The Ting Wai Monastery scandal has not only tainted the reputation of the monastery, but also affected public trust over the management of Hong Kong charities.
Many Hong Kong people believe the whistleblower has done the right thing given the gravity of the alleged misconduct.
This gives rise to an interesting point. Accountants often have access to sensitive information of clients, and this information is supposed to be confidential.
However, if they find something illegal, should they report it to authorities or keep it secret?
Accountants are not allowed to disclose or reveal any information about their clients or employer, even about potential clients, according to the Code of Ethics outlined by the Hong Kong Institute of Certified Public Accountants.
Also, they are not allowed to disclose any information to business partners or even relatives.
Nevertheless, the Code does list several exceptions, such as revealing information under the request of law.
The legal system in Hong Kong actually requires accountants to tip off authorities under certain circumstances such as when they discover money laundering or capital raising by terrorists.
If they do not follow this rule, they may face charges for covering up illegal activities.
However, if they reveal any such illegal activity, will they face lawsuits from their clients?
In fact, the law states that a tipping off authorities about a possibly illegal activity overrides the confidentiality agreement between accountants and their clients.
Whistleblowers won’t be sued or penalized for violating such agreement.
Nevertheless, accountants should never abuse that rule. Employers can shut the door forever on such accountants.
Simply put, accountants might face a dilemma: whether to lose a client if they choose to tip off authorities, or face imprisonment should they not.
In such a case, quitting the job may not end the nightmare.
Hong Kong law does not tolerate accountants withholding information. Also, the Institute might introduce a new regulation from the International Ethics Standards Board for Accountants (IESBA), which requests accountants to report suspicions of illegal acts to an appropriate external authority even if they resign.
In fact, this is the tricky part. For example, the Inland Revenue Department requests accountants to provide information under section 51(4). That’s quite clear. But the tax agency always requests disclosure of information beyond the regulation. Accountants could easily get into trouble.
To guard against such an unfortunate event, accountants should buy professional indemnity insurance.
Internal accountants might be less lucky, and could struggle to find job or even face a lawsuit if such an event happens.
The new rule might put accountants in a difficult situation.
Therefore, the Institute should offer free legal consultation after revising the Code of Ethics, or even consider group-buying of professional indemnity insurance to protect accountants.
This article appeared in the Hong Kong Economic Journal on Oct. 16.
Translation by Julie Zhu
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