From time to time, the Hong Kong Institute of Certified Public Accountants (HKICPA) initiates disciplinary action against its members.
This time around, the complaint did not come from the HKICPA but from a member, Gilbert Cho Kui-keung.
The media release states that the subject of the complaint made exaggerated claims about the services that she could offer.
Her name card said she was a member of the Institute of Chartered Secretaries and Administrators (ICSA) and held a master of corporate governance degree.
However, she was only a student member of ICSA and had merely enrolled in a corporate governance course during the period.
Cho made the complaint under Section 34 (1AAA) of the Professional Accountants Ordinance.
Initially the complaint was not submitted to the Disciplinary Committee. But Cho insisted, and the committee eventually decided to take disciplinary action against the accountant, ordering her to pay a penalty plus the cost of the disciplinary proceedings.
Section 34 (1AAA) of the Professional Accountants Ordinance has rarely been used, but this case has made an exception.
Under the section, a complaint should be made to the Registrar who will submit the complaint to the Council which may, in its discretion, refer it to the Disciplinary Panels.
If the Council decides not to refer the complaint to the Disciplinary Panels, the complainant may request the Council to refer the complaint to the Disciplinary Panels, and the Council shall, unless it is of the opinion that there is no prima facie case, or that the complaint is frivolous or vexatious, refer the complaint to the Disciplinary Panels.
Some might worry that the rule could be abused and that it would increase the HKICPA workload. In fact, the rule already enables the Council to exclude frivolous or vexatious complaints. And the complainant may need to pay for the cost of the disciplinary proceedings, which is usually over HK$10,000.
“That’s an indirect way of saying that after the Council decided not to refer the complaint to the Disciplinary Panels, he forced them to do so using this section. Well done and shame on the HKICPA — once again demonstrating why self-regulation doesn’t work,” stock market activist David Webb wrote.
However, I disagree with his conclusion. Section 34 (1AAA) proves that the supervision system is effective, and the rule has prevented members from shielding each other.
Some may say the members of the Disciplinary Committee are all HKICPA members. In fact, of the five-member panel, three, including the chairman, are non-accountants chosen from a panel appointed by the Hong Kong chief executive, while the remaining two are certified public accountants.
By comparison, the 28-member Medical Council of Hong Kong only has four outsiders.
This shows that the self-regulatory system of the accounting sector has considerable independence.
Of course, the existing system is not perfect, and improvements need to be made in terms of independence and transparency.
The prevailing trend is for independent bodies to assume regulatory responsibilities. Besides, the Council will soon lose its supervisory powers over accountants for listed companies.
Accountants should honestly report the financial condition and performance of a company or organization. Integrity is the key.
Exaggerating resumes is a big deal. If someone can fudge his or her resume, can they not cheat on their job as well?
Anyone found to have violated the accountants ordinance, apart from having to face disciplinary action and pay the penalty, will lose their reputation, and that stain will stay with them for the rest of their life.
The HKICPA keeps a record of the disciplinary actions it has taken on its website for five years; however, other websites and online discussion sites will keep them forever.
A denouncement from peers could instantly ruin an accountant’s career.
This article appeared in the Hong Kong Economic Journal on Sept. 11 under the pen name Bittermelon.
Translation by Julie Zhu
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