(From left) Eric Tong, Immediate Past President; Johnson Kong, Vice-President; Patrick Law, President; Nelson Lam, Vice President; Jonathan Ng, Acting Registrar
Institute elects 2019 leadership team
The Institute elected Patrick Law as President, and Johnson Kong and Nelson Lam, as Vice-Presidents for 2019 at its 46th annual general meeting on 13 December.
Law is Deputy Assurance Leader at EY Hong Kong and Macau, and has served on the Institute’s Council since 2014. He was vice-president in 2017 and 2018.
He has been actively supporting the profession through his participation in many committees, including the Registration and Practising Committee, as Chairman, the Ethics Committee, as Deputy Chairman, and the Governance Committee and the Nomination Committee, as a committee member. He has also been involved in the Professional Conduct Committee, the Restructuring and Insolvency Faculty Executive Committee, and the Standards and Quality Accountability Board.
Kong, Managing Director of Non-Assurance Services of BDO, also joined the Council in 2014, and served as Vice-President in 2018. Lam is Founder of Nelson CPA and served on the Council from 2012-2017.
At the election, seven members were elected to serve for a term of two years, including Vice-Presidents Kong and Lam; Au Chun Hing; Au Ki Lun; Raymond Cheng; Jennifer Cheung; and Loretta Fong.
Existing elected members who will hold office for one more year until their two-year term ends are President Law; Fung Ling Yip; Lee Suk Yee; Leung Man Chun; Leung Man Kit; Roy Leung and Li Kin Hang.
For lay members, the government appointed Susie Ho and Theresa Ng for a term of two years from 1 December 2018. Two continuing government-appointed lay members, Vincent Chui and Wilfred Wong, will fulfil the second year of their terms.
Immediate Past President Eric Tong will hold office as a member of the Council until December 2019.
Best Corporate Governance Awards 2018
The 19th Best Corporate Governance Awards handed out 23 awards, three more than last year, including to seven first-time winners. The awards presentation luncheon featured the Permanent Secretary for Financial Services and the Treasury (Financial Services), Andrew Wong, as the guest of honour. The full results and judges’ report can be found on the Institute’s website. Read interviews with two of the new awardees here.
Macau CPAs join Guangdong- Hong Kong-Macau Alliance
The second meeting of Guangdong-Hong Kong-Macau Alliance firms, since its formation a year ago, was held on 10 December in Guangzhou. Almost 100 representatives met to welcome Macau CPA practices into the alliance. This was followed by a talk on the China-United States trade war. The Institute’s Vice-President Johnson Kong led Hong Kong’s 20-person delegation.
Rich Kid, Poor Kid wins award
The Institute’s corporate social responsibility programme, Rich Kid, Poor Kid, was recognized last month by the Hong Kong Strategy for Financial Literacy as a “Financial Education Champion” for 2019. The award acknowledges the contributions and achievements of the Institute and its Accountant Ambassadors in offering high-quality financial education over the years. Since 2005, Accountant Ambassadors have visited more than 450 primary and secondary schools, and held over 750 free financial seminars, reaching more than 130,000 students in an interactive way, using their expertise to educate students on money management.
Council meeting minutes
The abridged minutes from the November Council meeting are now available for members to read. They can be found in the “Members’ area” of the Institute’s website.
Resolution by Agreement
Kung Wing Ting, CPA (practising) and Aries CPA & Co.
Complaint: Failure or neglect to observe, maintain or otherwise apply Hong Kong Standard on Auditing (HKSA) 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment, HKSA 500 Audit Evidence, HKSA 700 Forming an Opinion and Reporting on Financial Statements and HKSA 710 Comparative Information – Corresponding Figures and Comparative Financial Statements.
Kung is the sole proprietor of Aries CPA & Co. which audited the financial statements of a private company for the period ended 31 December 2014 and the years ended 31 December 2015 and 2016. The respondents issued a disclaimer of opinion on the 2014 financial statements after identifying a limitation of audit scope on certain items. They failed to articulate why the limitation of scope on those matters indicated possible misstatements so material and pervasive that they were unable to form an opinion on the financial statements.
The respondents expressed unmodified auditor’s opinions on the 2015 and 2016 financial statements but failed to obtain sufficient evidence to address inconsistent information about the principal activity of the company. As a result, they failed to obtain sufficient knowledge about the associated transactions and relevant disclosures in the financial statements. The respondents also failed to modify the auditor’s opinions when the matters leading to the disclaimer of opinion in the preceding period remained unresolved.
Regulatory action: In lieu of further proceedings, the Council concluded the following action should resolve the complaint:
- The respondents acknowledge the facts of the case and their non-compliance with the relevant professional standards;
- They be reprimanded; and
- They jointly pay an administrative penalty of HK$40,000 and costs of HK$10,000.
Ng Wai Kwong, Timothy, CPA (practising) and Timothy W.K. Ng & Co.
Complaint: Failure or neglect to observe, maintain or otherwise apply HKSA 220 Quality Control for an Audit of Financial Statements, HKSA 240 The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, and HKSA 500 Audit Evidence.
The respondents audited the financial statements of a private company for the years ended 31 March 2013 and 2014. There were disputes between the client’s directors which raised questions about the integrity of management. In the circumstances, the respondents failed to assess whether continuing the client relationship was appropriate. In addition, the respondents’ reliance on a director’s largely unsubstantiated representations demonstrated that they failed to obtain sufficient audit evidence to support the accounting treatment of a fixed asset in the 2013 and 2014 financial statements. They also failed to maintain professional skepticism by accepting that the 2014 financial statements were approved by the board when evidence indicated otherwise.
Regulatory action: In lieu of further proceedings, the Council concluded the following action should resolve the complaint:
- The respondents acknowledge the facts of the case and their non-compliance with the relevant professional standards;
- They be reprimanded; and
- They pay an administrative penalty of HK$20,000 and costs of HK$10,000 jointly.
Disciplinary finding
Lew Victor Robert, CPA (practising), So Kwok Keung, Keith, CPA (practising) and East Asia Sentinel Limited
Complaint: Failure or neglect by East Asia Sentinel Limited to observe, maintain or otherwise apply HKSA 700 Forming an Opinion and Reporting on Financial Statements and HKSA 230 Audit Documentation. Failure or neglect by Lew to carry out his work with professional competence and due care in relation to non-compliances resulting in the above breaches of HKSAs. Failure or neglect by So to diligently carry out the engagement quality control review in accordance with HKSA 220 Quality Control for an Audit of Financial Statements.
East Asia Sentinel Limited issued an unmodified auditor’s opinion on the financial statements of a Hong Kong listed company, South East Group Limited (now known as China Minsheng DIT Group Limited) for the year ended 31 March 2009. Lew was the engagement director and So was the engagement quality control reviewer of the audit.
The Institute received a referral from the Financial Reporting Council (FRC) about irregularities in the audit. The company did not recognize a significant decline in the fair value of two listed, available-for-sale investments as an impairment loss in the financial statements, contrary to Hong Kong Accounting Standard 39. East Asia Sentinel Limited failed to detect this departure from accounting standards in forming the auditor’s opinion.
Decisions and reasons: All the respondents were reprimanded. The Disciplinary Committee ordered the respondents to pay penalties of HK$55,000. In addition, the respondents were ordered to pay costs of the disciplinary proceedings of the Institute and the FRC in the total sum of HK$104,517.80. When making its decision, the committee took into account the circumstances of the case, including the particulars of the breaches, the respondents’ personal circumstances and their conduct throughout the proceedings.
Details of the disciplinary findings and guidelines for the Resolutions by Agreement are available at the Institute’s website: www.hkicpa.org.hk.
