Annual Dinner 2021 to celebrate members
The Institute will hold its annual dinner on 12 November at the JW Marriott Hotel Hong Kong. Themed “Together for the profession,” the event will celebrate how the diligence and skills of Institute members support the development of the profession and the wider community. It will celebrate the dedicated altruism of members who devote their time to assisting with the Institute’s Qualification Programme, professional development courses and events, mentorship programmes, and corporate social responsibility programmes. Members can book their seats via the Institute’s website.
Call for Council and committee applications
The Institute’s Nomination Committee is inviting applications for 2022. Members interested in contributing to the development of the profession in a meaningful way next year can put their names forward to join the Council as a co-opted member or committees. Members can learn more about the committees from the Institute’s website and should submit the nomination form before 26 November.
Both resolutions regarding the reform of the regulatory regime of the accounting profession were carried by a majority of members voting in person or by proxy at the Extraordinary General Meeting (EGM) held on 30 September. The government has been informed that the resolutions passed. The minutes from the EGM are now available for members to read. They can be found in the “Members’ area” of the Institute’s website.
Young Members Virtual Conference 2021
Themed “Building an arsenal for young accountants – new trends and skillsets for future-ready CPAs,” the Young Members Virtual Conference 2021 will be held on 6 November. The conference will bring a panel of speakers to share their insights on the skill sets young CPAs need, covering subjects relating to artificial intelligence, big data, cryptocurrencies, security token offerings, listed companies, as well as environmental, social and governance reporting. Those interested should enrol by 4 November via the Institute’s website.
Minutes of Council meetings
The abridged minutes from the August and September Council meetings are now available for members to read. They can be found in the “Members’ area” of the Institute’s website.
Resolution by agreement
Tang Siu Kun, Stephen CPA
Complaint: Failure or neglect to observe, maintain or otherwise apply the fundamental principle of professional behaviour under sections 100.5(e) and 150 of the applicable Code of Ethics for Professional Accountants.
Tang was a founder of Magic Holdings International Limited and the chairman of its board of directors. In March 2021, the Market Misconduct Tribunal (MMT) fined the company and its directors for late disclosure of inside information on a proposed acquisition of the company in 2013. The MMT found that the company’s disclosure of the proposed acquisition, which would have a positive impact on its share price, had been delayed for approximately three months.
The MMT also found that Tang breached the disclosure requirement under the Securities and Futures Ordinance and did not take all reasonable measures to ensure that proper safeguards existed to prevent the company’s breach of the disclosure requirement. He was fined and disqualified by the MMT from being a director or being involved in the management of a listed company for 24 months. Tang was also ordered to undergo a training programme to be approved by the Securities and Futures Commission.
Regulatory action: Based on the foregoing, especially the actions taken by the MMT, and in lieu of further proceedings, the Council concluded the following should resolve the complaint:
1. Tang acknowledge the facts of the case and the areas of non-compliance with a professional standard;
2. Tang be reprimanded; and
3. Tang pay costs of the Institute of HK$15,000.
Lin Ching Yee, Daniel CPA (practising) and Kwong Kam Wing, Kelvin CPA (practising)
Complaint: Failure or neglect by Lin to observe, maintain or otherwise apply Hong Kong Standard on Auditing (HKSA) 230 Audit Documentation, HKSA 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, HKSA 330 The Auditor’s Responses to Assessed Risks, HKSA 450 Evaluation of Misstatements Identified during the Audit, HKSA 500 Audit Evidence, HKSA 530 Audit Sampling and Other Means of Testing and its subsequent revised version entitled Audit Sampling, and HKSA 540 Audit of Accounting Estimates and its subsequent revised version entitled Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures. Failure or neglect by Kwong to observe, maintain or otherwise apply HKSA 220 Quality Control for Audits of Historical Financial Information and its subsequent revised version entitled Quality Control for an Audit of Financial Statements.
Lin and Kwong were partners of JBPB & Co. and Grant Thornton, two firms that have since been de-registered. JBPB & Co. and Grant Thornton expressed unmodified auditor’s opinions on the consolidated financial statements of E. Bon Holdings Limited, a Hong Kong listed company, and its subsidiaries (collectively, group) for the years ended 31 March 2010 and 31 March 2011 respectively. Lin was the engagement partner and Kwong was the engagement quality control reviewer of the audits.
The Institute received referrals from the Financial Reporting Council (FRC) about deficiencies in the 2010 and 2011 audits. For both years, the audit team failed to perform sufficient audit procedures and prepare adequate documentation in relation to provision for inventories and revenue from sales of goods. For the 2011 audit, the audit team failed to obtain sufficient evidence and prepare adequate documentation on revenue from contract variations and claims and relevant expenses, and on share-based payments made to the group’s personnel.
Decisions and reasons: The Disciplinary Committee reprimanded the respondents. In addition, Lin and Kwong were ordered to pay penalties of HK$200,000 and HK$100,000 respectively, and to pay costs of the Institute and the FRC totalling HK$3,635,673.70. When making its decision, the Disciplinary Committee considered the particulars in support of the complaints and certain mitigating factors, which included the respondents’ good compliance history and their adoption of a reasonable course of action to conclude these proceedings.
Mok Ching Ho 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), the fundamental principle of professional competence and due care in sections 100.5(c) and 130.1 of the code, 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.
Mok was practising in his own name and responsible for his practice’s quality control system and the quality of its audit engagements. A first practice review of the practice identified significant deficiencies in a number of its audit engagements, in that there was no evidence of necessary audit procedures performed in key areas including purchases and sales, existence and valuation of inventories, and validity of expenses. In addition, Mok failed to make sure his practice had sufficient staff resources and adequate policies and procedures to ensure audits were performed in accordance with professional standards, and to establish a monitoring process for ongoing evaluation of the practice’s system of quality control. Further, the practice reviewer found that Mok had a sizeable portfolio of 258 clients in the period covered by the review and for most of them, Mok performed little or no audit work before issuing the audit reports. He also created audit working papers and made misleading representations to the reviewer in an attempt to give a false impression that the audits had been properly conducted.
Decisions and reasons: The Disciplinary Committee ordered the name of Mok be removed from the register of CPAs for four years with effect from 18 October 2021. In addition, Mok was ordered to pay a penalty of HK$80,000 and costs of disciplinary proceedings of HK$73,630. The committee further found the extent of Mok’s lack of integrity and competence to be very serious, amounting to professional misconduct.
Details of the resolution by agreement and disciplinary findings are available on the Institute’s website.