are conversant with technical, strategic and

project management aspects of IT systems in order to provide general, innovative and technical solutions

to the construction of IT systems.

(5) Intensifying the promotion of IT and its benefits

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The CICPA would promote through a wide range of media the role and importance of IT to the profession

in order to enhance IT awareness in the profession, and inspire enthusiasm and proactivity in constructing

IT systems.

The CICPA would publicize best practice models and provide good case studies, so as to arouse the

profession’s passion in completing the initiative and carrying on construction beyond that.

(CICPA organized translation of the Plan into English. The Chinese version is the official one and this

English translation is for reference only.)