Hong Kong: The Accountancy Profession
Incorporated by the Professional Accountants Ordinances (Chapter 50 of the Laws of Hong Kong) on 1 January 1973, the Hong Kong Institute of Certified Public Accountants (the Institute) is the only statutory licensing body of accountants in Hong Kong responsible for regulation of the accountancy profession.
The Institute is ruled by a Council, and grants admission to membership based on examinations. The Council may grant exemptions from the examination requirement to a person who is a current member of an accountancy body accepted by the Council and has passed the professional examinations of that body. Essentially these are Commonwealth accountancy bodies.
The Institute has about 33,000 members, and nearly 16,000 registered students. Members of the Institute are entitled to the description "certified public accountant" and to the designation CPA.
Accounting firms in Hong Kong generally offer bookkeeping and accounting services to small firms and limited companies. The procedures to be adopted in respect of preparation and presentation of accounts from incomplete records are contained in a guideline published by the Institute.
The Institute has held discussions with the regulatory bodies with regard to special approval of accounting firms which audit financial institutions such as banks and securities dealers. At present, there are no additional requirements necessary to qualify a licensed practitioner to audit such clients.
In December 2009, the Institute issued a revised consultation paper proposing changes to practising certificate regime. Among the changes proposed were to: extend the ordinarily resident requirement for practising certificate holders to include residence in mainland China and also to recognize auditing experience in mainland China; require practising certificate holders to demonstrate recent audit experience for annual renewal of their practising certificate; and require practising certificate holders to register a firm to provide audit services.
After considering responses to this consultation, the Institute decided to drop the proposal to extend the location of ordinary residence for practising certificate issuance to include mainland China. The Institute also proposed in response to comments that practising certificate holders continue to be allowed to renew their practising certificate without meeting the recent auditing experience requirement and that practising certificate holders may perform audits in their own name, a firm or corporate practice provided that such practice units are registered as a Registered Audit Practice.
In addition to audit, tax and accountancy, accounting firms in Hong Kong generally offer a range of consulting services which include management consulting, financial consulting, executive recruitment, taxation advice and information technology consulting. In addition, most firms offer insolvency services, for which no additional licensing or approval is presently required.
In November, 2005, the Institute expressed support for a move to fully converge with the international financial reporting standards due to become effective on January 2005.
ACCA, with over 100,000 certified accountants in 160 countries, has long advocated a move towards harmonisation on global accounting standards.
"The move towards IFRS is happening all round the world. One of the challenges for everyone involved in the accountancy or finance profession is to understand fully what it will mean for them," noted Victor Ng, President of ACCAHK.
He added: "ACCA has led the way in the accountancy profession by using international accounting standards as the basis for its syllabus since 1996, and that makes ACCA-trained professionals more ready to meet the challenge.
The proposal to have a separate set of financial reporting standards for small and medium-sized entities has also been supported by ACCAHK.
"A common set of standards could help SMEs that trade across borders", Mr Ng explained.