Institute announces tax policy and proposals for 2023-24 Budget
The Hong Kong Institute of CPAs released its proposals for the government’s 2023-24 Budget earlier this month. The proposals include a range of measures to reinforce Hong Kong’s international status and competitiveness, to make Hong Kong a more livable city, and to achieve carbon neutrality and sustainability goals. The recommendations call on the government to provide specific incentives and concessions for international businesses and individuals, roll out targeted support measures to businesses and citizens to help overcome the challenges pending a stronger economic recovery, while also taking necessary steps to enable Hong Kong to achieve carbon neutrality by 2050.
The Institute estimates that the fiscal deficit for 2022-23 will reach HK$113.9 billion, slightly more than double the government’s original forecast of HK$56.3 billion at the time of last year’s budget. It comes as a result of lower land sales in 2022-23, and a weak economy following the fifth wave of the pandemic in 2022. “We expect that Hong Kong will continue to face various challenges in 2023 due to the global outlook, with the World Bank forecasting only 1.7 percent growth worldwide, the continuing conflict in Ukraine, high inflation affecting many economies and rising interest rates. With the projected deficit, Hong Kong’s fiscal reserves are expected to drop to HK$843.2 billion by the end of March 2023,” says Loretta Fong, Institute President.
The budget proposals and the press release are available on the Institute’s website. Read the summary of our recommendations on here.
Best Corporate Governance and ESG Awards 2022
The Best Corporate Governance and ESG Awards presentation luncheon ceremony was held on 6 December 2022. A total of 27 companies and public sector organizations were recognized in the 2022 Awards, including 10 winners of the top awards category, the Most Sustainable Companies/Organizations Awards. The full results, judges’ report and press release are available on the Institute’s website. Read the article featuring some of the awardees here.
Joint statement on the designation of Fellows of the HKICPA (practising)
The Institute and the Accounting and Financial Reporting Council (AFRC) issued a joint statement clarifying that Fellows of the HKICPA who hold practising certificates are eligible to continue to use the designation “Fellow of the Hong Kong Institute of Certified Public Accountants (Practising)” and initials “FCPA (practising).”
The AFRC, which is the responsible authority for issuing practising certificates to CPAs, decided to maintain the status quo given the wide acceptance and recognition of the designation and the initials in the accounting profession.
Annual report 2022 out now
Themed “Building upon Change”, the Institute’s 2022 annual report focuses on the journey of the Institute and its members in navigating significant changes under the regulatory reform and major industry developments in Hong Kong. The photo essays feature members who are rising to meet major changes under the Institute’s redefined role and who have contributed to our various initiatives to build upon and thrive amid change. The report is available on the Institute’s website.
Research report: Board diversity in Hong Kong
The Institute conducted a brief study on the current state of board diversity in Hong Kong, which covered over 1,800 listed companies with their financial year ending on 31 December 2021, looking at board size, number of long-serving independent directors, and diversity, in terms of gender, age and professional qualifications, in particular, accounting qualifications. The research report is available on the Institute’s website.
Minutes of the 50th AGM
The minutes from the Institute’s 50th annual general meeting (AGM) held on 8 December 2022 are now available.
Council meeting minutes
The abridged minutes from the November and December 2022 Council meetings are now available for members to read.
Cheung Hing Chik, CPA
Complaint: Failure or neglect to observe, maintain or otherwise apply the fundamental principle of integrity in section 110.1 A1(a) and subsections R110.2 and R111.2 under Chapter A of the Code of Ethics for Professional Accountants and the fundamental principle of professional behaviour in section 110.1 A1(e) and subsections R110.2 and R115.1 of the Code issued by the Institute, and being guilty of professional misconduct.
Cheung carried on his practice both as the sole proprietor of C&N Certified Public Accountants (C&N CPA) and as one of the two practising directors of Charles H.C. Cheung & CPA Limited (CHCC). In February 2021, he filed an annual return (return) with the Institute for the renewal of his membership and for the issuance of a practicing certificate (PC), for the year of 2021. In the return, Cheung declared that he was not a bankrupt, nor had he become bankrupt. Acting on the representations, including the aforesaid declaration made by Cheung in the return, his membership was renewed and a PC was issued to him.
It was subsequently discovered that a bankruptcy order (BO) was issued against Cheung by the High Court in August 2020. Although Cheung had applied to rescind the BO, his application was dismissed in September 2020. Cheung’s appeal against the said dismissal was also rejected by the Court of Appeal in July 2021. Cheung’s leave to appeal to the Court of Final Appeal was also refused in November 2021. Having discovered the BO, the Institute cancelled Cheung’s PC in May 2021. As a result, C&N CPA was removed from the Institute’s registration of firms, and CHCC was subsequently changed to a sole-practising member corporate practice.
Decisions and reasons: The Disciplinary Committee found that Cheung had falsely declared to the Institute that he was not a bankrupt nor had he become bankrupt when he renewed his PC for the year 2021 and had failed to resign as a director of CHCC in accordance with the requirements of the Companies Ordinance when he had become bankrupt. Cheung admitted to the complaint against him. The committee found that Cheung had been guilty of professional misconduct. The committee reprimanded Cheung and ordered that the name of Cheung be removed from the register of CPAs for 18 months with effect from 3 February 2023. In addition, he was ordered to pay costs of the disciplinary proceedings of HK$55,630.50.
Tang Chung Wah CPA (practising) and Lee Fung Ying, Alison CPA
Complaint: Failure or neglect to observe, maintain or otherwise apply sections 100.5(e) and 150.1 of the Code of Ethics for Professional Accountants, and guilty of professional misconduct and dishonourable conduct.
The respondents were joint and several liquidators of a private company. At the relevant time, they were also partners of a firm of CPAs that was later de-registered. In 2015, court orders were issued requiring the respondents to produce certain documents pertaining to the liquidation. Following the respondents’ failure to comply with the orders in full, the court found them guilty of contempt of court in 2016. While the contempt was subsequently purged by the respondents, they were sentenced to pay a fine totalling HK$500,000 and a substantial portion of costs on an indemnity basis.
Tang appealed against the Disciplinary Committee’s decision. On 22 September 2022, the Court of Appeal handed down its judgment dismissing Tang’s appeal.
Decisions and reasons: The respondents were reprimanded and ordered to each pay a penalty of HK$50,000, and jointly and severally pay costs of the Institute of HK$283,730. When making its decision, the committee noted that the contempt is serious and showed conduct falling far below that of a reasonable CPA. The committee also noted that the delayed production of the documents had caused irremediable prejudice to the party applying for the discovery, and that the Official Receiver had temporarily removed the respondents from all Panel A cases due to increased concern about this case. The committee further noted that while Tang was primarily responsible for not complying with the court orders, Lee had a non-delegable duty owed to the court and it could not be said that her breaches are less serious.
In deciding on sanctions, the committee considered a number of mitigating factors. These included the fact that the contempt was purged and that the respondents were fined by the court, the absence of dishonesty or fraud, the respondents’ practice histories and contributions to society, and mitigating pleadings from their professional acquaintances. The committee’s negative view of the respondents’ conduct in the proceedings was reflected in the amount of costs allowed to the Institute.
Details of the disciplinary findings are available on the Institute’s website.