Proposed rules on the auditing industry should not be misinterpreted as barring overseas accounting firms from practicing on the Chinese mainland, the Ministry of Finance said in a statement on Thursday.

The statement was issued in response to concerns that the proposals would ban Hong Kong accountants from working in the mainland market.

It said that overseas firms can continue to do business on the mainland through teaming up with qualified mainland accounting firms.

The world's top 20 accounting firms, including the "Big Four," have all already established cooperation with local firms, according to the statement.

The rules are aimed at improving audit quality following malpractice in which overseas firms illegally took audit documents out of the Chinese mainland or outsourced auditing businesses to smaller mainland firms.

As more and more Chinese companies seek overseas listings, the demand for audit services will surge accordingly. Therefore, it is important to regulate the market and reduce risks, said the statement.