(Front row, from left) Margaret W.S. Chan, Institute’s Chief Executive and Registrar; and Marek Grabowski, Chief Executive Officer of the Financial Reporting Council (FRC); (Second row, from left) Raymond Cheng, Institute’s President; Sam Hui, Deputy Secretary for Financial Services and the Treasury (Financial Services); and Dr Kelvin Wong, Chairman of the FRC
FRC signs MoU with the Institute
The Financial Reporting Council (FRC) and the Institute signed a Memorandum of Understanding (MoU) on 6 May to enhance efficient and effective cooperation and coordination between the two organizations. The move reflects how the FRC and the Institute will work even more closely together as part of the new independent auditor regulatory regime for listed entities in Hong Kong.
Under the MoU, the FRC and the Institute agree to refer cases to each other, and to share information to assist each other in the timely exercise of their respective functions. It was signed by Marek Grabowski, Chief Executive Officer of the FRC and Margaret W.S. Chan, Chief Executive and Registrar of the Institute in the presence of Sam Hui, Deputy Secretary for Financial Services and the Treasury (Financial Services), Dr Kelvin Wong, Chairman of the FRC, Raymond Cheng, Institute President and senior management from both parties.
Call for new QP workshop facilitators
The Institute is recruiting workshop facilitators for the new Qualification Programme (QP) who will have a key role to play in unlocking the potential of the next generation of accountants. The facilitators are required to have a minimum of four years’ membership with the Institute; hold or recently held a responsible position in a professional, business, government or academic organization; have a working knowledge and demonstrated technical competence in the module subject matter; and good command of spoken English. The closing date for applications is 15 June. More details can be found on the Institute’s website. For enquiries, email workshopadmin@hkicpa.org.hk.
Institute releases Hong Kong CPAs and the GBA survey
The Institute’s Greater Bay Area (GBA) Committee has prepared a short survey to garner the views of members and Qualification Programme students about the GBA, and the opportunities they think are in the Mainland cities of the GBA for Hong Kong CPAs. The committee will use the survey results to inform and evolve the Institute’s GBA strategy and initiatives. Findings will also be published in a public report. The survey is open until 8 June. To take part in the survey, which should take less than seven minutes to complete, members and students should have received the survey invitation email. All responses will be anonymous.
Standard Setting Department launches new webpage
The Institute’s Standard Setting Department has launched its “What’s new” webpage, providing members a one-stop shop for its latest publications, webcasts, and comment letters. Members can also follow the department on LinkedIn for the latest updates on standard setting.
CPA Virtual Run 2021 results announced
The final results of the CPA Virtual Run 2021 are out now. They can be found on the “CPA Virtual Run 2021” section of the Institute’s website. Almost 330 members enrolled in the event. Congratulations to all the awardees and thank you all the runners, sponsors, supporting organizations and helpers for making this event a success.
Resolutions by agreement
Chan Tak Shing CPA
Complaint: Failure or neglect to observe, maintain or otherwise apply section 800.3 under Chapter C of the Code of Ethics for Professional Accountants.
Chan does not hold a practising certificate. Accordingly, Chan is not allowed to carry on a business, trade or profession in a name that includes the initials “CPA” or the characters “會計師.” Chan registered an unincorporated entity under the Business Registration Ordinance that he wholly owned, in a name that included those initials and characters, contrary to the requirements in the professional standard.
Regulatory action: In lieu of further proceedings, the Council concluded the following should resolve the complaint:
1. Chan acknowledge the facts of the case and the areas of non-compliance with a professional standard;
2. Chan be reprimanded; and
3. Chan pay an administrative penalty of HK$10,000 and costs of the Institute of HK$15,000.
Yu Chi Fat CPA (practising)
Complaint: Failure or neglect to observe, maintain or otherwise apply the 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 700 Forming an Opinion and Reporting on Financial Statements.
Yu was the engagement partner in an audit conducted by HLB Hodgson Impey Cheng, a firm now deregistered, on the consolidated financial statements of See Corporation Limited (now known as Emperor Culture Group Limited), a Hong Kong listed company, and its subsidiaries (collectively, group) for the year ended 30 June 2012. HLB expressed an unmodified auditor’s opinion on the financial statements.
The Institute received a referral from the Financial Reporting Council about deficiencies in the audit. The financial statements included the group’s investment in a private group that was classified as an interest in an associate, and stated that the accounting policy for the investment was to incorporate the results and assets and liabilities of the associate using the equity method of accounting under Hong Kong Accounting Standard 28 Investments in Associates. This stated accounting policy was inconsistent with the group’s accounting practice of stating the investment at fair value.
Yu failed to carry out audit procedures to resolve the inconsistency between the group’s accounting practice adopted for the interest in associate and relevant accounting policy disclosed in the financial statements.
Regulatory action: In lieu of further proceedings, the Council concluded the following should resolve the complaint:
1. Yu acknowledges the facts of the case and the areas of non-compliance with professional standards;
2. Yu be reprimanded; and
3. Yu pays the costs of the Institute and the Financia lReporting Council totalling HK$39,132.
Disciplinary findings
Yu Kung Shing CPA (practising)
Complaint: Failure or neglect to observe, maintain or otherwise apply the fundamental principle of integrity in sections 100.5(a), 110.1 and 110.2 of the Code of Ethics for Professional Accountants (code of ethics), the fundamental principle of professional competence and due care in sections 100.5(c) and 130.1 of the code of ethics and Hong Kong Standard on Quality Control 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, and being guilty of professional misconduct.
Yu is the sole proprietor of K S Yu & Co. He is responsible for the practice’s quality control system and the quality of its audit engagements. The first practice review conducted on the practice identified significant deficiencies in its system of quality control and in a number of its audit engagements. In addition, Yu was found to have provided untrue answers in the self-assessment questionnaire, made false representations to the practice reviewer and retrospectively created documents in an attempt to support his false representations.
Decisions and reasons: The Disciplinary Committee reprimanded Yu and ordered the cancellation of his practising certificate, with no issuance of a practising certificate to him for 24 months, with effect from 12 May 2021. In addition, Yu was ordered to pay costs of the disciplinary proceedings of HK$55,331.50. When making its decision, the committee took into consideration the particulars of the breaches committed in this case, Yu’s early admission of the complaint and his pleas of mitigation.
Yu Kung Shing CPA (practising) and K S Yu & Co.
Complaint: Failure or neglect to observe, maintain or otherwise apply HKSA 500 Audit Evidence and HKSA 230 Audit Documentation.
Yu is the sole proprietor of the practice that was the auditor of a private company limited by guarantee. Yu issued unmodified audit opinion on the financial statements of the company for each of the four financial years ended 31 December 2013 to 2016. In carrying out the audits, the respondents failed to design and perform audit procedures to obtain sufficient appropriate evidence and prepare sufficient audit documentation to support their assessment of the existence and recoverability of the amounts due from executive committee members of the company. Furthermore, the respondents failed to prepare sufficient audit documentation to support their audit conclusions on salary expenses.
Decisions and reasons: The Disciplinary Committee reprimanded the respondents and ordered them to pay a penalty of HK$50,000 and costs of disciplinary proceedings of HK$72,892.50.
Details of the resolutions by agreement and disciplinary findings are available at the Institute’s website.
