A government-appointed body will take over responsibility for licensing Hong Kong’s certified public accountants from the profession’s own institute under a proposed new law, a move described by a union official as apparently politically motivated.
The Financial Reporting Council (FRC) will be given licensing authority as well as the power to investigate, regulate and punish registered accountants and corporate bodies, under a bill submitted to the Legislative Council (LegCo) on Wednesday.
The Financial Reporting Council (Amendment) Bill 2021 would “make the regulation mechanism more effective,” said Secretary for Financial Services and the Treasury Christopher Hui at the bill’s first and second reading.
Members of the profession are currently licensed by the Hong Kong Institute of Certified Public Accountants (HKICPA), a founding member of the Global Accounting Alliance. The ICPA is at present the only body authorised by the Professional Accountants Ordinance.
The HKICPA’s governing council has 14 elected members along with two ex-officio, four government-appointed, and a maximum of two co-opted members, while all members of the FRC are appointed by Hong Kong’s chief executive.
Under the proposed amendments, the HKICPA will be in charge of the training, examination and registration of accountants, as well as establishing agreements with accounting bodies in other jurisdictions.
Hui said the government had consulted the FRC, the HKICPA and other interested parties and a majority of them supported the proposed changes.
‘Unnecessary and meaningless’
Pierre Lau, vice president of Accounting Bro’Sis Labour Union, told HKFP the amendment was “unnecessary and meaningless” since some members of the HKICPA council were already appointed by the government.
“I can’t see the rationale behind the FRC taking over the HKICPA. The HKICPA has been established for over 40 years and they have not had a major issue managing and regulating certified accountants or auditors,” said Lau
The vice president also said he feared the FRC would have the power to amend rules and regulations affecting the benefits of those in the auditing and accounting industry.
Lau said he thought the government’s move was partly prompted by the political environment, since the pro-democracy camp won over half of the seats in the HKICPA council in an election last December.
“I think that might have provoked the government to tighten [control], it’s like an epitome of the District Councils and the Legislative Council,” he said.
Lau said the government’s move lacked transparency and the debate in the Legislative Council would be one-sided given the absence of representatives from the accounting profession.
Kenneth Leung, former legislator from the accounting functional constituency, was disqualified by the government in November last year along with three other pro-democracy lawmakers. The move prompted the mass resignation of democrat legislative councillors.
“I think there is a need for the government to consult the public, or at least the accounting sector, or even conduct a consultation via the HKICPA,” said Lau. “It’s so weird now as the HKICPA is doing their own consultation…it should have been done by the government.”