Li: Thank you. It’s really a great pleasure to have you here. We have a program which is called Oral History of Accounting. We want to document the history of accounting, especially in China. I looked at your background, and you partially retired from London School of Economics and Politics in 2011. And some people say as a distinguished professor in accounting, your whole life is committed in accounting, so could you please brief us a little bit on your career, your academic life?
Macve: OK. Thanks. Well, yes, I think accounting, as they say, is in the family genes. My father is a chartered accountant, and now my elder son is a chartered accountant, so three generations. And I started work after the university with Peat Marwick Mitchell (which is now KPMG) in London. And I was there for about six years. I had begun to do some part-time teaching at the London School of Economics, 2 or 3 hours a week, because they like to have people come in from outside. And then after a year or two, they asked if I would like to join the faculty. By that time I had got quite interested in finding out about the academic accounting. Maybe it could explain some of the things we did in practice, answer some of the questions about: “Why do we do this?” “Why do we do that?” So I joined the LSE and I was there for about 5 years, and then I was offered a chaired professorship at the University of Aberystwyth in Wales. And I went there in about 1979 and was there until 1996. Then I came back to LSE till I retired two years ago. But I am still teaching there part-time.
Li: Quite interesting. You have a family gene in accounting. And you started your career from an accounting firm, then move to academic life gradually. You found some issues when you did practical work in accounting. Then you go to the academic world try to figure out the answer to those questions.
Macve: Yes. For example, I think one of the audits I was on was an elevator manufacturer. When you come to do the end-of-the-year figures, if you think some of the contracts are going to make a loss, you have to write them down. But there are other contracts which still look as though they will make a profit, so why can’t you put them together, and say, “You know, overall, our set of contracts is still profitable.” And this is a common question in accounting.
It’s the same with oil wells. Do you treat each oil well as an individual item and write it off if there is no oil. Or you say, “No, we’ve got a field of ten oil wells. Some will be successful, and some won’t. But as long as we have some successful ones, they will pay for everything.” So you don’t need to write down if you got enough coming from the successful ones. So this is a big argument in oil accounting which has been going on forever. And it doesn’t look yet as though it is going to be resolved.
So these are the kind of things I couldn’t understand: “Why do we do it this way?” “Why do we do that way?” And nobody could answer it except to say, “That is what we did last year, so we always do it like that.” So I thought maybe if I could spend some time on academic study, I would find some more answers to that.
Li: I guess this kind of background, practical experience, plus academic research, for you, definitely is quite different from other purely academicaly originated professors.
Macve: I’ve always kept in touch, because the Institute of Chartered Accountants in England and Wales (ICAEW), they asked me to be their Academic Advisor, because they have some research funds which were left by a rich chartered accountant. So each year they have to decide which projects to support. So for nearly 20 years, I was their Advisor. I didn’t make the decisions. I just advised the research committee on what I thought was the appropriate decision. Sometimes they agreed with me, sometimes they didn’t. But it was quite interesting, because it meant I got to know lots of research from lots of different researchers, and then you began to learn who are the good ones and who are the ones that are maybe not good, you know.
Li: So that means actually even after you move to academic life, to those leading accounting and business schools, you still keep very close contact with the industry?
Macve: Yes. And also particularly with the life insurance industry in Britain, which is very old, goes back to about the middle of the eighteenth century. So there I got to know the actuaries as well, the actuarial profession, and I wrote quite a lot about the insurance accounting methods. And then maybe 10 or 15 years ago, they made me an honorary actuary. I am an honorary fellow of the Institute of Actuaries. So I have two professions that I’ve spent time with, the chartered accountants and the actuaries.
Li: I know most recently you have shifted at least part of your research to China, or issues related to China, especially the history of accounting and auditing in China. Could you please tell me why you choose to study these, because as you mentioned there are so many issues to be studied. But at this stage, why do you choose to focus on China-related accounting issues, especially the history of accounting in China and what are the major findings have you made so far?
Macve: Well, I think everybody is interested in China, you know. If what the experts say is right, China could be the biggest economy within the next ten years. And that’s going to affect all of us, not just China. So there are lots of—it seems to me, because I do accounting history, and I’ve looked at the UK and the US particularly, that some comparisons are there as to how things have changed. And obviously, at one time the UK was the most powerful economy in the world. Then the Americans become the most powerful economy in the world. So if China will be the most powerful economy in the world, then we need to understand how the Chinese system works. And my friends at LSE who are economic historians of China, increasingly, their view is that, until the foreign powers came in 1840/1850, China was a very successful economy (Li: in the world) at the level of mercantile activity (but not in the Industrial Revolution: that had not happened yet). So now we are interested in how people ran their successful businesses in China. And luckily, one of my colleagues at LSE, and a friend who works for the Chinese Academy of Social Sciences in Beijing, they have discovered an archive of accounting records running from about 1790 to 1850, before the foreign powers came. So this is very interesting, how they did their accounting. You know, we have got their original books written with Máobǐ, very very interesting. So we have been looking at them. And it seems quite clear that they are able to run their accounts very successfully without the western double-entry bookkeeping system. And that in turn is quite important, because a lot of people still argue, including quite eminent historians, that it was the double entry system that enabled the western countries—first in Italy, in 1300/1400s, and then it spread to other parts of Europe, and then it became very widely used because of the industrial revolution—to be so successful, and that without double entry bookkeeping you cannot have capitalism. That is the argument. Well, the Chinese evidence suggests you can have very successful capitalism without the double entry system. This is quite an interesting finding, you know. We haven’t finished the work yet, but some other archives are beginning to turn up of businesses from the Qīng period. So that’s one thing that I am looking at. We are nearly ready to submit a paper, and I’ve presented it at Tsinghua last week. And we have presented it in other places as well.
And then the other thing is, well, a long time ago, about 1990, I had a student, who was a top student in accounting in Xiamen. And he came when I was at Aberystwyth, and he wanted to do a PhD. For some reason, his father had a friend at Aberystwyth and he wanted him to go there. So he came to me and said, “Can I do a PhD?” And I said, “Well, first you must do a master’s degree.” He did that on management accounting, because he had a Chinese government scholarship and they wanted people to find out about management accounting. That is the most important thing, they thought. But while he was with me, he developed an interest himself in what is happening in auditing, because at that time, they were just beginning to take auditing away from state control into private firms. So people who had been in the Ministry of Finance became auditing firms, or professors became auditing firms. And at the time there was also the rival body from the National Audit Office. Their people were also making audit firms. So there were actually two institutes for a while, the Chinese Institute of Certified Public Accountants, which we still have, and another one which was the China Institute of Certified Auditors. And he interviewed lots of people in China, which was a new thing to do in China in those days, as most people just did their research from books, you know. Then we wrote a paper about it. Obviously, I am not saying it was because of us, but Premier Zhu Rongji (Li: the founder of this institute) had the same idea, he said, “This is stupid. We can’t have two institutes for auditors. We must have one institute for auditors.” So it was merged into the CICPA. So that was the first time I became interested in auditing in China.
And then about three or four years ago, there was a student from SUFE, who was visiting Cardiff University in Wales in Britain, and I met her at a conference. She gave a paper about what is happening to the audit firms now in China, and the Ministry of Finance’s plans for developing the Chinese auditing industry. So I said to her, “you don’t want to spend a year at Britain sitting at a computer doing equations. You are going to meet some people.” She was a bit surprised. Anyway, through my contacts in the profession, we got to interview some of the senior partners, the chairman of Deloitte and other people. And we have been asking them what they were doing about China. And similarly Dr. Zhang Weiguo, who you know was in SUFE and is now in IASB, he arranged meetings for us to meet people in China, some very important people, so we got some interviews with them as well.
There were quite a lot of people who were saying in Britain that the next “Big N” firm will be a Chinese firm. This is a bit surprising, you know. So I think it depends on what you mean by a “Big N” firm. It’s quite clear, I think, just because of the size of China, you can have the biggest accounting firm in the world just in China. But what people mean by “Big N” firm really is international firm. So that is a bit more difficult, because if you are a Chinese firm and you want to persuade a big British company you should be their auditor, there is obviously a large reputation gap at the moment between you and the “Big 4” international firms. So the question is: “How are the Chinese firms overcoming this need to build their reputation?” There are different models. A very popular model is that once the firm becomes a good size in China, they join one of the so-called second tier networks like BDO lìxìn, PKF and RSM/ Crowe Horwath, and they have worldwide networks. But each firm is kind of independent within the network. The Ministry of Finance seems to quite like this, and so does the CICPA, because the Chinese firm keeps its identity while becoming part of an international brand. There are some firms like ShineWing whose strategy seems to be grow from the Chinese base and start to follow their clients overseas. As their clients invest overseas in Africa, Europe, maybe they will start to open offices there, just like the Big 4 firms did a hundred years ago when the American and British firms went overseas.
The other thing is what has happened to the Big 4 firms themselves, because two years ago, 2016, their licenses were due for renewal, which were joint venture licenses. The Ministry of Finance says, “We don’t need these anymore. This was a special circumstance when we started and we had to keep foreign expertise. But now these firms must become Chinese firms. In other words, Chinese CPAs must become the people who are the partners and managers of these firms.” I think it would happen anyway, because for most of the big firms, that’s what they do all around the world, you know. In France, all the partners of KPMG are French now. When I was young, they were mostly British. But they all had a plan to localize. And I think probably the Big 4 firms here were not able to be that tough. Partly the Ministry of Finance thought they were being too slow, you know, and give them a bit of kick two years ago, and say you must have, some majority percent of the partners must be Chinese CPA. That’s happening now.
在英国有很多人在说，继四大之后的下一个大型事务(Big N)将是一个中国事务所。这有点让人吃惊。我想这取决于你对大型事务所的定义。很显然，正因为中国的规模，中国就能有全世界最大的会计事务所。但是人们所说的大型事务所其实是指国际性事务所。这个目标实现起来难度更大一点，因为如果你是一个中国的事务所，你想说服一家大型的英国公司聘请你做他们的审计师，很显然目前你和四大国际事务所相比，在声誉方面还有很多差距。因此，问题就是中国事务所如何克服困难建立声誉。有很多种模式。其中一个很流行的模式就是，一旦事务所在中国发展到一定规模以后，他们加入某个所谓的国际二线事务所，例如BDO立信、PKF、RSM和Crowe Horwath，然后就有了全世界的事务所关系网。但是在这个关系网内每个事务所相对独立。财政部以及CICPA的人似乎都很喜欢这种方式，因为这样中国的事务所既保持了其身份，又成为了国际品牌的一部分。还有一些事务所，比如信永中和，它的战略似乎是在中国本土发展壮大，然后跟随其客户在非洲、欧洲等地进行海外投资的步伐，开始在海外设立办事处，就像四大会计事务所一百年前跟随美国公司和英国公司海外扩张时一样。
Li: According to what you say, actually MOF China is following international practice to grow the CPA industry in China. And the future of Chinese CPA firms is quite promising. But possibly there are different pathways and also different kind of difficulties they must face in the future.
Macve: I mean part of the difficulty, I think, as you would expect, is China’s accounting standards are still Chinese accounting standards, but they are almost the same as IFRS. And the government said the long term plan is to converge with IFRS. China has already 100% adopted the International Auditing Standards. But one has to accept, for somebody who could have started out as a state auditor 25, 30 years ago, it’s quite hard to learn what this means, this new way of doing things. So it may take, you know, a generation. The younger ones are OK. They can learn very fast and understand. But for anybody who is certainly my age, as an old saying goes, “you can’t teach an old dog new tricks.” So it will take a little bit of time, I think, for people to understand what these standards mean in Chinese context. But it will come. Everybody says it will come. It is just the question of how long it takes. And then once the Chinese firms can say we operate with exactly the same standards as any firm around the world, then you know their reputation should become much more credible. So very interesting times.
Li: Recently as you mentioned, our Ministry of Finance, especially our Finance Minister, Minister Lou, pays a lot of attention on the development of management accounting. He believes China should work more on the management accounting. And I noticed that you have also done some research on the management accounting. People always have some argument between financial accounting and management accounting. So we would like to have your comment on the relationship between financial accounting and management accounting, and also how do you see China pay more and more attention on management accounting nowadays?
Macve: Well, as we were saying the other day, President Li, I think the problem is that the split has come when originally they were the same thing. As I say if you read Luca Pacioli on double entry bookkeeping, it’s written for the businessman for the help of running business. And of course for a long time, most businesses were privately financed, by friends, family or whatever. Then during the late 19th century, you began to get stock market investment. And then you get this requirement, obviously, that companies present their accounts to investors. But even then initially the kind of model that we have in the UK and mostly continental Europe as well, these accounts were presented at the annual meeting where the shareholders attended and can ask questions. If you are not running it very well, you know, then when there will be a motion to re-elect the board of directors they might say, “No, we don’t like this board of directors because they are not doing a good job.” So in a sense the same information is needed to run the business as a manager and to explain to your shareholders how well you are doing. But then gradually, obviously as stock markets have grown in importance, you get what are called “passive investors”, and now you get, you know, very, very short-term investors who might hold the shares for two seconds in high-speed trading. The emphasis has shifted particularly in America, where the regulation of accounting is really directed by the Securities and Exchange Commission (SEC), and their job is to make sure share prices are fair. So you get this totally different emphasis, which is you want to know what the value of a business is, not necessarily how well managers are running it, although these two are obviously related. And that seems to have led to this split, particularly in America, between management accounting and financial accounting. And it’s made worse in the academic area because our young academics are told they must publish four papers in five years. It is a lot easier to sit in front of a computer and run some regressions on financial accounting data and stock market data than it is to go and interview managers to find out how they do things—observe. Now some people are doing that, they are doing that kind of work.
But it’s fairly unusual and in America now there is very little management accounting research. This is a great pity, because at the end of the day, I think if people—and I used to say this when I was an auditor—if they are just producing figures for somebody outside who they know nothing about, they don’t have any real interest in the figures. While if they have to give figures which are based on what they themselves are using for making decisions, then those figures are going to be much more relevant and reliable. Obviously there is a danger they will lie. But you know that is human nature. You try and control it with internal governance and audits and other things. So I think there needs to be a re-focus of the research onto the management accounting.
And I think probably the more interesting developments in financial accounting will come from new ways of thinking about the management accounting. I mean, take for example, Prof. Hiroshi Okano’s interest now in the amoeba, a system that Kazuo Inamori used at Kyocera and at Japan Airlines. If you read what Inamori says, it has wonderful things like, “management is like accounting, double check everything, make sure your profits are good.” So although the system works by the way which it incentivizes the amoeba groups, by the end of the day you are going to have a headline number. And he has got American stock exchange investors in his company, so he has to report these financial accounting numbers, but those numbers are going to be much better if they come out of a system, like amoeba system where people are kind of living the numbers every day as part of their incentives and control systems that are within the groups, and link to the top management strategy, you know. So there shouldn’t be a conflict between them.
There are obvious problems, particularly in our history, because of the legal liability, you know. If you give out numbers which then turned out not to be right, somebody will sue you for a lot of money, and say, “it’s your fault that I lost money in your company.” Whereas if you can hide behind the accounting rules, so you will just give the numbers that the accounting rules say you have to give, then it’s very difficult for people to attack you. So we get such lawsuits in the UK, but in fact very few of them are successful, unless it is obvious fraud. If you can show that there is obvious fraud, then there is a liability. And I think the liability issue in China is still quite low, though it probably will increase with the stock market expansion. So I think it is important and I think the Ministry of Finance is quite right in this respect. What is important to companies is not just good financial accounting. It’s more good management accounting. The tail of—we have an expression, “the tail wagging the dog when it should be the dog wagging the tail”. So management accounting is the dog and financial accounting is the tail. It should be the dog wagging the tail, but recently it’s the tail that has been wagging the dog. And that is not good.
Li: Absolutely, accounting should play a more active role in supporting the operation, the value creation, not just reporting the value, right? Reporting the outcome or output? You mentioned very few professors are working on doing some research on management accounting area in US. How about the case in UK and in the Europe?
Macve: Yes. I think there are more, relatively speaking. I mean there are some in the US. It’s not completely black and white. But the most famous ones are in financial accounting. And to some extent, the UK has been copying that because again people want to publish in the top American journals. And we also have pressures in the UK now. We have what’s called the Research Assessment Exercise by the government every five or six years, and you have to have four good papers, international papers, if you are to be recognized as a researcher. So the pressure is very very high, especially on young people. And now many of the Chinese business schools are doing exactly the same thing. You know, you go to Beida, they give you a list, and if you do not get on the list, they are not interested. SUFE the same, and I think, Tsinghua, they are all the same. They all say: “We must get into the American journals, because…” I assume there is pressure from Ministry of Education, “…we want China to have universities in the top ten, like in the UK and America”, you know. And the only way they can see to do it is to get people with American, UK, and European PhDs to come and write those kinds of papers. But I don’t think it is helping China very much. Myself. Myself.
Macve教授：是的。相对来说，(英国和欧洲的)要多些。这并不是非黑即白的问题。我的意思是在美国有一些研究管理会计的人，但是最著名的研究人员都在财务会计领域。在某种程度上，英国也在照搬这种模式，因为人们想在顶级的美国杂志上发表论文。现在我们在英国也有科研压力，即所谓的科研评估实践(Research Assessment Exercise，今年起更名为卓越研究框架，Research Excellence Framework)，政府每隔五到六年评估一次。你得在国际刊物上发表四篇高质量的论文，才能被评定为研究员。因此压力是非常大的，尤其是对年轻人来说。现在中国的很多商学院也在做同样的事情。如果你去北大，他们会给你一份清单，如果你没有在清单上发表过论文的话，他们就不感兴趣。上海财大也是如此。清华等等都一样。他们都说，“我们必须要在美国期刊上发表文章，因为……”我猜他们也有来自教育部的压力，希望中国的大学能进入全球前十，就跟英国和美国的大学一样。他们觉得唯一的实现途径就是请从美国、英国、欧洲获得博士学位的人来中国任教并写那些论文。但是我不觉得这对中国有多少助益。仅代表我个人观点。
Li: It is really a kind of dilemma. On one side, you see from the need of various companies, definitely they need management accounting. (Macve: exactly) On the other hand, the criteria system in the universities, at least we can make an easy judgment, that kind of criteria doesn’t encourage research on management accounting. So there is a need, but there is a barrier.
Macve: Yes, I guess the other barrier is language, you see. If you write a paper that is mainly statistics, you can do that whether you are a Chinese or an American and you can get a friend that is smart enough to do it in English. But if you writea qualitative paper, that is discussing ideas, what the people you’ve interviewed think about things, you’ve got to then write it in very good English, not just passable English, but very good English. I think personally that he best strategy, and it is happening already, is for Chinese researchers and European and American researchers to work together. I mean the work I am doing on Chinese history, I couldn’t do it, I can’t read the Chinese accounts, but my Chinese colleagues can. And I know how the accounting works, so we can discuss it. On the auditing project, when some of the people we have interviewed don’t really speak English, we give them the questionnaire in Chinese and my colleague from SUFE will explain to them what we were doing. And then we two discuss it together, you know, and work out what we think we found out. I think that is probably the most productive path for these next few years, is for Chinese scholars and the European or the American scholars to work together on projects, because the Chinese probably understand the West quite well now, but they don’t have the same facility to communicate. The westerners don’t understand China, so they need to be made to understand.
Li: So actually we need cooperation across countries, and also across industries, maybe.
Macve: Yes, Yes, very much. But it’s not going to be easy. It requires some far-sighted people to say that just getting a paper into The Accounting Review is not the end goal of mankind.
Li: Yes, maybe to some extent, you need to change the criteria, at least for some kind of research institutes or universities.
Macve: Yes, exactly. I mean everybody needs to have their own mission for their own kind of institute. There’s no point you competing directly with Tsinghua. You are never going to be Tsinghua. But you could be the best accounting training institute in the country. And you probably already are.
Li: We still have a long way to go. This comes to my last question, professor. Based on your over 40 years’ experience working in the accounting sector as a practitioner, as a distinguished professor, what kind of advice do you have for China to further promote its development in accounting department or in accounting sector. And of course I would really appreciate it if you can give us some advice on how we can speed up the development of Shanghai National Accounting Institute in a right way. Of course I also would like to ask for your advice for our young people working in accounting profession, what kind of suggestion or advice you could give to them based on your personal experience.
Macve: Well, sometimes I think you have to recognize that you know the experiences that I’ve had may not be so relevant now because the world has changed so fast and is still changing extremely fast. Nevertheless, I think a basic issue is sometimes people distinguish positive research and normative research. They say normative research is just giving opinions about what you think is a good idea, no evidence at all, while positive research is about what actually happens, and then you don’t say whether anything is good or not. I think the proper kind of research is the mixture of both. It’s a mistake to say we should do this without knowing what the situation currently is. So you must have the facts before you make the choices. So I think the best kind of research is the research which does study the facts, and then make suggestions about what would appear to be the good things. But the end of the day, academics aren’t going to run anything, luckily. More practical people are going to actually do it. What we can give them I think, whether in UK, in America, or in China, is a little bit more understanding of what it is they are dealing with, what the experiences of other people in similar situations have been in other businesses, other industries, other times. That doesn’t seem to be the idea in some places really, —they think that academics shouldn’t get their hands dirty with real life but just write for each other to show how clever they are, you know.
I think at the end of the day, you should always be thinking “Why am I looking at this, what possible relevance could it be to anybody who has to live their life?” I mean, although China has changed a lot, it is still true that what Karl Marx said was right, “The philosophers have only interpreted the world, in various ways. The point, however, is to change it.” I think that combination of fact-based opinion—what we call in Britain now, it’s very fashionable now to talk about “evidence-based policymaking”. The government always gets a lot of ideas, they always say let’s get to do this, this is a wonderful initiative, this will win the election, blah blah blah. But they now say, “No, no, no, we have to have evidence-based policy.” So they do, they commission research, and they want the research to tell them what is the situation, what are the possibilities, what are the likely consequences if you do this or if you do that. At the end of the day they will decide, and they will decide for all sorts of other reasons, but that is the job of academics, is to provide as much as possible the inputs. As Deng Xiaoping said, “seek truth from facts”.
Li: Actually, I am thinking for an institute like Shanghai National Accounting Institute, definitely, we are different from, and we should be different from other traditional academic-oriented universities. Maybe that’s one of our priorities in our research, that is try to give some evidence-based suggestion for policymaking, for operation of various leading companies in China.
Macve: I don’t know quite a lot of the details of what your missions are. I think initially when Premier Zhu set up the institutes, I mean, the argument was that there was nobody in China who knew anything about accounting, so in a sense it started in a very low level, just to train some people how to do some basic accounting. But as that has expanded, now that there are lots of people who know it, you could raise the level that you are targeting. So you are now targeting at CFOs and boards of directors as well. So that means the level of the material you are giving them must be much higher, and once you get to that level, even you are not doing the same kind of academic research as SUFE, or Beida, you should be using their research in applying it to the materials that you pass on, because the businessmen are never going to read that research. But your people can, and so it will be the filter to say, well, 50% of research seems to be useless, but there is 50% which is quite useful if you think about it, you know. So I think that must be part of your mission, that is, maybe you are not going to do the most academic research, but what you do do or what you do pass on should be informed by the academic research that you are aware of. And your people, they are all educated in good universities, so they should be able to do some of that.
Li: What suggestion do you have for developing the accounting sector in China?
Macve: Well, it seems to be doing pretty well without my help, I think actually! I mean, something that went through my head the other day when we were talking about this initiative, about the Ministry wanting to push the development of management accounting. I mean I don’t know quite what they have in mind, but I think it would be a mistake to set up a kind of Institute for Management Accountants. I think if they have any such plans, my advice would be, “no no no, you want one institute for all the accountants called CICPA, but people can specialize in different areas of accounting.” So more like ICAEW, you have to do everything; you have to do management accounting, financial accounting, auditing, tax, plus some management subjects themselves like marketing and human relations among other things. So it’s a kind of mini-MBA type of qualification, but more oriented to actual practice. But then you can have specialisms and some special diplomas in management accounting or in financial management. I don’t know what the Ministry’s plans are. I would just say what you need to do, and that is consistent I think, with the fact that CICPA at present is quite keen that audit firms should not just be audit firms, which they have been traditionally, but like in the West, they should be multi-disciplinary firms, and also provide other management services, consulting, advise on management systems. It has its dangers, we know in the West, once it gets too big it might affect their audit judgment. But I don’t think that’s China’s problem yet, because it doesn’t yet have the level of skill. What the CICPA wants is for the Chinese firms to acquire greater skill in management advice.
That is good, I think, for a number of reasons. Partly in a sense, more interesting people will want to become CPAs if the work they are going to do is not just checking audits, but giving management advice. It means that it is likely to be more attractive to the companies who later offer them management positions. So it attracts more interesting people into the profession. And in fact, certainly for more complicated audits, you know you need those skills to be able to give a good audit opinion on the numbers as you need to understand what the business is about, if the strategy makes sense, if the marketing data is, you know, relevant, reliable, and appropriate, and whether the human relations situation is OK or it is going to have a terrible (well, maybe not in China, but in some places) a terrible strike next year that will stop the whole thing. So understanding all the aspects of business is quite important for being able to give a good audit opinion on a large, complicated company of the kind that the Chinese CICPA would like Chinese auditors to establish a reputation of being able to deal with.
So to come back to the original question, I would have thought, if I were the Minister of Finance, I would say what we need to encourage is the development of specialist, additional qualifications on top of the CPA, not alternative qualifications. Don’t end up with rival institutes, you know, because you have had that in the 1990s and Premier Zhu was very wise and said, “we will stop this and have one Institute for all accountants and auditors.”
Li: But no matter what happened, as you said, since the world is changing very rapidly, the world the accountants will work in actually will become more and more complicated, so that means no matter what kind of accountants you are, you must work hard, study more systematically, study in a constant way. So I guess in the future, we still need to learn from you, Professor.
Macve: Well, I don’t know. Maybe I have said everything I have to say. I hope not.
Li: Especially after you finish your study of the projects about China, we will be very interested to know the further findings of your research. Thank you very much.
Macve: Thank you very much for your invitation.