Strategic Plan 2022 now available
The Institute has produced and released the Strategic Plan 2022, which serves as a blueprint for implementing the Institute’s strategic aims for the rest of the year and beyond. It comes following significant challenges and changes in circumstances that have developed since the Strategic Plan 2020-2022 was issued which need to be addressed.
Aside from the impact of the COVID-19 pandemic on Institute members, another key disrupter is the further regulatory reform of the accounting profession announced by the Hong Kong government in 2021, which introduced legislation that moved all remaining regulatory functions from the Institute to the Financial Reporting Council with effect fr om 1 October 2022. The Institute recognizes that this brings significant changes and challenges to the responsibilities, functions and operations of the Institute, and so it is important for the Institute to redefine its positioning.
To make sure the Institute and the accounting profession in Hong Kong remains relevant, Council and management have identified necessary revisions and additions needed for the Institute’s strategic plan and objectives. They confirmed that the Institute’s strategy should be refocused around three key areas: delivering member value; proud to be a CPA (branding and communication); and advocacy for the profession.
Members can learn about the updated Strategic Plan 2022 by visiting the Institute’s website, where they can also find two webpages on the strategic objectives and initiatives and key action items to learn about the progress.
The Institute jointly organized three members’ forums on the government’s further regulatory reform of the accounting profession on 4, 7 and 11 April, as well as a members’ forum on 8 April regarding the proposal to review the election arrangements of the Institute’s Council.
The recordings of the members’ forums are now available for enrolment as e-Seminars. Links can be found on the Institute’s website.
Members’ survey on the government’s proposals for the election mechanism of the Institute’s Council
The Institute launched a survey to all members to collect their views on 1 April. The survey closed on 18 April and the Institute received 434 responses to the online survey questionnaire.
The responses to these questions have been summarized and made available for members’ viewing on the designated webpage.
Quality assurance report
The Institute’s Quality Assurance 2021 Annual Report is now available via the Institute’s website. The report summarizes the work of the Quality Assurance Department in practice reviews (including anti-money laundering and counter-terrorist financing compliance monitoring review) over the past year, and highlights common review findings of which members should be aware.
Members-Help-Members technical enquiry service
Members-Help-Members is a platform for members to obtain guidance and comments from the Small and Medium Practices Committee’s Working Group on Technical Issues about matters they are facing. Members may submit their enquiries through the Institute’s website, which may be addressed at an upcoming sharing session. Any enquiry received will be considered by the working group on a pro-bono basis.
Council meeting minutes
The abridged minutes from the March Council meeting are now available in the “Members’ area” of the Institute’s website.
Resolution by agreement
Kong Muk Yin CPA
Complaint: Failure or neglect to observe, maintain or otherwise apply the fundamental principle of professional behaviour in section 110.1A1(e) and subsection 115 under Part A of the applicable Code of Ethics for Professional Accountants (Code of Ethics).
Kong was the executive director of China Medical & Healthcare Group Limited. In May 2021, the Market Misconduct Tribunal (MMT) fined the company and its directors for late disclosure of inside information regarding unrealized profits and significant gains in 2014. At the relevant time, Kong was responsible for the operation of the finance and accounts department as well as company secretarial matters and administration. The MMT fined Kong and disqualified him from being a director or being involved in the management of a listed company for six months. Kong was also ordered to undergo a training programme to be approved by the Securities and Futures Commission (SFC).
Regulatory action: In lieu of further proceedings, the Council concluded the following should resolve the complaint:
- Kong acknowledge the facts of the case and his non-compliance with a professional standard;
- Kong be reprimanded; and
- Kong pay costs of the Institute of HK$15,000.
Ang Wing Fung CPA and Chan Kam Wah CPA
Complaint: Failure or neglect to observe, maintain or otherwise apply the fundamental principle of integrity in sections 100.5(a) and 110 of the Code of Ethics, and the fundamental principle of professional behaviour in sections 100.5(e), 150 and 300.6 of the Code of Ethics, and being guilty of professional misconduct.
W. Falcon Asset Management (Asia) Limited (Falcon) was a licenced corporation under the Securities and Futures Ordinance, which carried out regulated activities. In 2019, the SFC revoked the licence of Falcon due to its window-dressing of liquid capital and other failures, including providing the SFC with false or misleading information in its licence application and monthly financial returns.
The SFC also banned Ang, a former director of Falcon, and Chan, a former chief financial officer and company secretary, from re-entering the financial industry for life and three years, respectively, in connection with their roles in window-dressing the liquid capital of Falcon. The SFC found that Ang was the mastermind of the window-dressing scheme, and its operation was facilitated by Chan. In addition, the respondents failed to notify the SFC of Falcon’s insufficient liquid capital, and Ang failed to notify the SFC of his resignation as a director of Falcon. The SFC referred the matter to the Institute for action.
Decisions and reasons: The Disciplinary Committee reprimanded Ang and Chan. The committee further ordered the names of Ang and Chan be removed from the register of CPAs permanently and for three years, respectively, with effect from 12 April 2022. In addition, Ang and Chan were ordered to pay the costs and expenses of the disciplinary proceedings of HK$128,477 equally. When making its decision, the committee took into consideration the particulars in support of the complaints, and the conduct of Ang and Chan throughout the proceedings.
Chan Chung Mo CPA (practising)
Complaint: Failure or neglect to observe, maintain or otherwise apply the fundamental principle of integrity in section 100.5(a) and as elaborated under section 110 of the Code of Ethics, the fundamental principle of professional competence and due care in section 100.5(c) and as elaborated under section 130 of the Code of Ethics, 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) 220 Quality Control for an Audit of Financial Statements, HKSA 230 Audit Documentation, HKSA 240 The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, HKSA 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment, HKSA 330 The Auditor’s Responses to Assessed Risks and HKSA 500 Audit Evidence, and being guilty of professional misconduct.
Chan practices in his own name. An initial practice review in 2018 found deficiencies in the practice’s audit engagements and quality control system. In 2019, a follow-up practice review was conducted to evaluate if Chan had appropriately addressed the findings. During that review, the reviewer found significant deficiencies in the practice’s audit engagements and monitoring review procedures in its quality control system again. Furthermore, the reviewer found that Chan provided, as he had done in the initial practice review, an incomplete client list, and false and misleading answers in the electronic self-assessment questionnaire.
Decisions and reasons: The Disciplinary Committee reprimanded Chan and ordered the cancellation of his practising certificate effective 20 April 2022, with no issuance of a practising certificate to him for 18 months. In addition, Chan was ordered to pay a penalty of HK$50,000 and costs of the disciplinary proceedings of HK$64,727.
Details of the resolution by agreement and disciplinary findings are available on the Institute’s website.