Institute elects new President and Council
The Institute elected Raymond Cheng as President for 2021, following the 48th annual general meeting (AGM) on 10 December. Rosalind Suk Yee Lee and Li Kin Hang were elected as Vice-Presidents.
Cheng, who is currently Chairman of HLB Hodgson Impey Cheng Limited, was first elected as a Council member at the 2010 AGM and has served on the Council since 2011. The two new Vice-Presidents joined the Council since 2018 respectively.
Cheng has been actively involved in the development of the profession through his participation in a wide range of Institute working groups and committees, including the Audit Profession Reform Working Group, the Registration and Practising Committee, and the Remuneration Committee. He is also the Chair of the Qualification Oversight Board.
Seven members were elected at the Council election to serve for a term of two years: Alan Au; Alan Chan; Larry Cheng; Raymond Cheng; Fong Wan Huen, Loretta; Lam Chi Yuen, Nelson; and Wong Wing Hei, Ernest.
Existing elected members who will hold office for one more year are Cheung Wai Lun, William; Choy Kai Sing; Ernest Fung; Rosalind Suk Yee Lee; Louis Leung; Roy Leung and Li Kin Hang. The Hong Kong government has also appointed Agnes Choi Heung Kwan and re-appointed Theresa Ng Choi Yuk as lay members of the Council for a term of two years from 1 December 2020 to 30 November 2022. Two continuing government-appointed lay members Wong Kam Pui, Wilfred and Au King Lun will fulfil the second year of their terms. The Immediate Past President Johnson Kong will hold office as a member of the Council until the conclusion of the 49th AGM.
Results of Best Corporate Governance Awards 2020 announced
The results of the Institute’s Best Corporate Governance Awards (BCGA) 2020 were announced during a media briefing on 2 December. About 500 annual reports and around 500 sustainability reports were considered in the initial stage. The judges noted some positive signs, including improvements in the quality of environmental, social and governance (ESG) reporting, and decided to give out a record number of 30 awards. A diverse range of candidates reached the final stages, and seven new awardees emerged, including those winning awards for the first time in the sustainability and social responsibility or ESG reporting section.
This year, the awards celebrates 20 years of setting a benchmark for current corporate governance and sustainability standards in Hong Kong.“This year has been a year of disruption, due to the ongoing United States-China trade dispute and the global COVID-19 pandemic, and it is interesting to note that the awards were launched in 2000, the year that the dot com bubble began to burst. Throughout all this time, the importance of good corporate governance has always been clear, as a beacon of stability and a vital investor safeguard,” said Johnson Kong, Institute President and Chairman of Judging Panel of the BCGA 2020. The full list of winners and the Judges’ Report are available on the Institute’s website. Find out more about the corporate governance practices of some of this year’s winners here.
New auditing guide for ESG reporting now available
The Auditing and Assurance Standards Committee has published Auditing and Assurance Technical Bulletin 5 Environmental, Social and Governance (ESG) Assurance Reporting to assist members performing assurance on ESG reports. It is available on the Institute’s website. Read more about the guidance here.
Annual report published
The Institute’s 2020 annual report is available now. Themed “Leading with Trust,” the report ties in with the Institute’s Strategic Plan 2020-2022 published this year and includes photo essays of the Institute’s committees and panels members on how their efforts will keep Hong Kong’s accounting profession sustainable and prepared for the future. Watch the accompanying video to learn about some of the Institute’s works and activities in 2020.
Virtual Annual Cocktail celebration video
Due to the pandemic, the Institute cancelled its Annual Dinner and instead released a celebratory video to showcase its achievements in building trust with members, stakeholders and society throughout this year. Celebrate with us by watching the video.
Resolutions by Agreement
Tam Kwok Chung, John, CPA (practising) and John Tam & Co. Certified Public Accountants
Complaint: Failure or neglect to observe, maintain or otherwise apply the fundamental principle of professional competence and due care in sections 110.1 A1 (c) and R113.1 under Chapter A of the Code of Ethics for Professional Accountants.
The respondents issued an accountant’s report for a solicitor’s firm under the Accountant’s Report Rules (Cap. 159A). They did not conduct their procedures fully in accordance with the rules and the Institute’s Practice Note 840 (Revised) Reporting on Solicitors’ Accounts under the Solicitors’ Accounts Rules and the Accountant’s Report Rules. The respondents failed to identify errors in the firm’s ledger and the firm’s lack of prior written notification to clients when its fees were settled by withdrawing money from clients’ accounts. In addition, there were deficiencies in the respondents’ procedures on testing of bank reconciliations and confirmation of bank balances.
Regulatory action: In lieu of further proceedings, the Council concluded the following action should resolve the complaint:
- The respondents acknowledge the facts of the case and areas of non-compliance with professional standards;
- The respondents be reprimanded; and
- The respondents pay an administrative penalty of HK$25,000 and costs of the Institute of HK$15,000 jointly.
Li, Tang, Chen & Co.
Complaint: Failure or neglect to observe, maintain or otherwise apply Hong Kong Standard on Auditing (HKSA) 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Hong Kong Standards on Auditing, HKSA 500 Audit Evidence, and HKSA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures.
The firm expressed an unmodified auditors’ opinion on the consolidated financial statements of China Smarter Energy Group Holdings Limited, a listed company, and its subsidiaries for the year ended 31 March 2015. Both the engagement partner and the engagement quality control reviewer of the audit have since resigned from the Institute.
In the audit, the firm did not properly assess the method, bases and assumptions used by the company’s management and valuer in valuing intangible assets acquired in a business combination. The firm also failed to identify the company’s error in accounting for the consideration shares issued for the business combination, in that the fair value of the shares was not measured at closing market price on the date of acquisition as required under Hong Kong Financial Reporting Standard (HKFRS) 3 (Revised) Business Combinations and HKFRS 13 Fair Value Measurement but at a significantly lower issue price.
Regulatory action: In lieu of further proceedings, the Council concluded the following action should resolve the complaint:
- The firm acknowledges the facts of the case and areas of non-compliance with professional standards;
- The firm be reprimanded; and
- The firm pays an administrative penalty of HK$50,000 and costs of the Institute of HK$15,000 and of the Financial Reporting Council of HK$228,799.
Disciplinary finding
Wong Wang Tai, Ivan, CPA (practising) and Ng Ka Hong, CPA (practising)
Complaint: Failure or neglect by Wong to observe, maintain or otherwise apply HKSA 230 Audit Documentation, HKSA 500 Audit Evidence and HKSA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures. Failure or neglect by both Wong and Ng to observe, maintain or otherwise apply the fundamental principle of professional competence and due care in sections 100.5(c) and 130.1 of the Code of Ethics for Professional Accountants.
In April 2019, the Institute completed a practice review on McMillan Woods SG CPA Limited, a corporate practice that is now de-registered. The review covered the practice’s audit of the 2017 consolidated financial statements of a Hong Kong listed company and its subsidiaries. Wong was the engagement director and Ng was the engagement quality control reviewer of the audit.
The practice review found significant deficiencies in the work carried out by the audit team under Wong in relation to valuations of an investment in an associate acquired, convertible notes issued as consideration for the acquisition, and certain share options granted by the company. Ng failed to adequately evaluate the audit team’s judgements and conclusions, and review selected audit documentation as required under HKSA 220 Quality Control for an Audit of Financial Statements.
Decisions and reasons: The two respondents were reprimanded. The Disciplinary Committee ordered Wong and Ng to pay penalties of HK$80,000 and HK$120,000 respectively. In addition, Wong and Ng were ordered to pay costs of disciplinary proceedings of HK$89,386 and HK$39,004 respectively. When making its decision, the Disciplinary Committee took into consideration the particulars of the breaches committed in this case, the parties’ submissions, the respondents’ admission of the complaints, and Ng’s past regulatory record.
Details of the Resolutions by Agreement and disciplinary finding are available at the Institute’s website.
