21 October 2016
Hong Kong's Mid-tier Firm Alliance is an industry group of small and medium-sized accounting firms.
Hong Kong's Mid-tier Firm Alliance is an industry group of small and medium-sized accounting firms. Photo:

MFA opposes Hong Kong audit reforms

Hong Kong’s Mid-tier Firm Alliance (MFA) has been focusing on making its voice heard on international standards, in particular professional conduct, through the International Federation of Accountants.

Meanwhile, we are fighting for fair treatment for accountants from Hong Kong, Macau and Taiwan in cross-border audit work.

However, we have shifted our attention to unfair treatment for Hong Kong accountants, the biggest challenge for us at the moment.

I convened a press conference with a dozen accountants of the MFA on Oct. 28, and many young accountants came to support us, as they know it has a far-reaching impact on their career.

The MFA is strongly opposed to the Financial Services and the Treasury Bureau reducing 661 submitted responses to six, and twisting the result as “majority agreed”.

The handling of this consultation, which misled the public and resulted in “overwhelming support”, should attract attention from the public and stakeholders.

The government should reanalyze all suggestions or relaunch a consultation.

Also, we are very disappointed at the stance of the Hong Kong Institute of Certified Public Accountants.

Its chief executive welcomed the result in its official publication A-plus.

His remarks were very misleading and led the public to think the whole community welcomes the result.

The institute should have stood with us to defend and protect the rights and benefits of the community.

The MFA declares that Hong Kong accountants do not accept the consultation results, neither in the big picture nor in its operational details.

The institute announced in a local newspaper earlier that it intends to revise the Professional Accountants Ordinance in an effort to accelerate disciplinary procedures and remove disciplinary hearings.

That is exactly why we are against the proposal made by the Financial Services and the Treasury Bureau.

However, the institute intended to start the new practice within the organization first, which stunned many members.

We don’t understand why the institute decided to modify the ordinance now, at such an inappropriate time.

The move will affect practicing members as well as nearly 40,000 non-practicing members.

We hope the institute revokes its plan.

According to Hong Kong’s legal system, either the Financial Services and the Treasury Bureau or the Hong Kong Institute of CPAs should divide into three independent systems to deal with inspection, investigation and discipline. 

However, the current proposals are unfair and infeasible and go against the principle of “separation of powers”.

Under the reform proposals, the Financial Reporting Council will become the independent oversight body for auditors, vested with direct inspection, investigation and disciplinary powers with regard to auditors of listed entities.

Under Hong Kong’s existing presumption of innocence, all should be viewed as innocent.

And all disciplinary cases should go through a fair and independent hearing to ensure the independence and objectivity of procedures.

Hong Kong accountants have made an enormous social contribution, like other professionals, and like them should be treated by the same, fair regulatory regime.

Many young accountants are closely watching the issue, and it’s a big one for those who plan to become accountants or just joined the community.

Non-practicing accountants have no protection or professional insurance, and the government and institute are both pushing forward reforms against their interests.

Raymond Cheng Chung-ching wrote this article, which appeared in the Hong Kong Economic Journal on Nov. 13.

Translation by Julie Zhu

[Chinese version中文版]

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