When Loretta Fong CPA (practising) was a secondary school student, becoming an accountant one day was the furthest thing from her mind. She ended up studying for a popular business administration degree in university, but after balancing her first balance sheet during an accounting module, something clicked. “It was very satisfying, and I found it to be more practical than other modules I was studying at the time,” she says. Fong then switched to studying accounting, and joined Arthur Andersen, which later merged with PwC in Hong Kong in 2002, right after graduating. “I didn’t think twice about entering a Big Four firm. I knew that laying a solid foundation and getting a professional qualification would be necessary after studying accounting for so many years, and before moving into something else if I wanted to – but I didn’t.”
Fong has witnessed how the profession has changed over the years, with firms expanding their service offering in response to client demand and new technology, and with the growth of accounting specialisms. Now, as the Hong Kong Institute of CPAs’ President, Fong is using this insight to lead the organization through a transitional period, with changes soon taking place to its responsibilities, and to help all Institute members take advantage of future opportunities. “I am thrilled to be elected,” says Fong. “This year is a critical year for the Institute; it’s the year of rethink. The Institute needs to reposition itself, rebuild its image and reinforce members’ trust in us.”
For Fong, navigating the regulatory reform of the profession and ensuring a smooth transition of powers to the Financial Reporting Council (FRC) will be top of her mind. The reform of the regulatory regime of the accounting profession was first announced on 8 June 2021, and the Financial Reporting Council (Amendment) Bill was passed by the Legislative Council on 22 October 2021, signalling the shift of powers from the Institute to the FRC later this year. The move, which will see the FRC be renamed the Accounting and Financial Reporting Council, will see the FRC responsible for the issuance of practising certificates, registration of practice units, carrying out practice reviews, inspections and investigations, and imposing disciplinary penalties on CPAs, practice units and public interest entity auditors.
Fong views the reform as a way for the Institute to reorient itself, and play a bigger role in supporting its members. “Historically, our hands have been tied,” says Fong, explaining that the Institute’s role as a regulator has made it challenging to provide detailed technical support as it posed a “threat of self-review.”
Before becoming President, Fong has played an active role within the Institute, having served as a member of various committees since 2012, including the Corporate Finance Committee from 2012 to 2016, the Auditing and Assurance Standards Committee since 2015, and on the Council since 2017. “I’ve put forth suggestions with regards to helping our members. The feedback I’ve received has usually been ‘we can’t help to that extent because we are also regulators who are regulating them.’ With the reform, the Institute can provide more support to our members and give them more specific advice.”
Fong notes that change is not just driven by the reform. “Helping our small and medium practitioners (SMPs) to upskill and to digitalize has been on the agenda for a while now,” she notes. “We hope to take a big leap forward and really help SMPs to digitalize, such as through the digitalization of audit processes, and further continuing professional development programmes.”
Fong is well aware that some members may be worried about the changing regulatory regime, and emphasizes that the Institute will communicate closely with them on the matter to allay any concerns. “I understand that small practitioners might be especially anxious as they may be unsure of the benchmarks the FRC is going to use. With this in mind, more communication needs to happen with these small practitioners in a transparent manner – not just from us, but also from the FRC – so members can understand what is going to take place this year,” she says, adding that dialogue about the changes is also needed with non-practitioners.
As President, Fong will focus on ensuring all arrangements will be in place in time for the transition of powers later in the year. “Everything will need to be finalized by summer, so we only have half a year to make arrangements and publicize them to members. The speed in which this transition is happening will be a challenge,” she explains, pointing out that meetings and discussions are taking place between the Institute and the FRC. “However, details still need to be worked out in terms of how the transfer will take place operationally. This needs to happen quite quickly.”
The Institute, she stresses, will continue to play a key role in the profession following the transfer of powers. The Institute will maintain important responsibilities, including registering CPAs, and setting professional examinations and continuing professional development requirements. It will also retain its role as a standard setter, setting ethical, financial reporting, and auditing and assurance standards. According to a survey of members and Qualification Programme (QP) students the Institute carried out in July 2021, respondents indicated that they believe the Institute should continue representing the views of the profession and ensure that its professional development programmes match changing practices and expectations.
“It is important that the Institute stays focused in these areas and provide value to our members,” she says, noting that the Institute will continue to administer the QP, participate in the international space in reflecting the views of Hong Kong accountants in standard setting, and provide local guidance for practitioners.
Fong is confident that the QP, which held its Capstone level for the first time in the December 2021 examination session, will continue to attract both fresh graduates and young professionals and nurture them into full-fledged accountants. “I am delighted with the rollout of the new QP. It’s a reflection of what our key stakeholders demand from our members,” she says. “QP graduates are trained to not only be proficient in accounting, but also in finance and other disciplines, and to have an analytical mindset, which will prepare them to survive in the business world.”
Another one of Fong’s key objectives will be to forge better connections between the Council and the committees, with the aim of ensuring the Institute meets both short-term and long-term goals. “We have had three- or five-year plans in the past. How we execute these plans and communicate all ideas to our committees has to be done more effectively; there needs to be more collaboration,” she says.
Council members, Fong notes, should participate in various committees, and vice versa. “This is something I’m really hoping for. We have a number of committees for various initiatives, and these committees may or may not be led by Council members. We need more committee chairmen or committee vice-chairmen participating in our Council meetings,” she says, adding that increased communication between both Council and committee members would help to align goals and implement new plans.
“Everything will need to be finalized by summer, so we only have half a year to make arrangements and publicize them to members. The speed in which this transition is happening will be a challenge.”
Fong also notes the importance of the Institute’s image in society, and wants to enhance society’s trust towards the profession. “As President, I really hope to rebuild society’s image of accountants by showing what accountants are capable of and how we contribute,” she says. Having a better online presence, she says, will be key to achieving this goal. “People rely a lot on social media these days, so we need to do more in this area.”
Increased awareness of members and the important roles they play in society, she adds, will also help to reinforce their trust. “The public has to understand how accountants serve society. I haven’t seen enough member engagement in the past, so I really want to do more with respect to that,” Fong says, highlighting that there is a need for the Institute to communicate to the public that CPAs specialize in a wide range of fields beyond accounting. “Over 80 percent of our members are non-practising certificate holders and they contribute to society in many different ways. Members may not even be working on accounting-related tasks anymore, which goes to show how versatile and valuable to society our members are. Accountants should be proud of the fact that they are part of the Institute.”
Loretta Fong CPA (practising) has played an active role in the Institute, having served as a member of the Corporate Finance Committee from 2012 to 2016, the Auditing and Assurance Standards Committee since 2015, and on the Council since 2017.
Fong is proud that the Institute is globally recognized, and stresses that its international recognition also needs to be communicated in order to build a stronger sense of belonging among members. “The Institute is, without a doubt, well known. I’ve participated in international standard setting board meetings, and they indeed always seek comments from Hong Kong as the city is an international financial centre, and a bridge between Mainland China and the west. Our comments are always very valuable,” explains Fong. She points out that the Institute has representatives within committees under the International Federation of Accountants (IFAC), such as past president Johnson Kong, who has represented Hong Kong in its Small and Medium Practices Advisory Group since 2017. “However, I believe that more can be done to promote our responses to international papers and consultations, for example. I don’t think that we have made this too evident to our members. More communication is needed to show how we have been interacting internationally with the IFAC board or other international standard setters. The Institute also needs to stay focused and continue reflecting our members’ views in the international arena.”
The Institute needs to continue its efforts in nurturing its younger demographic, notes Fong. According to data from the Institute’s Annual Report 2021, more than 60 percent, or around 24,600 members, are at or under the age of 44. “The Institute has a big role to play in helping members, and young members are essential for the future development of Hong Kong and the Greater Bay Area (GBA),” notes Fong. She praises the Institute’s specialist training programmes in financial controllership, insolvency, taxation, business valuation and forensic accounting, noting that they have nurtured hundreds of CPAs, who have graduated from those programmes and then gone on to specialize in those respective fields. “Helping our young members to specialize, whether in audit or other fields, is particularly important.”
Fong hopes to help young members by making sure they receive tailor-made career advice. “I propose providing young members with customized training advice, through aptitude tests for example, to identify areas where they need to improve and then design training programmes for them – this will greatly help them to improve. This is one thing I have in mind.”
Fong also hopes to introduce programmes that help CPAs add value to global business trends, such as sustainability, for example, by delivering accreditation programmes in partnership with other bodies. “Environmental, social and governance (ESG) matters have been receiving tremendous attention recently, and enhancing our members’ capabilities in ESG by designing an ESG training programme, could be one of our key focuses this year,” she says.
“The Institute has a big role to play in helping members, and young members are essential for the future development of Hong Kong and the Greater Bay Area.”
With the spotlight on ESG, Fong is confident the profession will continue leading the way when it comes to promoting sustainability among companies, and supporting accountants in providing ESG assurance. “The Institute is a forerunner in this aspect; we have been holding our Best Corporate Governance Awards since 2000, and last year, we introduced the ESG Awards, which recognize companies that are outstanding in this initiative,” she says.
In December 2021, the Institute issued ESG Assurance in Hong Kong: A snapshot of the situation, a study on the current ESG assurance landscape in Hong Kong with information on the percentage of companies with ESG assurance, the standards and benchmarks being used, and the assurers of ESG reports. “Based on that report, less than 5 percent of listed entities are providing ESG assurance reports, out of which less than 50 percent of those are issued by CPAs,” notes Fong, emphasizing that the creditability of such reports is becoming more important to stakeholders. The Institute issued circulars such as Auditing and Assurance Technical Bulletin (AATB) 5 Environmental, Social and Governance Assurance Reporting in December 2020, which was revised in August 2021, and issued AATB 6 Non-Authoritative Guidance on Applying HKSAE 3000 (Revised) to Extended External Reporting Assurance Engagements, also in August 2021, to help CPAs with ESG assurance work. “We need to promote the importance of ESG assurance to the public and the investors, and to train our CPAs to provide such services.”
In November 2021, the Institute joined together with 13 other accounting bodies of The Prince of Wales’s Accounting for Sustainability Project Accounting Bodies Network and publicly pledged to achieve net zero greenhouse gas emissions. “It is important that we practice what we preach,” says Fong, noting that the commitment matters to the profession, Hong Kong and the planet itself. “It’s essential for us to make this commitment to be a good corporate citizen. By signing this commitment, we demonstrate to others that we are committed to net zero.”
Fong is Partner in PwC’s Entrepreneurial Group of the Assurance Division in Hong Kong.
Fong is also hoping for possible quarantine-free cross-border travel between Mainland China and Hong Kong this year. This, she says, will allow for business opportunities and cross-border audit engagements to take place in person, and for the Institute to resume dialogue with its counterparts on the Mainland. “The demand for CPAs in Mainland China is huge,” notes Fong. “There are approximately 300,000 CPAs under the Chinese Institute of Certified Public Accountants out of the 1.4 billion people in the Mainland, while there are over 47,000 members of the Institute. There are a lot of opportunities across the border, and many companies within the GBA – an area whereby the gross domestic product is one of the highest in various regions within China – are demanding CPAs for their business expansion.” A fully-open border will also facilitate talent and knowledge transfers with other cities in the GBA, Fong adds. “Our young accountants here in Hong Kong are very willing to travel, and if they could, they’d be able to witness the business opportunities in the GBA first hand.”
Outside of her professional life, Fong enjoys slowing down and seeking a sense of calm through her favourite hobby – yoga. “Practicing yoga is part of my life – I’ve been practicing for over 10 years,” she says. “Some of the poses are very challenging, so that helps me to not think about work at all. I always feel so refreshed after practicing.” She also enjoyed travelling before the pandemic, and appreciates how her work as an auditor brought her to places she’d never even imagined visiting. “Auditing gave me the opportunity to travel to many places in the world and learn so much during my trips. I’ve been to Israel, India, and Myanmar for work, to name a few.”
Her passion for her work continues to drive her as a partner at the firm. “Accounting is in many ways an art rather than a science; there could be many possibilities and alternatives in the accounting treatment for transactions, but there’s always a best option after considering all the facts and circumstances. I could be very technical, while at the same time very practical. I enjoy arriving at a solution after the consideration of many aspects.”
Above all, she is committed to fulfilling her role as President, and is equally intent on laying the right groundwork to ensure a prosperous future for the profession. “This is the year we strengthen our members’ trust,” she says. “As the President of the Institute, together with the leadership team, I would like to lay a good foundation for the Institute to celebrate its 50th year of establishment. I’d like our members to be proud of being an Institute member, and attract people outside Hong Kong to be CPAs under the Institute, for it’s a recognition of their creditability and high standards of professionalism.”
Loretta Fong’s focus areas for this year include: navigating the regulatory reform of the profession; building better connections between the Council and the committees; enhancing the image of the accounting profession in society; reinforcing trust with members; developing the careers of young members; promoting sustainability; and enhancing the Institute’s relationship with the Mainland and other overseas accounting institutes.