Institute news


(From left to right) William Chan, Johnson Kong and KK So

Institute calls for more support for local businesses and citizens amid economic downturn

The Hong Kong Institute of CPAs announced on 10 February its tax policy and budget proposals for 2020-21, under the theme “Together for a Better Hong Kong.” The proposals encompass 13 different measures that aim to help support the city’s economy amid global and domestic pressures, and improve the lives of residents.

“Hong Kong’s economy is at a crossroad, facing various domestic challenges as well as a slowdown in global growth. The increasing pressure on public finances, coupled with intensifying competition for business from other jurisdictions in the region and globally, and the changing international tax landscape, all point to a need to take a harder look at the city’s long-term positioning and competitiveness. In order to maintain Hong Kong’s strength as a global financial hub, the government needs to conduct comprehensive review of business and tax policies to help secure Hong Kong’s future economic success,” said Institute President Johnson Kong.

“For business owners, the government should consider introducing a mechanism for tax loss carryback into our tax system, as a means to help relieve the cash flow pressure that businesses face during economic downturns,” said KK So, the Past Chairman of Institute’s Taxation Faculty Executive Committee (TFEC). Tax loss carryback is available in many developed countries, and taxpayers who are making a current-year tax loss may be able to get a refund of tax paid in the prior year or years. The Institute asks the government to consider providing group tax loss relief to companies investing in start-ups.

The proposals emphasize providing additional support for the middle-class and low-income people not receiving any government assistance. “While they may not benefit greatly from the recent raising of the ceiling for the 2018-19 tax rebate to 100 percent from 75 percent, because the cap remains at HK$20,000, providing an increased cap of HK$30,000 under salaries tax, and for individuals taxed under personal assessment, as well as for profits tax, would help the middle class in the coming year. The government should also consider giving out a cash subsidy to permanent residents aged 18 and above, who are not taxpayers and do not own any property, so as to benefit the so-called ‘N-nothings,’” said Curtis Ng, Convenor of the Institute’s Budget Proposals Subcommittee.

The Institute reiterated the need for a holistic review of the Hong Kong tax system amid recent changes in the international tax landscape, as well as called for a better living environment for citizens that includes cleaner air. “One area that needs to be addressed is vehicular pollution. More needs to be done to cut pollution due to an aged vehicle fleet in Hong Kong”, said William Chan, TFEC Deputy Chair.

Members can find the tax policy and budget proposals for 2020-21 here.

Institute launches new COVID-19 – CPA Information Centre webpage 

The Institute acknowledges that the current exceptional circumstances are posing a significant challenge to the profession and wider society. To help members, it has set up a webpage to share information with them on the Institute’s services arrangements and support, relevant messages, and links to regulatory and government measures, including health advice and other relevant resources.

Resolutions by Agreement 

Chan Wai Nam, William, CPA (practising), Jimmy Siu, CPA (practising) and Elite Partners CPA Limited

Complaint: Failure or neglect by Chan and Elite to observe, maintain or otherwise apply Hong Kong Standard on Auditing (HKSA) 230 Audit Documentation, HKSA 500 Audit Evidence and HKSA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures. Failure or neglect by Siu to observe, maintain or otherwise apply HKSA 220 Quality Control for an Audit of Financial Statements. 

Elite audited the consolidated financial statements of China Finance Investment Holdings Limited (formerly known as Cypress Jade Agricultural Holdings Limited) (company), a Hong Kong-listed company and its subsidiaries for the year ended 31 December 2015 and expressed an unmodified auditor’s opinion. Chan was the engagement director and Siu was the engagement quality control reviewer.

Under an agreement made with a third party during the year, the company acquired an option to require the third party to subscribe for the company’s convertible bonds up to a certain amount. The company recognized the option as a financial asset in the financial statements at a year-end fair value determined by an external valuer, with a corresponding gain on changes in fair value of the financial asset recognized in the income statement. The company did not eventually exercise the option.

In the audit, the respondents failed to obtain sufficient evidence of the assumptions adopted by the valuer in valuing the option. The respondents also failed to prepare adequate documentation of their purported discussions with management concerning the option and other audit procedures purportedly carried out on it. In addition, the respondents failed to identify the inadequate financial statement disclosures of the fair value measurement and risks associated with the option.

Regulatory action: In lieu of further proceedings, the Council concluded the following action should resolve the complaint:

  1. The respondents acknowledge the facts of the case and their non-compliance with the relevant professional standards;
  2. They be reprimanded; and
  3. Chan, Siu and Elite pay an administrative penalty of HK$35,000, HK$20,000 and HK$50,000, respectively, and they jointly pay costs of the Institute and the Financial Reporting Council totalling HK$173,241.20.

Ng Ka Hong, CPA (practising)

Complaint: Failure or neglect to observe, maintain or otherwise apply HKSA 220 Quality Control for an Audit of Financial Statements.

Ng was the engagement quality control reviewer in the audit of the consolidated financial statements of Superb Summit International Group Limited, a Hong Kong-listed company, and its subsidiaries (collectively group) for the year ended 31 December 2014 undertaken by a corporate practice that has now been deregistered.

The audit engagement team failed to perform adequate procedures in respect of the group’s valuation of biological assets, prepaid land lease payments and impairment assessment of intangible assets. Those areas were material and involved significant judgements. Ng failed to perform an adequate engagement quality control review on those areas to ensure that the audit evidence obtained by the engagement team was sufficient and appropriate to support the audit conclusions.

Regulatory action: In lieu of further proceedings, the Council concluded the following action should resolve the complaint:

  1. Ng acknowledges the facts of the case and his non-compliance with professional standards;
  2. Ng be reprimanded; and
  3. Ng pays an administrative penalty of HK$20,000 and costs of the Institute and the Financial Reporting Council totalling HK$80,530.

Disciplinary finding

Chik Wing Kan, Peter, CPA (practising)

Complaint: Failure or neglect to observe, maintain or otherwise apply 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; the fundamental principle of integrity in sections 100.5(a), 110.1 and 110.2 of the Code of Ethics for Professional Accountants; and the fundamental principle of professional competence and due care in sections 100.5(c) and 130.1 of the code and being guilty of professional misconduct.

Chik is the sole shareholder of PCW CPA Limited (practice) and is responsible for the practice’s quality control system and the quality of its audit engagements. A first practice review conducted on the practice identified significant deficiencies in its system of quality control and in two of its audit engagements. In addition, Chik was found to have falsely or recklessly provided untrue answers in the self-assessment questionnaire and “Audit Health Screening Checklist” submitted to the Institute in relation to the practice review.

Decisions and reasons: The Disciplinary Committee reprimanded Chik and ordered cancellation of his practising certificate with no issuance of a practising certificate to him for 15 months with effect from 3 February 2020. In addition, Chik was ordered to pay a penalty of HK$50,000 and costs of disciplinary proceedings of HK$41,802. When making its decision, the committee took into consideration the particulars of the breaches committed in this case and Chik’s conduct. The committee noted that Chik’s conduct shows serious disregard for regulatory requirements and raises doubt on his professional competence and integrity, and would have a detrimental effect on the confidence in the profession.

Details of the Resolutions by Agreement and disciplinary findings are available at the Institute’s website.

Add to Bookmark
Text size
Related Articles
January 2024
The President of the Institute on tackling the talent shortage issue, and the significance of the Institute’s role as a statutory sustainability standard setter
January 2024
Digital transformation
January 2024
Key insights from the Institute’s study on the current state of technology adoption by small- and medium-sized practices in Hong Kong
BCG & ESG Awards
January 2024
Key highlights based on the awardees of the Institute’s business awards which celebrate achievements in corporate governance and ESG
January 2024


We use cookies to give you the best experience of our website. By continuing to browse the site, you agree to the use of cookies for analytics and personalized content. To learn more, visit our privacy policy page. View more
Accept All Cookies