Choice Of Entity In Domestic Accounting Firms

Different option of entity form means different way of undertaking liability, which is especially important for CPA profession because of its high responsibility to society. It needs establishing the suitable organization form for accounting firms, both can make domestic accounting firms expansion, and have flexible structure of professional characteristic, but also well protect interests of third parties, face the condition of the massive drains which in view of the recent years in market share. So, how should an domestic accounting firm select its most suitable entity form?Partnership is disadvantageous to the stability and development of CPA profession because of the limited of the scale of accounting forms, as it is the best arrangement for accounting firms through the theory of enterprise. Limited Liability Partnership (LLP), retains the character of partnership, which results unlimited liability for individual, and joint flexibility. But it avoids unnecessary risks, that need not take liability for each other, who make mistakes or corruptions. It is the most suitable form, as both maintains the tradition of the high sense of responsibility in CPA profession, and protects the legitimate right of the innocent partners, compared with partnership or limited liability companies. The most perfect development in Britain and the United States can be used by domestic accounting firms, with inspection of the procession and finally chooses of their accounting firms, and their characteristics which legislated.Now, we made LLP in our new revision of the "Partnership Enterprise Law" after years of preparation in order to enable our accounting firms to compare with international ones. LLP joins in the chapter of "Ordinary Partnership" in this new revision of the "Partnership Enterprise Law". It includes the limits permitted of LLP, the publicity requirement of LLP, the responsible of LLP and its partners, and the protection of creditor in LLP, as stipulates in the law. It has already got to a common view of LLP with domestic CPAs and scholars. It can be predicted that a large number of domestic accounting firms restructure to LLP after the new revision of the "Partnership Enterprise Law" execute in June, 2007.We also need some improvements of supporting measures although it is the inevitable tendency to restructure to LLP in domestic accounting firms. Such as perfecting the registration and establishment system of LLP, enhancing the financial...