http://news.ft.com/cms/s/bdc9a522-f3ef-11da-9dab-0000779e2340.html

The big four accountancy firms are planning to boost their staff numbers in China by more than 20 per cent this year as they grapple with staff shortages that threaten attempts to boost investor confidence in the domestic stock market.

Demand for international accounting expertise is soaring in China as giant state-owned enterprises seek listings overseas, smaller domestic companies prepare to adopt new accounting standards, and the Chinese subsidiaries of foreign companies continue to grow.

PwC, the biggest firm, has the most ambitious plans, aiming to add 1,550 graduates and 500-700 experienced people to its combined Hong Kong and China staff of 6,450.

But because China has a dearth of qualified accountants, the big four are likely to be competing for many of the same candidates as they seek to add between 20 per cent and one third to their staffing levels.

The shortage of accountants threatens government efforts to bolster investor confidence in the domestic stock market by promoting accurate accounting and independent auditing.

The coveted status of the profession in China contrasts with the years after the Cultural Revolution when accountants were among hundreds of thousands of professionals and intellectuals who were denounced, sent to internal exile, or even killed.

Even after the launch of economic reforms in 1978, accountants continued to use a Soviet bookkeeping system designed for a centrally planned economy, quite distinct from western accounting. This has resulted in a severe shortage of accountants with seniority and knowledge relevant to its modern economy.

The lack of outside experts able to carry out due diligence also hinders the access of some companies to overseas capital markets. Stephen Taylor, a partner at Deloitte in Hong Kong, said: ¡°We are having to turn work away because we just don¡¯t have enough people. For IPOs and M&A we¡¯re not hungry for the work, so we can be a bit more selective.¡±

Deloitte, which employs 4,960 people in the mainland and Hong Kong, wants to hire 1,500 new staff by the middle of next year. KPMG aims to supplement its 4,500 with 1,000 graduates and 300 senior people this year.

Francis Siu, senior partner at KPMG in Beijing, said: ¡°The fact we don¡¯t have enough people doesn¡¯t stop us taking a good client but they have to be very tempting.¡±

The shortage is being made worse by poaching from outside the sector as banks and other companies offer high salaries to lure financially literate employees who speak Chinese and English. Because of a particular lack of senior accountants, the big four have begun importing partners who speak Chinese from Hong Kong, Taiwan, Singapore and Malaysia. Including such imp-orts, Ernst & Young plans to raise its staff of 3,500 in mainland China to 4,300.