From left: Institute Chief Executive & Registrar, Margaret W.S. Chan; Vice-President Au Chun Hing, Edward; President Fong Wan Huen, Loretta; and Vice-President Roy Leung.
Institute elects new President and Council
Fong Wan Huen, Loretta CPA (practising) was elected the Institute’s President for 2022, following the 49th annual general meeting (AGM), and Roy Leung FCPA (practising) and Au Chun Hing, Edward FCPA (practising) as Vice-Presidents.
Fong, Entrepreneurial Group Leader, Assurance, PwC Hong Kong, has served on the Council since 2017. Vice-President Leung has served on the Council since 2018, while Vice-President Au served from 2019 to 2020 before returning this year.
Fong is also the Chairman of the Institute’s Auditing and Assurance Standards Committee and the Professional Development Committee, and has also been involved in the Executive Committee and Greater Bay Area Committee in recent years.
At the Council election, the following seven members were elected to serve for a term of two years: Au Chun Hing, Edward; Stephen Law; Lee Shun Yi, Jasmine; Roy Leung; Liu Kwok Tai, Teddy; Tse Hoi Fat, Calvin; and Andrew Yung.
The existing elected members who will hold office for one more year until their two-year term ends are Alan Au; Alan Chan; Raymond Cheng; Larry Cheng; Fong Wan Huen, Loretta; Lam Chi Yuen, Nelson; and Wong Wing Hei, Ernest.
The Hong Kong government has also re-appointed Au King Lun, and Wong Kam Pui, Wilfred, as lay members of the Council for a term of two years from 1 December 2021 to 30 November 2023. The two government-appointed lay members, Agnes Choi Heung Kwan and Theresa Ng Choi Yuk, will fulfil the second year of their terms. The Immediate Past President Raymond Cheng will hold office as a member of the Council until the conclusion of the 50th AGM.
Winners of revamped awards announced
The presentation luncheon for the Institute’s revamped Best Corporate Governance and ESG Awards was held on 6 December, with Kelvin Wong, Chairman of the Financial Reporting Council, as the guest of honour and over 190 participants from some of Hong Kong’s leading listed companies and public sector organizations. “We were pleased to see more interest than ever in the revamped awards this year, with high numbers of annual and environmental, social and governance (ESG) reports reviewed and more companies making it onto the short list, particularly in the ESG section of the awards,” said Raymond Cheng, Institute President and Chairman of the Judging Panel.
The Institute congratulates all the award winners, particularly the 10 awardees of the inaugural Most Sustainable Companies/Organizations Awards, which reflect a growing awareness around the world of the importance of integrating corporate governance and ESG policies and practices. The new, top category of awards, recognize listed companies and public sector organizations that have performed to an equally high standard in both corporate governance and ESG, and that are taking steps to integrate these two key aspects of their performance.
ESG Assurance in Hong Kong: A snapshot of the situation
To understand the current situation with ESG assurance Hong Kong, the Institute conducted brief research covering all the December year-end listed companies for 2020. The report reflects a snapshot of where Hong Kong listed companies stand at the present time with regard to ESG assurance. You can find the report on the Institute’s website.
Annual report 2021 out now
The Institute’s 2021 annual report is available now. Themed “Together for the Profession,” the report celebrates some of the members who devote their time to supporting the profession and Hong Kong.
Election results of the 2021 LegCo Election
Wong Chun Sek, Edmund has been elected to serve as a member of the Legislative Council (LegCo) for the accountancy functional constituency. His term of office will commence 1 January 2022. More details including the number of votes received by each candidate and the turnout rate are available from the official website of the 2021 LegCo Election.
Hui Mei Sum, Virginia Ann CPA (practising)
Complaint: Failure or neglect to observe, maintain or otherwise apply the 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, Hong Kong Standard on Auditing (HKSA) 230 Audit Documentation, HKSA 500 Audit Evidence, HKSA 700 Forming an Opinion and Reporting on Financial Statements, HKSA 705 Modifications to the Opinion in the Independent Auditor’s Report, 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, and being guilty of professional misconduct.
Hui is the sole director of V A Hui & Co Limited. An initial practice review conducted on the practice revealed a number of significant deficiencies in its quality control system. In addition, significant deficiencies were found in three of the practice’s audit engagements, in which inadequate audit procedures were performed on the sponsorship income of a non-profit entity, construction contracts of an engineering company, and sales and administration expenses in the consolidated financial statements of a group. In the aforementioned group audit, Hui also failed to determine whether the extent of a limitation of audit scope would require her to disclaim the audit opinion or withdraw from the engagement. Furthermore, multiple submissions of inaccurate client lists of the practice were made during the practice review, demonstrating Hui’s negligence in supervising her staff and managing the practice’s engagements.
Decisions and reasons: The Disciplinary Committee reprimanded Hui and ordered the cancellation of her practising certificate, with no issuance of a practising certificate to her for six months with effect from 2 December 2021. In addition, Hui was ordered to pay costs of the disciplinary proceedings of HK$141,811. When making its decision, the committee took into consideration the circumstances of the case, including remedial and preventive measures taken by Hui subsequently.
Edmund Siu CPA (practising)
The Hong Kong Institute of CPAs has settled regulatory proceedings concerning alleged non-compliance with its professional standards involving Edmund Siu CPA (practising).
The complaint concerns audit deficiencies identified in the 2019 practice review conducted on Elite Partners CPA Limited. The Practice Review Committee of the Institute raised a complaint pertaining to the audit of the consolidated financial statements of a Hong Kong listed entity and its subsidiaries for the year ended 31 December 2018, on which Elite issued an unmodified opinion. The entity was principally engaged in investing in listed and unlisted companies. Siu was the engagement director of the audit. There is no evidence to suggest that the audit deficiencies below resulted in the wrong audit opinion being issued by Elite.
The entity’s 2018 financial statements included a material amount of equity investments recorded at fair value through profit or loss. This amount comprised the entity’s investments in three unlisted companies. The practice reviewer found that in performing the audit, Siu failed to:
- properly test or evaluate the reasonableness of assumptions and estimates made by management in the fair value estimation of the entity’s investments in the three companies;
- obtain sufficient appropriate audit evidence for the investments in the three companies, including adequate evaluation of the work done by the valuer in relation to one of them;
- prepare adequate audit documentation in respect of the investment in one of the companies; and
- identify that the entity did not make adequate disclosures with respect to the equity investments as reported in the financial statements in accordance with the relevant requirements.
As a result of the above, Siu failed or neglected to observe, maintain or otherwise apply the following professional standards:
- HKSA 230 Audit Documentation;
- HKSA 500 Audit Evidence;
- HKSA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures; and
- 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.
Settlement agreement: The Council of the Institute has agreed with Siu that:
1. Siu acknowledges the facts of the case and areas of non-compliance with professional standards;
2. Siu be reprimanded; and
3. Siu pay a financial penalty of HK$120,000 and costs of HK$155,000.
Before determining that a settlement was appropriate, the Institute considered past disciplinary and regulatory actions taken against Siu, and reviewed past, similar cases pertaining to other respondents. The Institute concluded a settlement on the agreed basis would be the probable outcome of disciplinary proceedings and would be in the public interest.
Details of the disciplinary finding and settlement are available on the Institute’s website.