New scheme will enable HKICPA to cement its dominance

The HKICPA is set to become even bigger in terms of financial and political influence. Photo: HKEJ

I found out recently that the Hong Kong Institute of Certified Public Accountants (HKICPA) now has almost 40,000 members.

In April, the HKICPA had 39,721 members, up 3 percent from 38,699 in June last year.

Over the last decade, the number of members has been expanding at an annual rate of 5 percent.

The HKICPA has beaten other local professional groups in the city in the number of members and the rate of its growth.

The group has not only great political influence but also a solid balance sheet.

Its annual member fee income has reached HK$90 million (US$11.6 million), as each member paid HK$2,250 last year.

That accounts for only 55 percent of its total revenue of HK$133 million last year. And the figure is expected to surpass HK$150 million this year.

The size of the HKICPA is mainly due to the Professional Accountants Ordinance, which states that the group is the only body authorized by law to register and grant practicing certificates to certified public accountants in Hong Kong.

The HKICPA is responsible for promulgating financial reporting, auditing and ethical standards in Hong Kong.

But accounting, taxation and company secretarial services are beyond its radar.

In Hong Kong, anybody can provide accountancy-related services except auditing, and so service quality varies a lot.

Clients may become aware of quality issues in services like accounting or taxation only when the tax authorities knock on their door.

Hong Kong is widely recognized as the world’s freest economy.

And there is no sign that the government intends to regulate the accounting service sector.

Nevertheless, some financial intermediaries dub themselves as “professional accounting firms” and charge customers exorbitant fees for so-called financial appraisals.

Kenneth Leung Kai-cheong, legislator for the accountancy constituency, has proposed that regulators should prohibit unqualified firms from marketing themselves as providing “professional accounting services”, ”registered accounting services”, and so on.

Meanwhile, speaking of the qualifications of accountants, a person has to undergo the HKICPA's Qualification Program (QP) to become a certified public accountant.

The QP was launched in 1999, and the HKICPA intends to introduce a revised QP in 2018.

The new scheme will introduce an “associate” level for those who are either sub-degree holders or non-accountancy degree holders.

Under the existing rules, non-accountancy degree holders are able to undertake the QP only after completing a conversion program.

And sub-degree holders are required to pass the HKIAAT (Hong Kong Institute of Accredited Accounting Technicians) and PBE (Professional Bridging Examination) exams before moving to the QP.

The new scheme will incorporate the conversion program and the HKIAAT and PBE exams into the QP framework.

In the past, graduates with an accountancy sub-degree will face the dilemma of whether they should follow the HKIAAT route to the QP or whether they should obtain a recognized accountancy degree first.

The new scheme will offer them a clearer path and allow them to pass all the exams in a shorter time.

The number of managerial-grade employees in the accountancy sector has kept rising in recent years, and the industry still has a labor shortage, a 2015 manpower survey report for the accountancy sector from the Vocational Training Council showed.

If so, there will be more people who will plan to become accountants given the robust demand, and the new scheme will attract more students as well as bring the HKICPA more exam income.

As a result, the HKICPA is set to become even bigger in terms of financial and political influence.

This article appeared in the Hong Kong Economic Journal on June 17 under the pen name Bittermelon.

Translation by Julie Zhu

[Chinese version 中文版]

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Young Accountants Association of Hong Kong