David Sun’s appointment as Chairman of the Accounting and Financial Reporting Council (AFRC) on 1 January 2025 marked the culmination of a career that spans continents, decades, and milestones in Hong Kong’s accounting landscape. In some ways, his journey with the AFRC began more than 20 years earlier – when he led discussions that laid the groundwork for today’s independent accounting regulatory body.
“It was quite a coincidence in the sense that it has come full circle. We started with the idea of creating an independent regulatory body, and two decades later I became chair of this body,” Sun reflects.
The AFRC, formerly known as the Financial Reporting Council (FRC), was established by the Hong Kong government post-Enron in December 2006. It evolved significantly following regulatory reforms in 2019, becoming what Sun calls a “full-fledged regulator of the accounting profession,” shifting the profession from self-regulation to independent oversight.
For Sun, this evolution has deeper roots. In 2003, during his tenure as President of the Hong Kong Institute of CPAs and before the FRC was formed, the government approached the Institute to consider how best to preserve the independence and trustworthiness of the accounting profession, amid the global shift towards independent oversight.
“The Council met several times to discuss and reaffirm the importance of maintaining public trust and recommended that the government appoint independent members to the Council, which is still in place today. We also recommended setting up an independent body, which was later named the FRC to investigate improprieties. Thus, one may say that the Institute and the AFRC essentially share the same objective: to promote quality and develop the accounting profession.
Sun’s aspirations as Chairman stem from a career-long love for accounting. “I fell in love with accounting in college and have benefited immensely from a fulfilling career with a global firm. To any young person today, I would say: this is a great profession to join,” he says.
A vision for greatness
A top priority for Sun is to push forward the AFRC’s three-year strategic plan, released in March. It outlines four pillars: regulation, development, governance, and organizational effectiveness. Sun sums up its philosophy: “Quality and growth – quality in the work that we do, and growth not only in the work itself but also as individuals and as an industry. That’s what makes accountants great again.”
Quality, he emphasizes, is absolutely imperative and non-negotiable. “The AFRC was set up to ensure the quality in the audit work being done,” he says, drawing on his experience as Director of Audit of the government. “Financial statements and government services need regular health checks to ensure public confidence in the numbers, the processes, and the services.”
The AFRC’s enforcement divisions, inspection, investigation, and discipline, play a critical role in ensuring competence, consistency, and conduct in financial reporting and auditing. “We want to guard against the missteps of the ‘head’, ‘hand,’ and ‘heart’ of professional accountants,” says Sun, referring to incompetence, inconsistent service delivery, and ethical lapses that have contributed to audit failures. “Accounting professionals need to foster character and curiosity; build conviction and capability,” he stresses.
“Probity is fundamental to accountancy; practitioners are expected to embody integrity, independence, trustworthiness, and accountability. That’s why ethics is a critical part of our training and CPD.”
When it comes to tackling missteps of the “head,” alluding to incompetence, the AFRC collaborates with the Institute to enhance continuing professional development (CPD), ensuring the city’s around 47,000 CPAs remain up to date. According to Sun, “Once you become a CPA, that’s not the finish line. It’s actually the beginning, and it’s important for our professionals to cultivate a growth mindset and continue to be relevant.” Sun indicated that the AFRC is working with the Institute to ensure that the CPD courses address current challenges faced by accounting professionals today, ranging from the integration of technology and AI within the audit processes to building capacity for sustainability reporting and assurance.
On the “hand,” consistency, Sun stresses that firms must maintain disciplined and structured practices supported by robust systems of quality management (SQM) that upholds principles and performance at all times.
Lastly, he emphasizes the value of the “heart,” referring to character. “Probity is fundamental to accountancy; practitioners are expected to embody integrity, independence, trustworthiness, and accountability. That’s why ethics is a critical part of our training and CPD. Practitioners are reminded that these core values are integral to our profession.”
Balancing regulation and development
The AFRC also assumes a development pillar, advancing the profession as part of its mandate. This includes publishing inspection findings, encouraging firms to conduct self-assessments, and providing guidance. Although the AFRC holds enforcement power, Sun insists that discipline is about improvement, not punishment. “The motivation behind discipline is to help firms improve and develop,” he says.
A crucial part of development is also ensuring auditors possess appropriate capability and capacity. “Auditing a bank is quite different from auditing a trading company. We want to ensure that firms engaged in such work employ specialists with the relevant industry expertise and experience,” says Sun.
Recognizing that the AFRC cannot act alone, the governance pillar seeks to strengthen the broader ecosystem – listed company boards, management, independent non-executive directors (INEDs), and investor groups – so that they can ask better questions. The AFRC supports this through workshops and publications, integrating all stakeholders into what Sun calls “the ecosystem that guards quality.”
The fourth pillar – organizational effectiveness – focuses on the AFRC’s self-evaluation. “Are we effective? Are we efficient?” Sun says, noting that the regulator is revamping its workflows through technology to enhance its own performance.
Building a framework for sustainability assurance
The AFRC’s oversight goes beyond red flags. Its mandate also looks to the future, particularly sustainability assurance, where Sun sees the accounting profession playing a significant role. The government has tasked the AFRC with developing a regulatory framework for this area.
Interestingly, a recent AFRC study revealed that over half of today’s sustainability reports are assured by engineering firms, many of which have been active in this space since its early days. The same study also revealed disparities in readiness among assurance providers. “The Big Four audit firms are better prepared than smaller players,” he notes.
“One only needs to follow the flow of money to see that climate change and its associated risks are top of mind for the next generation.”
The challenge, Sun notes, is integrating this emerging field under a unified and internationally recognized framework while ensuring the market remains accessible to new players. “We inspect accountants but not engineering firms. How we bring the two together is a matter for deliberation,” he says, referring to the AFRC’s upcoming public consultation later this year.
Sun observes that the sustainability movement is driven by financial forces, particularly institutional investors who are focused on future proofing their investees’ business models. Another driver is the anticipated “great wealth transfer,” where trillions of dollars will be passed from baby boomers to younger generations who place greater value on clean energy and our planet resilience. “One only needs to follow the flow of money to see that climate change and its associated risks are top of mind for the next generation,” he notes. This shift is expected to influence investment priorities and reshape corporate strategies over the coming decades.
Life in numbers and people
Sun’s journey into accounting was a gradual realization. “I enrolled in accountancy almost without knowing what it was about,” he recalls. “Then I discovered that numbers tell stories. If you show me your checkbook, I can tell you the kind of person you are. In the same way, numbers tell stories about companies and their leaders.”
“I failed a few times, but as the Chinese would say, ‘failure is the mother of success.’ I learned to view every failure as an opportunity for growth and development.”
His fascination deepened at Arthur Young (now EY), where he learned not just accounting and auditing but also how to manage projects, people, and problems, skills that he still applies. Failures shaped him too. “Nobody never fails,” Sun says bluntly. “I failed a few times, but as the Chinese would say, ‘failure is the mother of success.’ I learned to view every failure as an opportunity for growth and development.”
As a college student in the United States, Sun spent two summers selling books door-to-door, enduring failures and rejections that taught him resilience. “It thickened my skin and gave me insights into handling failures and criticisms,” he says.
A call to public service
Sun credits his foray into public service, which began in the late 1980s, to the partners at his firm like Mr. Horace Yao and Dr. Brian Stevenson who encouraged and allowed him to serve not just clients but the community, as well as watching how leaders like Dr. Charles Lee, Dr. Eric Li, and Dr. Peter Wong served. “These men have taught me great lessons about life, work, and society,” Sun says.
Serving on boards exposed him to many community leaders as well, offering masterclasses in decision-making and expression. “Where else could a 30-something sit up close and personal and learn from wise leaders, listening to them talk and watching how they made decisions? I certainly reaped more than I sowed.” Over the years, Sun has served on boards and committees across government, education, and finance sectors, culminating in serving as the Director of Audit of the government.
Staying young
Outside the boardroom, Sun keeps fit with jogging, “less for joy, more for wellness,” and enjoys golfing with friends. A Christian, he also engages in Bible studies and spiritual mentorship. He embraces a philosophy of holistic well-being, citing the book Younger Next Year and distilling it into three points: “Eat well, exercise well, and live well with a group of close friends, that will make you younger next year.”
While the AFRC’s strategic plan was only published recently, Sun says Chief Executive Officer Janey Lai and her executive team are highly motivated and making steady progress according to the set priorities. His focus now is on effectively executing the plan, fostering collaboration with the Institute and other stakeholders, and restoring trust in the profession. “We see the Institute as our partner,” he says, “and the more we work together, the more we benefit the profession.”
The Hong Kong government has tasked the AFRC with developing a new regulatory framework for sustainability assurance, and the regulator recently conducted a survey revealing disparities in readiness among assurance providers.
