(From left) Loretta Fong CPA (practising), President of the Hong Kong Institute of CPAs; Margaret Chan CPA, Chief Executive and Registrar of the Institute; Christopher Hui, Secretary for Financial Services and the Treasury; Marek Grabowski, Chief Executive Officer of the Financial Reporting Council and Kelvin Wong, Chairman of the FRC.
HKICPA and FRC sign Revised Statement of Protocol on Oversight Arrangement
On 16 August, the Institute and the Financial Reporting Council (FRC), which will be renamed the Accounting and Financial Reporting Council (AFRC), signed a Revised Statement of Protocol on Oversight Arrangement (Revised Statement of Protocol) which was witnessed by Christopher Hui, Secretary for Financial Services and the Treasury.
The Revised Statement of Protocol includes the AFRC’s broader responsibilities to oversee the Institute’s performance of its statutory functions under the further reform of the regulatory regime of the accounting profession which commences on 1 October 2022.
Institute responds to the ISSB’s exposure drafts
The Institute has responded to the International Sustainability Standards Board’s (ISSB) exposure drafts on its International Financial Reporting Standard (IFRS) S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. Overall, the Institute is supportive of the ISSB’s proposals but has made several suggestions to ensure the smooth transition to the standards, especially for small- and medium-sized entities. A summary of the response can be found here in this issue of A Plus while the full response has been made available on the Institute’s website.
The Global Accounting Alliance, of which the Institute is a member body among 10 of the world’s leading accounting institutes, also responded to the request for comments, stating it believes there is an urgent need for global sustainability reporting standards, and that a single set of high-quality sustainability reporting standards will serve the public interest and bring significant benefits to the global economy, capital markets, and society at large.
In addition, Accounting for Sustainability (A4S), a charitable organization under The Prince of Wales’s Charitable Foundation, has coordinated responses by 86 chief financial officers from around the world and institutional investors representing more than £620 billion in assets under management to the consultation. The Institute is a member of A4S’s Accounting Bodies Network.
Membership renewal for 2023
The next date of expiry for CPA memberships with the Institute is on 31 December. If you are a practising member, the renewal of your practising certificate, practice unit and registered public interest entity auditor registration (where applicable) with the AFRC (currently known as the FRC) will be subject to the successful renewal of your membership with the Institute.
In order to allow more time for members who may need to complete the renewal procedures with the Institute before completing the renewal procedures with AFRC, the Institute will be allowing members to renew their membership beginning on 1 October. Members will thus be able to do so one month earlier than the usual practice.
To ensure that you are able to receive the annual renewal notice, please check and update your contact details in MyCPA on or before 9 September.
Keeping CPD records and documentary evidence
Members are reminded that they are required to keep their continuing professional development (CPD) records and documentary evidence of their verifiable CPD hours for a minimum of five years. Members selected for CPD compliance audit will need to produce the records and supporting documents to verify their CPD activities.
73rd National Day Celebration for the accounting profession
The commemoration of the National Day of the People’s Republic of China is an important annual event for the accounting profession in Hong Kong. To celebrate the 73rd National Day this year, the Institute is co-hosting a celebration with the Association of Hong Kong Accounting Advisors, Hong Kong Association of Registered Public Interest Entity Auditors Limited, Hong Kong Business Accountants Association and The Society of Chinese Accountants and Auditors.
In light of the current situation under the pandemic, no food or beverage will be provided during the celebration. Book your seat and subscribe for the newspaper supplement here, or become a prize sponsor now.
Council meeting minutes
The abridged minutes from the July Council meeting are now available in the “Members’ area” of the Institute’s website.
Resolution by agreement
Lau Siu Wah CPA
Complaint: Guilty of dishonourable conduct. Lau was convicted of criminal intimidation under sections 24 and 27 of the Crimes Ordinance (Cap. 200) in December 2020. The conviction was likely to have brought discredit upon Lau himself, the Institute or the accounting profession. As a result, he was guilty of dishonourable conduct under section 34(1)(a)(x) of the Professional Accountants Ordinance (Cap. 50).
Regulatory action: In lieu of further proceedings, the Council concluded the following should resolve the complaint:
- Lau acknowledges the facts of the case and his non-compliance with the Professional Accountants Ordinance;
- Lau be reprimanded; and
- Lau pays costs of the Institute of HK$15,000.
Fan Kin Nang CPA (practising) and Ken Fan & Co.
The Hong Kong Institute of CPAs has withdrawn the complaint against Fan Kin Nang CPA (practising) and Ken Fan & Co. before a Disciplinary Committee paid a sum of HK$2,800,000 as a contribution to the respondents’ costs of and incidental to the investigation and disciplinary proceedings and discontinued the disciplinary proceedings. The Institute arrived at this decision in the interests of the public and the profession after further considering the merits of the case, the duration of the proceedings, and the potential impact on the application of the relevant professional standard.
In the course of the disciplinary proceedings, the Disciplinary Committee gave directions in relation to disclosure to the respondents of certain unused materials held by the complainant.
Cheng Sin Bun, Benson CPA (practising)
The Institute has settled regulatory proceedings with Cheng Sin Bun, Benson CPA (practising) concerning alleged non-compliance with professional standards.
The matter concerns audit deficiencies identified in a practice review conducted on PricewaterhouseCoopers (practice). The review covered the audit of the financial statements of a regulated entity for the year ended
31 December 2020, on which the practice expressed an unmodified opinion. Cheng was the engagement partner of the audit.
The practice reviewer found that Cheng failed to exercise adequate professional scepticism in the audit due to his failure to obtain sufficient and appropriate audit evidence on the valuation of an investment and the accuracy of a bank balance. He also failed to prepare adequate audit documentation in support of the audit conclusion.
As a result of the above, Cheng failed or neglected 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 230 Audit Documentation; HKSA 500 Audit Evidence; and HKSA 540 (Revised) Auditing Accounting Estimates and Related Disclosures.
Settlement agreement: The Council of the Institute has agreed with Cheng that:
- Cheng acknowledge the facts of the case and areas of non-compliance with professional standards;
- Cheng be reprimanded; and
- Cheng pay a financial penalty of HK$90,000 and costs of HK$35,100.
Ip Pui Sum CPA (practising)
The Institute has settled regulatory proceedings concerning alleged non-compliance with its professional standards by Ip Pui Sum CPA (practising).
The matter concerns the compliance reporting and financial statements audit conducted by Sum, Arthur & Co. on an insurance broker for the year ended 31 December 2018. The firm expressed an unmodified auditor’s opinion on each of the two engagements. Ip was the engagement partner.
The Institute concluded a practice review of Sum, Arthur & Co. in November 2021 and identified deficiencies in the above two engagements. There were inadequate procedures carried out in testing the insurance broker’s compliance with statutory requirements on professional indemnity insurance, handling of client monies and reconciliation of brokerage debtor and creditor balances. Deficiencies pertaining to the audit of the financial statements were also found in the firm’s procedures relating to planning and tests of internal controls, material account balances and maintaining of proper audit documentation.
As a result of the above, Ip failed or neglected to observe, maintain or otherwise apply the following professional standards:
- 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 320 Materiality in Planning and Performing an Audit;
- HKSA 330 The Auditor’s Responses to Assessed Risks;
- HKSA 500 Audit Evidence;
- HKSA 530 Audit Sampling; and
- The fundamental principle of professional competence and due care as specified in section 110.1 A1(c), as elaborated in section R113.1, under Chapter A of the Code of Ethics for Professional Accountants.
Settlement agreement: The Council of the Institute has agreed with Ip that:
- Ip acknowledge the facts of the case and areas of non-compliance with professional standards;
- Ip be reprimanded; and
- Ip pay a financial penalty of HK$120,000 and costs of HK$50,000.
Yen Ching Wai, David CPA
The Institute has settled regulatory proceedings concerning alleged non-compliance with its professional standards by Yen Ching Wai, David CPA.
The complaint concerns the removal of Yen as one of the joint and several liquidators of a private company by the Court of First Instance in 2017 due to his conduct during the liquidation of the company. Yen appealed against the removal order but the Court of Appeal upheld the decision of the Court of First Instance and dismissed his appeal. The decision of the Court of First Instance brought discredit to Yen and the profession.
As a result of the removal order, Yen failed or neglected to observe, maintain or otherwise apply the fundamental principle of professional behaviour under sections 100.5(e) and 150.1 of the Code of Ethics for Professional Accountants.
Settlement agreement: The Council of the Institute has agreed with Yen that:
- Yen acknowledge the facts of the case and areas of non-compliance with professional standards;
- Yen be reprimanded; and
- Yen pay a financial penalty of HK$100,000 and costs of HK$80,000.
The Institute considers a settlement on the agreed basis to be in the public interest. In the circumstances, the Institute is satisfied that there is no purpose to be served in pursuing disciplinary proceedings.
Details of the resolution by agreement and the settlements are available on the Institute’s website.