Zhang Ke is reported to have said that his firm has all but stopped signing off on bond sales by local governments over concerns that the debt may have become unserviceable.
At first blush it appears that Zhang is simply stating the obvious – local government debt is out of control. What is remarkable is that his firm is standing up to local governments, and that Zhang is talking so openly about it. I think this may mark the beginning of a new era for CPAs in China. Are CPAs about to take a greater role in governance in China – speaking the truth to power?
In my opinion, Zhang Ke is the top CPA in China, more powerful than any of the Big Four senior partners. He once headed Coopers & Lybrand’s joint venture in China, only to leave in 1998 to start his own firm after a falling out upon the merger of Coopers & Lybrand and Price Waterhouse. His firm, ShineWing, has prospered, even though he eschewed aligning with second-tier international firms, as have most other large Chinese CPA firms. Instead, Shinewing has tried to build its own international network, a quixotic adventure given the 150-year head start of the Big Four.
For Zhang Ke to speak out this way may signal that policy makers are thinking about upgrading the role of accountants in society. I think Zhang is too connected to be out on his own here. A cynic might argue that Zhang Ke has simply become an instrument of a central government that wants to reign in local bureaucrats. I am hoping it is more than that, and that these actions show that the accounting profession is about to assume a more important role as independent evaluators of fiscal responsibility.