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society news - Hong Kong Institute of Certified Public Accountants
SOCIETY NEWS The 2002 Council (Front row, from left) Lee Kai-fat (Registrar and Secretary-General); Judy Tsui; Andy SC Lee; Wong Tak Wai, Alvin (President); David Tak-kei Sun (Vice-President); Edward KF Chow (Vice-President); Cho Lung Pui Lan, Stella; Mark C Fong (Back row, from left) Wilson Fung; Carlson Tong; Gordon WE Jones; Kennedy Tat-yin Liu; Roger Best; Paul MP Chan; Doug Oxley; Shum Man-to; Michael KH Chan Council Announcements The Council approved the issuance of the following: • the proposed amendments to PN 870 “The Assessments of Certification Authorities under the Electronic Transactions Ordinance” • the SSAP 35 “Accounting for Government Grants and Disclosure of Government Assistance” as a final statement which will become effective for financial statements covering periods beginning on or after 1 July 2002 The Council also approved the issuance of the following Draft Interpretations which are based on the equivalent SIC Interpretations for a one-month consultation period: • Proposed Interpretation 14 “Evaluating the Substance of Transactions Involving the Legal Form of a Lease” (based on SIC-27) • Proposed Interpretation 15 “Business Combinations – Date of Exchange and Fair Value of Equity Instruments” (based on SIC-28) • Proposed Interpretation 16 “Disclosure – Service Concession Arrangements” (based on SIC-29) • Proposed Interpretation 17 “Revenue – Barter Transactions Involving Advertising Services” (based on SIC-31) • Proposed Interpretation 18 “Consolidation and Equity Method – Potential Voting Rights and Allocation of The Hong Kong 4 ACCOUNTANT Ownership Interests” (based on SIC-33) The Council approved the following appointments/ nominations: • Mr Colin Chau, Director of Professional Compliance, as the Society’s representative to serve on the Hong Kong Management Association judging panel for the Best Annual Reports Award 2002 • Ms Winnie Cheung, Senior Director, as the Society’s representative to serve on another term on the Information Technology Services Department’s Advisory Committee on Code of Practice for Recognised Certification Authorities • Mr Michael Chan as the Society’s representative to attend the IFAC IT Chairs Meeting, scheduled for 8-9 April 2002 in Amsterdam The Council approved the following sponsorships: • the Hong Kong Baptist University’s Academic Festival 2002 • the Hong Kong Inter-Tertiary Association’s Exhibition • the Hong Kong University of Science & Technology’s Accounting Week 2002 • the University of Hong Kong’s Business Workshop 2002 APRIL 2002 SOCIETY NEWS President’s Engagements Mr Alvin Wong, the President, attended the following events on behalf of the Society in the past months: • Environmental Campaign Committee’s 2001 Hong Kong Eco-Business Awards Presentation Ceremony on 21 January • Hong Kong Institution of Engineers’ 27th Annual Dinner on 21 February • Annual Spring Reception of the Liaison Office of the Central People’s Government in the HKSAR on 21 February • Spring Cocktail Reception of the Hong Kong Association of Property Management Companies, Hong Kong Institute of Housing, Hong Kong Institute of Real Estate Administration and Chartered Institute of Housing Asian Pacific Branch on 4 March • ACCA Hong Kong’s Spring Dinner on 5 March • Society of Chinese Accountants & Auditors’ Spring Dinner on 7 March • Vocational Training Council’s 20th Anniversary Reception on 19 March Statistics Update As of 15 March 2002, the Society’s statistics were as follows: 19,301 Members 3,023 Practising Certificate Holders 1,046 Firms 103 Corporate Practices Public Service Appointments Public Service Appointments Mr James Kong Tze-wing (江子榮) has been appointed a member of the Fish Marketing Advisory Board for one year with effect from 1 January 2002. Mr Vincent Wan Shui-tong (尹樹棠) has been re-appointed an adjudicator of the Registration of Persons Tribunal for two years with effect from 1 March 2002. Mrs Grace Lee Chan Ka-yan (李陳嘉恩) has been appointed a member of the Vocational Training Council’s Chinese Cuisine Training Institute Training Board with effect from 1 January 2002 and up to 31 March 2003. Mr Canning Fok Kin-ning (霍建寧) has been appointed a member of the Services Promotion Strategy Group for one year with effect from 1 April 2002. Cocktail Reception for New Members The Society held a cocktail reception on 20 March at the World Trade Centre Club to welcome new members who joined the Society between September 2001 and January 2002. More than 40 new members, Council and committee members attended. the Society’s latest developments, structure, services and the Accountant Ambassadors Programme. The occasion provided an excellent opportunity for new members to meet and network with fellow members in the profession. At the reception, Mr Wong Tak Wai, Alvin, the President; Mr Lee Kai-fat, the Registrar & SecretaryGeneral; and Mr Richard Tse, Deputy Chairman of the Community Services Committee, addressed members on A happy get-together APRIL 2002 Mr Alvin Wong, the President (right), chatting with two new members The Hong Kong ACCOUNTANT 5 SOCIETY NEWS Appointing Committees for 2002 The Council recently appointed members to its committees for 2002. At present, there are five statutory and 32 nonstatutory committees under the Council, as well as 10 working groups that deal with ad hoc matters. The composition of the various committees and working groups for 2002 is as follows: Statutory Committees DISCIPLINARY PANEL Mr Gabriel Azedo Prof Antonio J Barreira* Mr Mark Bradley* Mr Chan Sai Hoi Prof TS Chan* Prof Kevin Chen* Mr Marvin KT Cheung Prof Raymond CP Chiang* Mr Anthony WK Chow* Mr Paul Chow* Mr Con Conway* Mr Anthony Espina Prof JCY Han* Mr Dudley Harding Prof Richard Ho* Miss Angelina Kwan Mr Quinn YK Law Prof Leung Chun Ming* Mr Leung Tai Chiu, Antony Mr Lo Kai Ming, Charles Mr Tim TL Lui Mr Ma Ching Nam* Prof Abdul Majid* Mr Selwyn Mar Mr Vernon Moore Mr Mark Taylor* Mr Herbert HK Tsoi* Mr Bernard Wilkinson Mr Peter HY Wong Mr Wong Kwai Huen* Mr Patrick LT Wong Mr Wu Ting Yuk, Anthony Mr Patrick KC Yeung Mr Yu Hon To, David EXAMINATIONS BOARD Mr Doug Oxley (Chairman) Mr Kennedy Tat-yin Liu (Deputy Chairman) Mr Patrick KC Yeung (Deputy Chairman) Ms Mimosa KL Chan Mr Edward KC Chiu Dr Cho Lung Pui Lan, Stella Mr Dennis CO Chung Mr Richard Ho Mr Kwan Hong, Ricky* Mr Larry LK Kwok Mr Paul Neale* Ms Vivian Sun Mr Stephen Weatherseed The Hong Kong 6 ACCOUNTANT Ms Catherine Yen Mr David SO Yip INVESTIGATION PANEL Mr Albert Au Mr Tom Chan Dr Chan Koon Hung Mr Charles Chow Mr Kenneth Chung Mr Nicholas P Etches Mr PM Kam Mr RJ Kenrick Mr Johnson Kong Mr Larry LK Kwok Mr Joseph M Lai Mr Lam Hon Ming Mr John Lees Mr Albert KK Li Mr Meocre Li Mr Joseph Lo Mr ML Man Mr Nelson Miu Mr KG Morrison Mr Nigel Reid Mr Dennis Wong Mr Thomas YT Wong Mr Raymond Yung PRACTICE REVIEW COMMITTEE Mr KG Morrison (Chairman) Mr Lam Hon Ming (Deputy Chairman) Mr Robin Radcliffe (Deputy Chairman) Mr Albert Au Mr Francis Chan Mr TS Chan Mr Charles Chow Ms Ivy SL Chua Mr Philip Fung Ms Elizabeth Law Mr Louis Leung Ms Pauline Leung Mr Michael Pang Mr Philip Tsai Mr David Tsoi Mr Dennis Wong REGISTRATION AND PRACTISING COMMITTEE Mr Roger Best (Chairman) Mr Mark C Fong (Deputy Chairman) Mr David Tsoi (Deputy Chairman) Mr Floyd Chan Dr Cho Lung Pui Lan, Stella Mr Wilson Fung Mr Andy SC Lee Mr Kennedy Tat-yin Liu Mr Doug Oxley Mr Richard Sun Mr Patrick LT Wong Non-Statutory Committees ACCOUNTANCY ACCREDITATION BOARD Mr Roger Best (Chairman) Mr Stephen Chang (Deputy Chairman) Mr Doug Oxley (Deputy Chairman) Prof Gary C Biddle* Mr Edward KC Chiu Miss Fionna Kong Prof Amy Lau* Mr Richard KP Tse Prof Judy Tsui Ms WS Wong* ACCOUNTING STANDARDS ADVISORY PANEL Mr PM Kam (Chairman) Mr Roger Best (Deputy Chairman) Mr Charles Grieve Mr Johnny CD Mao Mr Vernon Moore Ms Estella Ng Mr Shum Man-to Mr Carlson Tong Prof Judy Tsui ADMINISTRATION AND FINANCE COMMITTEE Mr Edward KF Chow (Chairman) Mr Michael KH Chan (Deputy Chairman) Mr Wilson Fung (Deputy Chairman) Mr Albert Au Ms Margaret KK Chiu* Mr Anthony TY Lau* Mrs Yvonne Law Mr Samuel Lee Mr Doug Oxley Mr David Tak-kei Sun Ms Katherine Tsang* AUDIT COMMITTEE Sir Gordon M Macwhinnie (Chairman) Mr PM Kam Mr Joseph M Lai Mr Tim TL Lui APRIL 2002 SOCIETY NEWS Mr Aloysius Tse AUDITING AND ASSURANCE STANDARDS COMMITTEE Mr David Tak-kei Sun (Chairman) Mr Charles Chow (Deputy Chairman) Mr Kennedy Tat-yin Liu (Deputy Chairman) Mr Andrew Bennett Mr Patrick Cheng* Mr Richard George Ms Fanny Li Mr Shum Man-to Mr Tai Hay Yuen Mrs Jeanette Wa Mr Paul F Winkelmann Ms Shirley Wong Mr Desmond Yuen COMMUNITY SERVICES COMMITTEE Mr Kennedy Tat-yin Liu (Chairman) Mr Michael KH Chan (Deputy Chairman) Mr Richard KP Tse (Deputy Chairman) Mr Cheng Kin Chung Ms Susanna CM Ching Mrs Cindy MK Chow Mr Ho Tze Tu Mr Kong Tze Wing Miss Pak Miu Wa, Dorothy Mr Kenneth Poon Mr Tam Hung Biu, Billy Mr Peter Wan Mr Wong Wai Keung, Frederick Mr Andrew KK Wu Mr Louie MW Wu COMPLAINTS PANEL Mr Chan Chow, John (Convenor) Mr Simon Blade Ms Barbara Chan Mr Andy Choi Mr Charles Chow Mr Raphael Ding Mr Patrick Fitzgerald Mr William Gee Mr Richard George Mr Paul Hebditch Mr Philip Hilliard Mr Alan Johnson Mr Johnson Kong Mr Benny KB Kwok Mr Lam Hon Ming Mr Kenneth Lam Mr Jonathan Leong Mr Alden Leung The Hong Kong 8 ACCOUNTANT Ms Ruby Leung Mr Simon Leung Mr Keith Lie Mr Simon Morris Mr Robin Radcliffe Mr David Smith Mr Tai Hay Yuen Mr Alan Tang Mr Tse Ping Kwong Mr Jim Wardell Mr Paul Winkelmann Mr Richard Winter Mr Dennis Wong Ms Maria Xuereb Ms Catherine Yen Mr Raymond Yung CONTINUING PROFESSIONAL DEVELOPMENT COMMITTEE Mr Doug Oxley (Chairman) Dr Cho Lung Pui Lan, Stella (Deputy Chairman) Mr Leo Lee (Deputy Chairman) Mr Paul CC Chan Mr Sherman Cheung Mr Derry Fong Mr Philip Hilliard Ms Elizabeth Law Mr Gerald Redmond Mr Henry To Mr Philip Tsai Mr Stephen Weatherseed Mr Patrick LT Wong Miss Lesley Yeung CORPORATE GOVERNANCE COMMITTEE Mr David Tak-kei Sun (Chairman) Mr Quinn YK Law (Deputy Chairman) Prof Judy Tsui (Deputy Chairman) Mr Albert Au Mr Michael KH Chan Mr David Cheng Mr Richard George Mr Gordon WE Jones* Mr Peter Nixon Mr James Siu Mr Richard Sun Mr Carlson Tong Ms Nancy Tse Mr Jim Wardell Miss Alison Wong CORPORATE SERVICES COMMITTEE Mr Andy SC Lee (Chairman) Mr Wilson Fung (Deputy Chairman) Mr Kevin Yuen (Deputy Chairman) Mr Wilson CS Kwok Miss Lam Ching Ka Mr Lawrence WC Lau Mr Kennedy Tat-yin Liu Mr Frank YC Lyn Mr Gabriel Tam* Mr Carlson Tong Mr Joe PS Tsang EDITORIAL BOARD Mr Stephen Lau (Chairman) Dr Cho Lung Pui Lan, Stella (Deputy Chairman) Dr Steven K Luk (Deputy Chairman)* Mr Chow Wai Yin, Wilson Mr Benny KB Kwok Ms Joanne O’Callaghan* Mr Anthony Tam Mr David SO Yip ETHICS COMMITTEE Mr Mark C Fong (Chairman) Mr Edward KF Chow (Deputy Chairman) Mr KG Morrison (Deputy Chairman) Mr Albert Au Ms Barbara Chan Mr Stephen Chang Mr Roger Knight Mr William Lee* Mr Doug Oxley Mr Michael TL Pang Mr Shum Man-to Mr David Tsoi Mr Louis Wong* Ms Isabelle Young EXPERT PANEL ON BANKING Mr Simon Tsang (Convenor) Mr Lam Hon Ming Mr Babak Nikzad Ms Maria Xuereb Mr Raymond Yung EXPERT PANEL ON INSOLVENCY Mr John Lees (Convenor) Mr Paul MP Chan (Deputy Convenor) Mr Alan Tang (Deputy Convenor) Mr Charles Booth* Mr David Hague Mr Darach Haughey Mr Nick Hill Mr Johnson Kong Ms Ruby Leung Mr Stephen Liu* Mr Rupert Purser* Mr Mark Sterling* Mr Gabriel Tam Mr Kenny Tam APRIL 2002 SOCIETY NEWS Mr John Toohey* Mr Jim Wardell EXPERT PANEL ON INSURANCE Mr Philip Hilliard (Convenor) Mr Michael KH Chan Mr Max Chen Mr CF Choy* Mr Nick Kitto Mr Ken McKelvie Mr Jimmy Pun Mr Stephen Roder Mr Paul Winkelmann Mr ST Yuen EXPERT PANEL ON LEGAL MATTERS Mr Carlson Tong (Convenor) Mr Peter Griffiths (Deputy Convenor)* Mr Roy Huang* Mr Clement Shum* Ms Teresa Tong Mr William YH Tsang Mr Stephen Yam EXPERT PANEL ON LISTING Mr Carlson Tong (Convenor) Mr Edward KF Chow (Deputy Convenor) Mr Kenneth Lam (Deputy Convenor) Mr Floyd Chan Mr Phil Chan Dr Michael Firth Mr Larry Kwok Mr Leung Heung Ying, Alvin Mr Kennedy Tat-yin Liu Ms Katherine Loh Mr John Maguire* Mr Daniel SL Sham Mr Henry To Miss Stephanie Wong Mr Patrick KC Yeung EXPERT PANEL ON SECURITIES Mr Colin Shaftesley (Convenor) Mr Phil Chan Mr Cheng Kwok Kin, Paul Mr Sherman Cheung Mr Chris Donovan Mr Carlyon Knight-Evans* Mr Alex Kwok Ms Fanny Li Mr Keith Lie Mr Bonn Liu Mr David Tak-kei Sun Mr Patrick KC Yeung The Hong Kong 10 ACCOUNTANT FINANCIAL ACCOUNTING STANDARDS COMMITTEE Mr Roger Best (Chairman) Mr Bernard Wilkinson (Deputy Chairman) Mr Paul F Winkelmann (Deputy Chairman) Mr Billy WN Chan Ms Olivia Cheung Mr Edward KF Chow Mr Tommy Fung Mr Charles Grieve Mr Philip Hilliard Ms Sheila Pattle Mr Christopher Raper Mr Nigel Reid Mr Stephen Taylor Prof Judy Tsui Mr Andrew Williamson FINANCIAL MANAGEMENT COMMITTEE Mr Edward KF Chow (Chairman) Mr Patrick KW Chan (Deputy Chairman) Mr Alan Wong Chiu Ming (Deputy Chairman) Mr Ronald Chan Mr Paul Cheng Mr Chew Fook Aun Mr SY Choi Mr Peter Choy Mr Wilson Fung Mr Roger Henderson Mr Steven Hui Mr Quinn YK Law Mr Meocre Li Mr Guy Look Mr James Siu INFORMATION TECHNOLOGY COMMITTEE Mr Michael KH Chan (Chairman) Mr Edwin Cheung (Deputy Chairman) Ms Susanna Chiu (Deputy Chairman) Mr John Barnes* Mr Tony Chan Mr Vincent Chan Mr Con Conway* Mr Louis YY Ho Ms Lusan Hung Mr David Li Mr Gregory Lo Mr Kenneth Poon Mr Victor Tan Mr Paul Tsoi* Mr Ricky Woo* INSOLVENCY EDUCATION STEERING COMMITTEE Mr Doug Oxley (Chairman) Mr John Lees (Deputy Chairman) Mr Jeremy Glen* Mr Johnson Kong Ms Elizabeth Law Mr Kenny Tam Mr Alan Tang Ms Jane Tingle Mr John Toohey* Mr David SO Yip IT STRATEGY STEERING COMMITTEE Mr Michael KH Chan (Chairman) Mr Edwin Cheung (Deputy Chairman) Mr Tony Chan Mr Joseph Leung* Mr Kenneth Poon Mr Gary Wong Mr Wong Wai Keung, Frederick Mr Adrian Yeung MAINLAND AFFAIRS COMMITTEE Mr Patrick Cheng (Chairman) Mr Paul MP Chan (Deputy Chairman) Mr Edward KF Chow (Deputy Chairman) Mr Alfred Shum (Deputy Chairman) Mr Paul CC Chan Prof Chan Koon Hung Mr Louie Choi Mr Mark C Fong Mr Heng Kwoo Seng Mr Johnson Kong Prof Amy Lau* Mr Meocre Li Mr William YH Tsang Mr Peter Wan Mr Alan Wong Chiu Ming Ms Debra Wong Mr Desmond Yuen PR STRATEGY STEERING COMMITTEE Mr Tim TL Lui (Chairman) Mrs Grace Lam (Deputy Chairman)* Prof Judy Tsui (Deputy Chairman) Mr Michael KH Chan Mr Paul MP Chan Ms Rebecca Lam* Ms Betty Lee* Mr Kennedy Tat-yin Liu Ms Catherine Yen APRIL 2002 SOCIETY NEWS PROFESSIONAL RISK MANAGEMENT COMMITTEE Mr Ken McKelvie (Chairman) Mr Roger Knight (Deputy Chairman) Ms Elizabeth Law (Deputy Chairman) Mr Albert Au Mr Patrick Fitzgerald Mr Ng Shiu Hong Mr Nigel Reid Mr Kenny Tam Mr William YH Tsang PROFESSIONAL STANDARDS MONITORING COMMITTEE Mr Carlson Tong (Chairman) Mr Wilson Fung (Deputy Chairman) Ms Rebecca Chan Mr Charles Chow Mrs Norma Hall Mr Paul Hebditch Mr Jonathan Russell Leong Ms Estella Ng Mr Michael Sim Mr Tse Ping Kwong Ms Debra Wong Mr Thomas YT Wong RESEARCH AND SURVEY COMMITTEE Mr Carlson Tong (Chairman) Dr Cho Lung Pui Lan, Stella (Deputy Chairman) Mr Edward KF Chow Mr Mark C Fong Mr Wilson Fung Mr Teddy Iu* Miss Fionna Kong Ms Elizabeth Law Mr Andrew CC Ma Mr CY Tang Prof Samuel Tung SMALL AND MEDIUM PRACTITIONERS COMMITTEE Mr Paul MP Chan (Chairman) Mr Mark C Fong (Deputy Chairman) Mr Patrick LT Wong (Deputy Chairman) Mr Au Chau Ki, Wilkie Mr Albert Au Mr Charles WD Chan Mr Billy WN Chan Mr Philip Fung Mr Daniel KL Lee Mr Tai Hay Yuen Mr Thomas WS Wong Mr Thomas YT Wong Mr Louie MW Wu Ms Yung Wing Sheung, Amy APRIL 2002 STUDENT TRAINING AND DEVELOPMENT COMMITTEE Dr Cho Lung Pui Lan, Stella (Chairman) Mr Tse Yau Bong (Deputy Chairman) Mr David SO Yip (Deputy Chairman) Ms Amy YF Chow Ms Ruth HS Kung Mr Wilson CS Kwok Ms Lam Ching Ka Dr Peter TY Lau Mr Mike Li Miss Lillian Liang Mr Paul Neale* Mr Richard S Simmons Miss Alison Wong Dr Joseph SW Yau TAXATION COMMITTEE Mr Tim TL Lui (Chairman) Mr Paul MP Chan (Deputy Chairman) Mrs Yvonne Law (Deputy Chairman) Miss Debbie Annells Prof Chan Koon Hung Ms Florence Chan Mr Daniel Cheung Ms Chiu Kwai Fong, Florence Mr Charles Chow Ms Elizabeth Law Mr Leung Wo Ping Mr David Smith Mr David H Southwood Mr Tai Hay Yuen WEBTRUST COMMITTEE Mr Con Conway (Chairman)* Mr Michael KH Chan (Deputy Chairman) Mr William Gee (Deputy Chairman) Mr John Barnes* Mr Vincent Chan Ms Susanna Chiu Mr Gerry KH Li Mr Gregory Lo Mr Victor Tan Mr Andrew Watkins* Mr Stephen Weatherseed Mr Gary Wong Working Groups Working Groups ACCOUNTANTS’ REPORT TASK FORCE Mr David Tak-kei Sun (Chairman) Mr Richard George (Deputy Chairman) Mr Kennedy Tat-yin Liu (Deputy Chairman) Mr Paul Cheng Mr Charles Chow Mr Edward KF Chow Mr Paul Hebditch Mr Alan Morgan Mr Daniel Sham Mr Paul F Winkelmann GAAP FOR SMALL BUSINESSES WORKING GROUP Mr Paul MP Chan (Chairman) Mr Billy WN Chan (Deputy Chairman) Mr PM Kam (Deputy Chairman) Mr Clement Chan Mr TS Chan Mr Raymond Cheng Mr Philip Fung Mrs Norma Hall Mr Albert Li Ms Fanny Li Mr Tai Hay Yuen Mr Bernard Wilkinson INTERNATIONAL RECOGNITION TASK FORCE Mr Roger Best (Chairman) Mr Wong Tak Wai, Alvin (Deputy Chairman) Mr PM Kam Dr Li Ka-cheung, Eric Mr Doug Oxley Mr David Tak-kei Sun Prof Judy Tsui JOINT GOVERNMENT/HKSA COMPANIES ORDINANCE REVIEW WORKING GROUP HKSA representatives Mr Roger Best (Chairman) Mr Peter Griffiths* Mr Albert Li Mr Tai Hay Yuen Mr Bernard Wilkinson Mr Paul F Winkelmann Ms Winnie Cheung Government’s representatives Mr Gordon WE Jones Mr Esmond Lee Mr CW Cheng Mr Charles Grieve Ms Anita Tong LANGUAGE PROFICIENCY WORKING GROUP Mr Doug Oxley (Chairman) Prof TS Chan (Deputy Chairman)* Mr Wilson CS Kwok (Deputy Chairman) Ms Maria Chan Ms Cecilia Lee Prof Abdul Majid* The Hong Kong ACCOUNTANT 11 SOCIETY NEWS Prof Samuel Tung Mrs Lesley YC Wong* Mr Allan Yun Leun Yeung Ms Jennifer Yuet Fong Yip Li MEMBERSHIP NEEDS SURVEY TASK FORCE Mr Carlson Tong (Chairman) Mr Paul MP Chan Mr Edward KF Chow Mr Wilson Fung Ms Elizabeth Law Mr Kennedy Tat-yin Liu Prof Lui Ping Keung* ORGANISING COMMITTEE OF WORLD CONGRESS OF ACCOUNTANTS 2002 Mr Peter HY Wong (Chairman) Mr Edward KF Chow (Deputy Chairman) Mr David Tak-kei Sun (Deputy Chairman) Mr Dennis SS Chan* Mr Michael KH Chan Mr Brian WK Chan The Hong Kong 12 ACCOUNTANT Mrs Nellie Fong Mr Samuel Lee Mr Tim TL Lui Mr Doug Oxley Mr Carlson Tong Mr John Wan* Mr Wong Tak Wai, Alvin PRACTICAL EXPERIENCE TASK FORCE Mr PM Kam (Chairman) Mr Roger Best (Deputy Chairman) Dr Cho Lung Pui Lan, Stella Mr Peter Chow Ms Chu Yuet-Lai, Georgiana Mr Kenneth Chung Mr Timothy Ho Mr Leung Wo Ping Mr Paul Neale* Mr Doug Oxley STANDARD-SETTING STRATEGY REVIEW TASK FORCE Mr PM Kam (Chairman) Mr Roger Best (Deputy Chairman) Mr David Tak-kei Sun (Deputy Chairman) Mr Albert Au Mr Billy WN Chan Mr Edward KF Chow Mr Mark C Fong Mr Charles Grieve Mr Johnny Mao Mr Vernon Moore Ms Estella Ng Mr Shum Man to Mr Carlson Tong Prof Judy Tsui Mr Wong Tak Wai, Alvin TASK FORCE TO STUDY THE DESIRABILITY FOR ESTABLISHING GUIDELINES FOR DISCIPLINARY ORDERS Mr Selwyn Mar (Chairman) Prof TS Chan* Mr Anthony WK Chow* Ms Elizabeth Law Mr Patrick KC Yeung * Non-HKSA member APRIL 2002 SOCIETY NEWS Statements Prepared by Hong Kong Society of Accountants and Presented before the Legislative Council Panel on Financial Affairs The Hong Kong Society of Accountants was invited by the LegCo Panel on Financial Affairs to attend a special meeting on the initiatives to strengthen Hong Kong’s corporate governance regime on 14 March 2002. The meeting was also attended by representatives of the Financial Services Bureau, the Companies Registry, the Standing Committee on Company Law Reform, the Securities & Futures Commission and the Hong Kong Stock Exchange and Clearing Co. Ltd. At the meeting, the Society was represented by the President, the two vice Presidents, the Registrar and the Senior Director. The President Mr Alvin Wong give an oral presentation in Chinese, setting out the HKSA’s contributions and plans in corporate governance and related issues, as well as the Council’s current position with respect to the areas of: • Standard-setting, • Auditors’ role and audit independence, • Regulatory framework, • Corporate governance practices and • Financial reporting models – Looking into the future This important statement, in its entirety, is reproduced below. The oral presentation was based on a written submission, followed by the speaking notes of the Secretary for Financial Services Mr Stephen Ip, and the Chairman of the Standing Committee on Company Law Reform Mr Anthony Rogers on the same occasion. President’s Address on Corporate Governance 1. We welcome this opportunity to contribute our views to the discussion of the subject “Initiatives to Strengthen Hong Kong’s Corporate Governance Regime”. 2. In your invitation to attend this special meeting of the Panel, specific references were made to the collapse of Enron, a listed company in the US, and the concerns to which this has given rise in relation to the ethics and standards of practices of the accountancy profession and corporate governance. following the Enron affair in the States. HKSA works within and is an integral part of the body that represents the world accounting profession, the International Federation of Accountants (IFAC). Our profession, under the leadership of IFAC, readily accepts that the profession must contribute to reducing the occurrence of major failures such as Enron, and we will play our part in the drive for greater quality and consistency of accounting and auditing services and will continue our work to improve corporate governance. 5. That said, we do not propose to discuss in this meeting the specific accounting and auditing issues surrounding Enron. We do not know enough about the specifics of the case and the transactions involved, nor the complex and intricate systems in the United States of America and the environment in which they operate, to make value judgments. In any case, business failures seldom have simple causes, but are usually the result of a more complex interplay of various factors. Reform should be an on-going process rather than a knee-jerk reaction to sudden events or failures. 6. At the end of the day, all interested parties including management, auditors, banks, analysts, regulators, standard setters, the government and the investing public will learn from the Enron affair. Issues will be identified and solutions will be found to address them. 7. We plan to watch closely and learn from the recent events and proposed reforms in the US. If evidence emerges suggesting that changes are required in Hong Kong, we will, of course, do our best to ensure that all that needs to be done in order to maintain the highest possible standards is in fact done. 8. We hope, however, to make use of the opportunity in this meeting to respond to some questions and doubts raised by members of this Panel on a number of areas regarding Hong Kong’s financial reporting standards, the role of the audit and audit independence and corporate governance practices. 3. We understand that we are specifically requested to brief this Panel on the ethics and practices of the accounting profession in Hong Kong as a central issue within the wider subject of Hong Kong’s corporate governance that is under discussion today. 9. We believe that concerns in these areas, while understandable given the widely reported problems that have been unfolding in the US following the Enron debacle, must be put into perspective. 4. While we maintain that the Enron case is an isolated incident and is rare, we would like to say at the outset that the accounting profession has registered and takes seriously the public concerns expressed in recent weeks 10. We feel sure that the on-going efforts of our profession and others in this community have made significant progress towards building a sound and solid financial reporting foundation for Hong Kong. These efforts are APRIL 2002 The Hong Kong ACCOUNTANT 13 SOCIETY NEWS on-going and we do not think we should let individual events overshadow them. Afterall, Rome was not built in one day. Standard-setting 11. Let us turn first of all to HKSA’s standard-setting regime. 12. HKSA sets accounting, auditing and ethical standards, compliance with which is a prerequisite for all HKSA members, whether they act as auditors, preparers/CFOs, executive or independent directors. 13. HKSA has since 1993 laid down the policy to model Hong Kong standards on international standards. 14. We further strengthened this policy in 1999 by introducing a harmonisation programme that saw Hong Kong accounting and auditing standards very close to fully aligned with the full set of International Standards on Auditing (ISAs) issued by IFAC, and the International Accounting Standards (IAS) issued by the International Accounting Standards Board (IASB). 15. We have provided in Appendix 1 a comparison table, which shows that our standards are almost in tandem with the international standards. 16. Having achieved harmonisation with the existing international standards and looking ahead, we have recently put in place a new, open and transparent due process to ensure the timely adoption of new and revised IASs, ISAs and the IFAC Ethics Code into our Hong Kong Standards. 17. We expect that by end 2002, we will achieve full process convergence with the international standard setting bodies, which means that by then we will be setting same standards simultaneously as these bodies. 18. We also provide in Appendix 2 the composition of our Financial Accounting Standards Committee (FASC) and Auditing Standards Committee (AuSC), which shows that both Standard-setting Committees are widely representative. 19. We have indicated our support for the recommendations set out in the Standing Committee on Company Law Reform’s Consultation Report regarding the composition of the FASC and AuSC. We would like to confirm that the recommendations will be implemented in the 20022003 term of the Council, to coincide with our standards and process convergence plan with the International Standards by the end of 2002. 20. The international standards (IAS, ISA and IFAC Ethics Code) on which Hong Kong standards are based follow a framework/principle-based approach as opposed to the rule-based approach adopted in the US. The Hong Kong 14 ACCOUNTANT 21. The framework approach, which puts substance over form, is regarded as more effective as a safeguard against abuse. The kind of off-balance sheet finance arrangements through special purpose entities (SPE) permitted under US Generally Accepted Accounting Principles (US GAAP) would not have been permitted under IAS, nor under Hong Kong Accounting Standards (SSAP 32), which have fully adopted the IAS “control” concept for group consolidation and in particular the accounting for SPE in group accounts. 22. Sir David Tweedie, the IASB Chairman, in his recent speech to the US Congress, explained why the IASB has chosen a principle-based as opposed to rule-based approach to standard-setting. He also commented in relation to USGAAP that it tends, on the whole, to be more specific in its requirements and include much more detailed implementation guidance, and in his view, this approach is a product of the environment in which U.S. standards are set. “The IASB has concluded that a body of detailed guidance (sometimes referred to as bright lines) encourages a rule-book mentality of “where does it say I can’t do this?” We take the view that this is counter-productive and helps those who are intent on finding ways around standards more than it helps those seeking to apply standards in a way that gives useful information. Put simply, adding the detailed guidance may obscure, rather than highlight, the underlying principle. The emphasis tends to be on compliance with the letter of the rule rather than on the spirit of the accounting standard.” 23. No standard can claim to be flawless, they are by nature continuously evolving. However, we should let you know that we have a sound standard-setting regime to keep us in line with international benchmarks. The wide and balanced representations of the FASC and AuSC, together with the Council’s determination to model our standards based on international standards, have ensured that the standard-setting process in Hong Kong is independent and much less vulnerable to business and political lobbying. 24. HKSA has a long-standing record of willingly driving the process of improving quality and integrity on our own initiative. We will continue to review and refine our approach where necessary. The Auditors’ Role and Audit Independence 25. We would like to move on next to the subject of the audit scope and audit independence. 26. We should first explain some facts about the role of audit as it seems always misunderstood. Role of Audit (i) Auditors are appointed by shareholders of a company to audit and report to the shareholders on the accounts APRIL 2002 SOCIETY NEWS prepared by the directors laid before the company in general meeting. be a good starting point to comment by clarifying the Hong Kong position on this issue. (ii) The auditors’ job is to report on whether the accounts for a year that has already ended, show a true and fair view in compliance with accounting standards. They are not responsible for preparing the company’s accounts or managing the company. 28. We would state categorically that professional independence is a concept fundamental to the accountancy profession. We take pride in our reputation for excellence and integrity in this regard. The HKSA has a clear set of ethical standards for members to follow, which include guidance on independence, objectivity and integrity, practice promotion, fees, clients’ monies, confidentiality, etc, and we have an effective enforcement regime to safeguard our members’ adherence to these principles. (iii) The management are responsible for running the company’s business, preparing financial statements, ensuring that adequate systems of control are in place and keeping shareholders and the market informed of important events. (iv) Auditors are required to be independent of the company and management and they must follow a rigorous code of Auditing and Ethical standards to ensure quality of their work. Those who fail to observe the standards in Hong Kong are subject to disciplinary action by HKSA. (v) The auditors can provide a “reasonable assurance” on the annual accounts. They cannot, and will not, guarantee the financial health of the company. (vi) It has been accepted by the court that the auditor is a watchdog not a bloodhound. The law requires him to form an opinion on the view given in the accounts. On the other hand, auditing standards (benchmarked with ISAs) provide the framework based upon which the auditors should check the accounting records and documents presented to him by the management and reach his audit opinion. He is required to exercise reasonable skepticism when reviewing the transaction presented to him by management, but he is not expected to perform an investigation into the authenticity of those transactions. (vii)If the management are perpetrating a calculated fraud or conspiring to hide information from auditors, the auditors will not always be able to find this out. (viii)Unfortunately, senior management fraud or bad business decisions have been a prevalent factor in the history of major business collapses. (ix) Often, the question of whether the auditors should do more is a question of the balancing cost and benefit. (x) Fraud discovery is a much more in-depth and costly process. Audit Independence 27. “Audit Independence” has become the focus of much attention worldwide in recent weeks, following the Enron collapse. With the spotlight firmly on the question of the perceived independence of audit firms which provide non-audit services for their audit clients, it would perhaps APRIL 2002 29. Our ethics standards on Independence, based on the UK principles, are continually being updated to align with international developments. 30. An updated International Code of Ethics for Professional Accountants featuring new rules on independence has recently been released. This is the result of international consultation by IFAC over the last three years in the form of a Discussion Draft issued in August 1999; an Exposure Draft issued in June 2000; and a Re-Exposure Draft issued in April 2001. 31. The International Code is intended to serve as a model on which to base national ethical guidance for accountants worldwide. 32. HKSA has decided to adopt the Code as soon as it is finalised and had therefore taken part in the review of the Draft Code throughout the consultation process. 33. Following the finalisation of the Code in December 2001, the HKSA Ethics Committee has started work to adopt the IFAC Code of Ethics as a model on which to base our ethical guidance for professional accountants in Hong Kong. 34. Our current standard as well as the IFAC Code has followed a substance over form, principle-based, approach, and is not designed in such a way as to impose a ban on certain services, but rather to provide guidance on specific circumstances and relationships that pose a threat to independence and safeguards to mitigate threats. 35. A ban is imposed by reference to the principle under the Code that no safeguard could reduce the threat to independence to an acceptable level. Our current standard recognises the possible threat to independence created by the quantum of fees, and imposes a benchmark that fees from any one client should not exceed 15% of the total fee income of the firm. It also deals in depth with other issues of potential threats, such as: • personal relationships (no member should personally be involved in an audit if he or she has worked with The Hong Kong ACCOUNTANT 15 SOCIETY NEWS the client company during the previous two years); • financial involvement (insurance, pension products and units in a mutual fund which holds shares in a client company are permitted, but other direct and indirect beneficial interests should not be held by any staff member involved in auditing the company); and • on the provision of non-audit services such as management consulting, the standard requires firms to take care not to perform management functions. These requirements are consistent with the existing and updated IFAC Code. 36. The updated IFAC Code also identifies a number of examples where it is considered that there is no adequate safeguard to reduce threats to an acceptable level and members should not perform such work for their audit clients under normal circumstances. These include specific types of legal, corporate finance and valuation services, and accounting records and financial statement preparation for listed audit clients. 37. The above examples are given under the conceptual framework that an auditor should be free in each professional assignment he undertakes of any interest which might detract from objectivity. This requirement applies to both reporting and other professional work. The IFAC Code sets out factors that pose a threat to independence and firms are required to identify and evaluate these threats for every non-audit assignment and put in place proper safeguards to preserve their independence. 38. While we agree that the provision of non-audit services to an audit client may pose a real or perceived threat to independence, we do not believe that a rule-based approach to impose a ban on some or all such services will serve the good or interest of either the public or the profession. Again, quoting Sir David Tweedie’s words, the rule-based approach is “counter-productive and helps those who are intent on finding ways around standards more than it helps those seeking to apply standards”. 39. Recent talk about separation of audit and consultancy is somewhat misguided. One has to determine first of all what is meant by “consulting”. But where does one draw the line? 40. Many services provided to an audit client may be construed as advice or consulting, but they are so closely linked to the audit that as a practical matter only the auditor can provide them. 41. For example, during the audit process, the management typically request and receive significant input regarding The Hong Kong 16 ACCOUNTANT such matters as accounting principles and financial statement disclosure, the appropriateness of controls and the methods used in determining the stated amount of assets and liabilities. Technical assistance of this nature and advice on accounting principles for audit clients are a necessary means to promote the fair presentation of the financial statements. Banning such services would jeopardise and in fact hinder an efficient and cost effective audit. 42. We would say that should it be decided that auditors should cease to provide such services to their audit clients, this will significantly reduce rather than enhance the standard of corporate financial reporting. For argument sake, if all consultancies are banned on the auditors, the audit could evolve to such an extent that despite having identified audit adjustments, the auditors could not communicate them to the management but can only revert to qualifying the accounts. 43. The use of the word ‘independence’ on its own may create misunderstanding. Standing alone, the word may lead observers to suppose that a person exercising professional judgment ought to be free from all economic, financial and other relationships with others. This is impossible, as every member of society has relationships with others. 44. What we require our members to do under the IFAC “conceptual framework” is to exercise professional judgment and objectivity with regard to the public interest, which include, an obligation to identify and evaluate circumstances and relationships that create threats to independence, and to take appropriate action and safeguards to eliminate or reduce them to an acceptable level. 45. These safeguards include: • Policies and procedures to prohibit professional staff from making management decisions for the assurance client, or assuming responsibility for such decisions. • Discussing independence issues related to the provision of non-assurance services with those charged with governance, such as the audit committee. • Disclosing to those charged with governance, such as the audit committee, the nature and extent of all fees charged. • Policies within the assurance client regarding the oversight responsibility for provision of non-assurance services by the firm. • Involving an additional professional accountant to advise on the potential impact of the non-assurance engagement on the independence of the member of the assurance team and the firm. APRIL 2002 SOCIETY NEWS • Involving an additional professional accountant outside of the firm to provide assurance on a discrete aspect of the assurance engagement. practical experience requirements, and by its structured programme of continuing professional education through seminars, courses and reading materials. • Making arrangements so that personnel providing non-assurance services do not participate in the assurance engagement. • Managing the professional work in such a manner so as to avoid the interest of one client adversely affecting those of the other. 53. The HKSA started its own initiatives and in its Fourth Long Range which was published in year 2000, it decided, amongst other things, to conduct an overall review of the Society’s self-regulatory system including a review of both its disciplinary process and practice review process. The HKSA’s policy direction is very clear: • 46. When the safeguards are insufficient to eliminate the threats to independence or to reduce them to an acceptable level, the firm is expected to decline the work or withdraw from the assurance engagement. 47. It is stated at the outset of the IFAC Code that “… A conceptual framework that requires firms and members of assurance teams to identify, evaluate and address threats to independence, rather than merely comply with a set of specific rules which may be arbitrary, is . . . . . . . , in the public interest. (Para. 8.10). We published a white paper on improving disciplinary hearing proceedings back in September 2000 with a view to making our disciplinary hearing process more open and transparent. With membership and community support, we will make our hearings public and inc rease lay mem bers on disci plinary committees. • 50. The Code which is 120 pages long may be downloaded from IFAC’s web site at www.ifac.org. 51. We would point out that the controversial independence issues that have arisen in the US are generally attributed to the dramatic growth in the size of some audit firms’ consulting businesses relative to audit, and the widespread provision of management consulting services to audit clients. By contrast, audit and other traditional professional services, such as tax advisory, are still the mainstream services provided by accountants in Hong Kong. Regulatory Framework 52. The Society has the authority and machinery to set accounting auditing and ethics standards and to discipline those members of the profession who fail to observe such standards, irrespective of whether they work as auditors or preparers of financial statements (CFO/ directors etc.). This self-regulatory framework is complemented by the Society’s control of entrance into public practice through professional examinations and The Hong Kong 18 ACCOUNTANT Involvement of lay members While there will be a continued need for those familiar with financial reporting and audit work to participate in our practice review, investigatory and disciplinary committee work, we also recognise the importance and contributions of lay members to the enforcement process. We will invite, for example, the Hong Kong Law Society and the Hong Kong Bar Association to nominate their experienced members to serve on our disciplinary panel. 48. IFAC’s leadership is confident that the updated Code will contribute to increased public confidence in the assurance services provided by the world’s accountants. “Such high quality standards are the fundamental underpinnings of the world’s financial markets,” states Aki Fujinuma, president of IFAC. 49. We agreed and intend to put the Code in place in Hong Kong as soon as possible. We believe that as long as our members adhere to the laid down principles as defined in our ethics standards, non-audit work will not compromise independence. Greater openness and transparency • Independence of the regulatory proces Under the current legislation, the Society’s Council cannot influence the work of the statutory committees (Investigation Committee and Disciplinary Committee). There is no cross membership between Council members and members of these committees and we observe strictly the conflict of interest issues during deliberations. 54. The Society has demonstrated its ability to self-regulate through its system of practice review, which it has operated since September 1992 and professional standards monitoring since the 1980’s. We have since completed a total of 1,013 practice review cases. Under this system, the Society reviews and monitors the quality control procedures and compliance of all audit practices with ethical, auditing and accounting standards. The reviews provide assurances that a high standard of independent professional work is maintained. The system of practice review is currently under review with the objective to identify areas where it can be further improved to enhance effectiveness. 55. In addition to its own regulatory work, HKSA works closely with other regulators including the SFC and APRIL 2002 SOCIETY NEWS HKEx with the common goal to maintain an effective and efficient corporate governance regime in Hong Kong. Corporate Governance Practices 56. Since the formation of our Corporate Governance Working Group (later renamed Corporate Governance Committee) in 1994, the Society has undertaken numerous studies and produced a series of study reports and practice guidance to promote good corporate governance practices in Hong Kong. 57. In our First Report, published in 1995, we made 19 recommendations for improved corporate governance standards and practices. When we recently took stock o f t he e x t e n t o f i m pl e m e n t a t i o n o f t h e s e recommendations, we were pleased to find that many of them have since been formally adopted by the Stock Exchange in the form of additional Listing Rules or by inclusion in the Stock Exchange’s Code of Best Practice. 58. There are, however, a number of other items, which remain to be implemented. 59. A number of these will have a significant enhancement effect in relation to some of the issues to which we have outlined in this paper. We would therefore like to draw your attention to these in the hope that we will be able to enlist your assistance in promoting their early adoption in Hong Kong:I. Mandatory appointment of a CFO (who should be a qualified accountant) at board level: • with designated responsibility for the finance function; • who should be a signatory to the financial statements on behalf of the board; and • have the right of access to the Audit Committee. 60. The growing complexity of financial reporting, corporate financial arrangements and activities, and the development of highly technical financial instruments suggest that it would be appropriate to appoint a qualified accountant as chief financial officer in each regulated and listed corporation. The Society’s membership would be one suitable qualification. 61. We believe the appointment of a qualified accountant with special responsibility for the financial statements would provide a better assurance of the quality of accounting information and its compliance with generally accepted accounting principles. In this way, where the preparer of the accounts is a member of HKSA, he would be subject to the regulation of the Society to maintain high professional standards and would be directly accountable to the Society for his professional conduct. This would give added protection to minority shareholders and so be in the public interest. APRIL 2002 62. This requirement has been incorporated in the Rules of the Growth Enterprise Market (GEM), but has not so far been introduced into the Main Board. II. Disclosure of fees paid to auditors in respect of other non-audit services 63. Such disclosure would increase the transparency of the auditors’ independence, and we see great benefits in its early adoption by companies. However, while this practice has the profession’s endorsement, responsibility for implementation of it would remain with the companies and the regulators. We would of course encourage voluntary disclosure by the companies concerned before such disclosure becomes a mandatory requirement. III. Effectiveness of Audit Committee 64. We published a practice code on audit committees in 1997 and an updated edition has just been released in February 2002. The code set out detailed guidance regarding the responsibilities of the audit committee, independence and quality of its membership, meeting & reporting functions, etc. The code has been developed to benchmark good practices and has been referred to in the Stock Exchange’s Code of Best Practice. While it has no mandatory force, we actively promote and encourage its voluntary adoption by companies. We believe that if companies follow the principles laid down in the code, they will be more likely to have an effective audit committee. 65. We should also like to point out that one of the functions that we have prescribed in our practice code for the audit committee is to assess the quality of the service and the reasonableness of the fees charged by the auditors. The audit committee should keep under review the nature and extent of non-audit services provided by the auditors, to strike a balance between ensuring the auditors’ objectivity and cost-effectiveness and efficiency to the company for engaging them to do the work (see also paras. 44 above). IV. Disclosure of meeting and attendance record 66. To contribute to the transparency of the company as to how it runs its business:(i) Disclosure of the number of meetings held during the year of the board, audit committee and remuneration committee. (ii) Disclosure of the attendance records of individual directors in relation to meetings of the board, audit committee and remuneration committee. Financial Reporting Models – Looking to the Future 67. There is a common complaint that the relative absence The Hong Kong ACCOUNTANT 19 SOCIETY NEWS of up-to-date information with which to assess corporate earning capacity, coupled with the pace of change, helps explain the volatility of today’s share prices. Investors need more frequent corporate financial and non-financial disclosures (e.g. on-line, real-time) to make informed investment decisions. Recent initiatives proposed by the Stock Exchange will address these needs. 68. Looking to the future, companies would be producing the new disclosures with the desired frequency over the internet; auditors would be providing contemporaneous assurance that the information was reliable; investors would benefit from better decision-making information; productive corporations would benefit from a lower cost of capital; and the economy would be growing with even more stability and promise. 69. To realise this vision, both the reporting model and the focus of auditing must change. Steps toward this new direction have already begun. Companies’ accounting and reporting processes will be more automated and standardised. Auditors in this new world will be reporting on information systems. They will be focusing heavily on preventive controls and providing assurance that information systems are operating effectively and sufficiently to produce reliable information. 70. Initiated by the coordinated effort of the world accounting profession, new reporting technology (such as XBRL) and assurance models (WebTrust, SysTrust, DataTrust) are emerging that will facilitate continuous reporting and auditing to meet the needs of the knowledge economy. HKSA is cognisant of the need of the accounting profession in Hong Kong to keep an open mind to new developments elsewhere in the world and is playing an active part in these new and exciting developments. Closing Remarks 71. In closing, we hope that we have explained our position and contributions towards the issues under discussion in this meeting. The Society supports any initiatives to improve Hong Kong’s financial reporting standards and assurance services. We will work closely with LegCo, the Government and other regulators to create a business environment that will benefit local and overseas investors to maintain Hong Kong’s status as an international financial centre of the world. Appendix 1A Update on Hong Kong Statements of Standard Accounting Practice (HKSSAPs) vs International Accounting Standards (IASs) IAS No. Name of Statement SSAP No. IAS 1 Presentation of Financial Statements SSAP 1 IAS 2 Inventories SSAP 22 IASs 3-6 Withdrawn N/A IAS 7 Cash Flow Statements SSAP 15 IAS 8 Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies. SSAP 2 IAS 9 Research and Development Costs (superseded by IAS 38) SSAP 16 IAS 10 Events After the Balance Sheet Date SSAP 9 IAS 11 Construction Contracts SSAP 23 IAS 12 Income Taxes IAS 13 Withdrawn N/A IAS 14 Segment Reporting SSAP 26 IAS 15 Information Reflecting the Effects of Changing Prices IAS 16 Property, Plant and Equipment SSAP 17 IAS 17 Leases SSAP 14 IAS 18 Revenue SSAP 18 IAS 19 Employee Benefits SSAP 34 IAS 20 Accounting for Government Grants and Disclosure of Government Assistance SSAP 35 IAS 21 The Effects of Changes in Foreign Exchange Rates The Hong Kong 20 ACCOUNTANT Up-to-date Targeted completion date Exposure draft 30 April 2002 On hold On hold * APRIL 2002 SOCIETY NEWS IAS 22 Business Combinations SSAP 30 IAS 23 Borrowing Costs SSAP 19 IAS 24 Related Party Disclosures SSAP 20 IAS 25 Accounting for Investments (Superseded by IAS 39 and IAS 40) IAS 26 Accounting and Reporting by Retirement Benefit Plans IAS 27 Consolidated Financial Statements and Accounting for Investments in Subsidiaries SSAP 32 IAS 28 Investments in Associates SSAP 10 IAS 29 Financial Reporting in Hyperinflationary Economies IAS 30 Disclosures in the Financial Statements of Banks and Similar Financial Institutions HKMA Best Practice Guide IAS 31 Financial Reporting of Interests in Joint Ventures SSAP 21 IAS 32 Financial Instruments: Disclosure and Presentation IAS 33 Earnings Per Share SSAP 5 IAS 34 Interim Financial Reporting SSAP 25 IAS 35 Discontinuing Operations SSAP 33 IAS 36 Impairment of Assets SSAP 31 IAS 37 Provisions, Contingent Liabilities and Contingent Assets SSAP 28 IAS 38 Intangible Assets SSAP 29 IAS 39 Financial Instruments: Recognition and Measurement Exposure Draft IAS 40 Investment Property In discussion IAS 41 Agriculture Exposure Draft Sept 2002 SSAP 13 and 24 2.302 “Financial statements of retirement schemes” On hold Exposure Draft (As at 12 March 2002) Appendix 1B Update on Hong Kong Statements of Auditing Standards (HKSASs)/ Hong Kong Standards on Assurance Engagements (HKSAEs) vs International Standards on Auditing (ISAs) Title Title — Preface to ISAs and related services ISA 120 Framework of ISAs ISA 100 Assurance engagements ISA 200 Objective and general principles HKSAS 100 Objective and general principles governing an audit of financial statements governing an audit of financial statements ISA 210 Terms of audit engagements HKSAS 140 Engagement letters ISA 220 Quality control for audit work HKSAS 240 Quality control for audit work ISA 230 Documentation HKSAS 230 Documentation ISA 240 The auditor’s responsibility to consider fraud and error in an audit of financial statements HKSAS 110 The auditors’ responsibility to consider fraud and error in an audit of financial statements ISA 250 Consideration of laws and regulations in an audit of financial statements HKSAS 120 Consideration of laws and regulations in an audit of financial statements The Hong Kong 22 ACCOUNTANT Remarks HKSAS 010 The scope and authority of auditing pronouncements HKSAE 100 Framework for assurance engagements intended to provide either a high or moderate level of assurance HKSAE 200 High level assurance engagements APRIL 2002 SOCIETY NEWS ISA 260 Communications of audit matters with those charged with governance HKSAS 610 Communications of audit matters of governance interest with directors or management ISA 300 Planning HKSAS 200 Planning ISA 310 Knowledge of the business HKSAS 210 Knowledge of the business ISA 320 Audit materiality HKSAS 220 Audit materiality ISA 400 Risk assessments and internal control HKSAS 300 Audit risk assessments and accounting and internal control systems ISA 401 Auditing in a computer information systems environment HKSAS 310 Auditing in a computer information systems environment ISA 402 Audit considerations relating to entities using service organisations HKSAS 480 Audit considerations relating to entities using service organisations ISA 500 Audit evidence HKSAS 400 Audit evidence ISA 501 Audit evidence - additional considerations HKSAS 401 for specific items ISA 505 External confirmations HKSAS 402 External confirmations ISA 510 Initial engagements – opening balances HKSAS 450 Opening balances and comparatives ISA 520 Analytical procedures HKSAS 410 Analytical procedures ISA 530 Audit sampling and other selective testing procedures HKSAS 430 Audit sampling ISA 540 Audit of accounting estimates HKSAS 420 Audit of accounting estimates ISA 550 Related parties HKSAS 460 Related parties ISA 560 Subsequent events HKSAS 150 Subsequent events ISA 570 Going concern HKSAS 130 Going concern ISA 580 Management representations HKSAS 440 Representations by management ISA 600 Using the work of another auditor HKSAS 510 Principal auditors and other auditors ISA 610 Considering the work of internal auditing HKSAS 500 Considering the work of internal auditing ISA 620 Using the work of an expert ISA 700 The auditor’s report on financial statements HKSAS 600 Auditors’ report on financial statements ISA 710 Comparatives HKSAS 450 Opening balances and comparatives ISA 720 Other information in documents containing audited financial statements HKSAS 160 Other information in documents containing audited financial statements ISA 800 The auditor’s report on special purpose audit engagements On hold. ISA 810 The examination of prospective financial information In discussion. The Hong Kong equivalent is Auditing Guideline 3. 341 “Accountants’ report on profit forecasts”. ISA 910 Engagement to review financial statements HKSAS 700 Engagements to review interim financial reports ISA 920 Engagements to perform agreed-upon HKSAS 710 Engagements to perform agreed-upon procedures regarding financial information procedures regarding financial information ISA 930 Engagements to compile financial information Audit evidence - considerations for specific items HKSAS 520 Using the work of an expert HKSAS 720 Engagements to compile financial information HKSAS 470 Overall review of financial statements No equivalent ISA. (As at 12 March 2002) APRIL 2002 The Hong Kong ACCOUNTANT 23 SOCIETY NEWS Appendix 2A HKSA – Financial Accounting Standards Committee Composition for 2002 1. Mr. BEST Roger Thomas (Chairman) Deloitte Touche Tohmatsu A 2. Mr. WILKINSON John Bernard (Deputy Chairman) - X 3. Mr. WINKELMANN Paul Franz (Deputy Chairman) PricewaterhouseCoopers A 4. Mr. CHAN Wing Nang, Billy Billy Chan & Co. A 5. Ms. CHEUNG Sau Ying, Olivia Hong Kong Exchanges & Clearing Ltd. R 6. Mr. FUNG Hon Kwong,Tommy Arthur Andersen & Co. A 7. Mr. GRIEVE Charles Ramsay Securities & Futures Commission R 8. Mr. HILLIARD Philip Mckenzie Craigie Limited I 9. Ms. PATTLE Sheila Helen KPMG A 10. Mr. RAPER Christopher William Swire Pacific Limited P 11. Mr. REID Nigel James Hamilton Ernst & Young A 12. Mr. TAYLOR Stephen Deloitte Touche Tohmatsu A 13. Prof. TSUI Judy City University of Hong Kong W 14. Mr. WILLIAMSON Andrew Gordon Hongkong and Shanghai Banking Corp. U/P 15. A nominee of the Hong Kong Institute of Directors - Awaiting IOD confirmation B/P Key to representation : A: Accountants in public practice U: Users of financial statements P: Preparers of financial statements B: Business community R: Regulators of the securities and banking industries W: Academia I: Investment community X: Private user in public community Appendix 2B HKSA – Auditing Standards Committee Composition for 2002 1. Mr. SUN Tak Kei, David (Chairman) Ernst & Young A 2. Mr. CHOW 3. Mr. LIU Chan Lum, Charles (Deputy Chairman) Wong Brothers & Co. A Kennedy (Deputy Chairman) Arthur Andersen & Co. A 4. Mr. BENNETT Andrew Ernst & Young A 5. Mr. CHENG Patrick South China Capital Ltd. U 6. Mr. GEORGE Richard John Weir Deloitte Touche Tohmatsu A 7. Ms. LI Yin Fan, Fanny BDO International A 8. Mr. SHUM Man To Government of HKSAR, Treasury G 9. Mr. TAI Hay Yuen Tai, Kong & Company A 10. Mrs. WA LIANG Hsien Shau, Jeanette City University of Hong Kong W 11. Mr. WINKELMANN Paul Franz PricewaterhouseCoopers A 12. Ms. WONG Sau Ling, Shirley KPMG A 13. Mr. YUEN Kwok Keung, Desmond Grant Thornton A 14. A nominee of the Hong Kong Monetary Authority – Awaiting HKMA confirmation R 15. Vacant (A banker) B Key to representation : A: Accountants in public practice B: Banking industry G: Government U: Users of financial statements R: Regulators of the securities, banking and insurance industries W: Academia The Hong Kong 26 ACCOUNTANT APRIL 2002 SOCIETY NEWS Secretary for Financial Services’ Address on Corporate Governance The following is a synopsis of the points made by the Secretary for Financial Services, Mr Stephen Ip, at the Legislative Council Panel on Financial Affairs meeting on 14 March 2002: Good corporate governance is the key to improving economic efficiency, enhancing the attraction of our market and investors’ confidence, as well as maintaining the stability of our financial system. Enhancing Hong Kong’s corporate governance regime is a priority of our work. We have all along attached much importance to, and dedicated considerable efforts in, reforming our legislation and rules to keep them up to date. Good progress has been made by the Administration, the Standing Committee on Company Law Reform (SCCLR), the Securities and Futures Commission (SFC), the Hong Kong Exchanges and Clearing Limited (HKEx) and professional bodies concerned in carrying out this priority task in the past two years. Our hard work has been well recognised. The Managing Director of the International Monetary Fund said last year that Hong Kong was the standard setter for corporate governance and transparency in Asia. According to Standard and Poor’s Corporate Governance Study on Hong Kong published in January this year, Hong Kong is a leader in the domain of corporate governance in Asia. Protection of Shareholders’ Rights In the context of protection of shareholders’ rights, progress has been achieved in the following areas: • In its Consultation Document published in July last year, the SCCLR proposed a number of amendments to enhance shareholders’ rights. These include amending the law to provide shareholders with a more meaningful procedure by which to nominate and elect directors; introducing statutory derivative action, whereby the SFC will be empowered to bring derivative actions against wrongdoers in relation to listed companies, subject to the proviso that the SFC shall exercise its power in the public interest as well as in the interest of the company. The public comments received indicated support for the proposals. We are taking forward such proposals and proceeding to amend the law. • Measures to protect shareholders are also contained in the Securities and Futures Ordinance enacted by the Legislative Council yesterday. These include providing expressly for a private cause of action for a person to seek compensation for pecuniary losses suffered as a result of relying on any public communication relating to securities or futures contracts, which is false or misleading. Such compensation may be sought from the person responsible for disseminating the information, e.g. directors or senior officers of a company. The intention is to ensure that persons responsible for issuing APRIL 2002 public communications, such as listed companies, should exercise due care and diligence in doing so, so as to ensure the accuracy of the information released. • The new Ordinance also creates an express private right of civil action for a person to sue another person for recovery of pecuniary losses resulting from the latter’s market misconduct, such as insider dealing and stock market manipulation. This allows the court hearing on such a private action to admit findings of the Market Misconduct Tribunal and criminal convictions as evidence. This would help investors to establish their claims, without having to prove afresh the existence of market misconduct. • Tighter voting mechanism for connected transactions by interested shareholders; stricter rules against the dilution of shareholders’ interests through placing of shares, rights issues and share repurchases are proposed by the HKEx in its Consultation Document on changes to the Listing Rules. These proposals are along a similar vein of those made by the SCCLR. I welcome members’ comments on such proposals. Enhance Transparency and Measures to Combat Market Misconduct In relation to enhancing transparency: • The Securities and Futures Ordinance mentioned above has put in place a disclosure regime that is in line with international standards. The initial disclosure threshold for substantial shareholders has now been lowered from 10% to 5%, and the notification period has been shortened from five to three business days. • The provisions in the Securities and Futures Ordinance have also enhanced the investigatory powers of SFC, including the power to seek assistance from a listed company’s bank, auditor or business counterpart so as to verify information obtained from an investigation. This facilitates the SFC to investigate into market misconduct behaviour that would undermine the interest of shareholders of listed companies. The imminent establishment of the Market Misconduct Tribunal and the expansion of the route for criminal action under the Ordinance would strengthen the civil and criminal measures available to combat market misconduct behaviour. These measures help to deter manipulation of market and stock prices, as well as the disclosure of false or misleading information for inducing transactions. • Timely disclosure of quality information by listed company is important. In this connection, the HKEx’s Consultation Paper suggests listed companies to publish quarterly reports within 45 days after the quarter-end. Issuers will be required to publish their half year results The Hong Kong ACCOUNTANT 27 SOCIETY NEWS announcements within two months of the relevant financial period. Again, I welcome members’ views on such disclosure proposals. Promoting Good Directors and Board Practices Establishing good director and board practices would be conducive to ensuring that directors and their boards act responsibly in the governance of their companies and be accountable to shareholders for asset and resources entrusted to them: • The Standing Committee’s Consultation Paper contains proposals in relation to directors’ duties. Furthermore, the Standing Committee has proceeded with the second phase of its corporate governance review, and is drafting a non-statutory statement on the duties of directors for public reference. The Standing Committee will also examine the development of training programmes for directors. • The HKEx will issue further guidance on the independent role of the Independent Non-Executive Directors (INEDs). The Listing Rules consultation document proposes that at least one of the INEDs will be required to have appropriate professi onal qualifications and issuers will be required to appoint INEDs representing not less than one-third of the members of their boards or not less than 2 in any event. The HKEx also recommends that the roles of Chairman and Chief Executive Officers should be segregated as a good practice. Issuers will have to disclose the nature of audit work they engaged, amount of audit and nonaudit fees as well as directors’ remuneration. Stricter rules on disclosure of securities transactions by directors are also proposed. In addition, the HKEx proposes making the establishment of Audit Committees a mandatory requirement, and the establishment of Nomination and Remuneration Committees good practice. An important aspect of corporate governance is to enhance the transparency of company operations. Effective corporate governance means the disclosure of information that is truthful and timely in reflecting the operations and financial position of the corporation concerned. Such information should also meet the needs of the users (especially investors). It is important to bear in mind that the quality of our accounting and auditing standards and practitioners in the accounting profession has a direct bearing on the quality of the information disclosed. The Hong Kong Society of Accountants is the selfregulatory body for the accounting profession. It promulgates the accounting and auditing standards in Hong Kong (Statement of Standard Accounting Practices and Statement of Auditing Standards). The President of the Society would explain their work later on. The present system has operated well but there are of course areas for improvement. For The Hong Kong 28 ACCOUNTANT example, the SCCLR in its Consultation Paper published last year recommends widening the composition of the relevant accounting and auditing standards setting committees to cater for greater public involvement in the process. We support such recommendations. Furthermore, the SCCLR also recommends establishing a body with authority to investigate financial statements. We are positively examining this proposal. In relation to accounting and auditing standards, apart from very rare circumstances, Hong Kong’s standards are in line with the International Accounting Standards. The President of the Society would explain the details. In fact the Financial Times carried an article on 26 February 2002, stating that the US accounting standards compare unfavourably with those in Hong Kong in certain areas. For example, the Hong Kong accounting standards do not permit the use of special purpose entities. The Securities and Futures Ordinance provides auditors of listed companies who report to the SFC any suspected fraud or misconduct in the management of a listed company with statutory immunity from civil liability under the common law. This would encourage auditors working under the rule of professional ethics to discharge their civic duty to report possible fraud or irregularities to the SFC when conducting an audit of a listed company. This helps to protect the interest of the investing public. The measures mentioned above are part and partial of an on-going task to solidify our corporate governance regime. The initiatives were launched by the various agencies and professional bodies well before Enron. The public is being consulted in this evolving process. Obviously, we cannot rely on legislation alone to enhance corporate governance standards. In fact, the Enron case indicated that such incidents happen even in the States, notwithstanding her stringent legislation and advanced regulatory regime. This illustrates that besides making and enforcing legislation, corporate culture is equally important. By corporate culture, I mean whether companies comply with both the spirit and provisions of the law, whether they recognise the direct impact of corporate governance on the value of their shares, whether they acknowledge their responsibilities to shareholders, employees and creditors, as well as to the general public as a whole. In this regard, in implementing the provisions of law in Hong Kong, we would continue to work closely with the SFC, the HKEx and other professional bodies to instil a good corporate culture amongst companies through public education and publicity campaigns. Corporate governance is not a sector specific issue. It straddles different sectors and is a subject that should concern directors and senior management of companies, shareholders, regulators and professionals alike. Improving our corporate governance regime is a continuous task, which APRIL 2002 SOCIETY NEWS requires the concerted action and support of all parties concerned. We will work with all relevant parties towards this common goal. Finally, the rule of law and the independence of judiciary are crucial elements in a successful corporate governance regime. Even with stringent legislation, a water-tight regulatory regime and the professionalism of the practitioners, we can only deter but cannot eliminate fraud completely. In this respect, we rely on Hong Kong’s effective law enforcement agencies, our mature legal system and the independent judges who apply the law without fear or favour to punish those who break the law. The full text of the presentation statement can be viewed at http://www.legco.gov.hk/english/index.htm SCCLR Chairman’s Address on Corporate Governance The following is a synopsis of the points made by the Standing Committee on Company Law Reform (SCCLR) Chairman, Mr Anthony Rogers, at the Legislative Council Panel on Financial Affairs meeting held on 14 March 2002. The views expressed in this note are personal views. Whilst it is intended that they should reflect the views and likely conclusions and recommendations of the Committee, because its work on corporate governance is by no means finished, the Committee’s conclusions and recommendations are yet to be formulated. This note does not aim to provide a comprehensive review of all aspects at present being considered by the Committee but can only highlight a few of the matters and issues. Background to Committee’s Work on Corporate Governance On completion of the overall review of the Companies Ordinance, the Committee was asked to consider corporate governance. In order to do this, three subcommittees were formed with a view to considering matters relating to shareholders, directors and corporate reporting. Last summer, July 2001, the Committee issued a consultation document setting out various proposals. In the main, these matters were items arising from the review of the Companies Ordinance. Matters relating to corporate reporting came, primarily, from proposals from the accountancy profession. Appendix B to the paper CB(1)1184/ 01-02(04) reflects the proposals which were put forward in the consultation paper last July. Those proposals have now to be viewed in the light of the responses to the consultation document and further consideration given to the matters by the Committee. The response to the consultation document has shown that the business community is very wary of over regulation of private companies. As one example, the consultation document had proposed that private companies should file their annual accounts in the Companies Registry. That proposal has met with almost universal disapproval. In view of the points made in the responses, the Committee is now not proposing to recommend to the Secretary for Financial Services that such filing be introduced. One major difficulty thrown up by the consultation has The Hong Kong 30 ACCOUNTANT been in relation to directors’ dealings with associated companies. The proposals in the consultation document in relation to this aspect did not meet with universal enthusiasm. The Committee has, however, determined that the matter should be considered again with a view to formulating appropriate proposals. Commissioned Research Projects The Committee has commissioned four research projects. City University was successful in respect of three tenders and Chinese University in respect of one. These cover the areas of investors attitudes; a comparative study of corporate governance regimes in other countries; audit, nomination and remuneration committees and finally an analysis of the extent of single family control and its effect on economic performance of the relevant companies. There has been some delay in the provision of the final reports of these projects although current progress would indicate that the reports should be available by the end of April or soon thereafter. One further research project has not been commissioned in view of the unsatisfactory tenders. Some of the preliminary and tentative results which are emerging from these research projects include: • Investors, in particular institutional investors, are more concerned about track records and past performance of companies than they are about corporate governance. • Although there may be a perception that corporate governance matters in Hong Kong were not as well regulated as in other jurisdictions, so far nothing specific has been shown where Hong Kong is lagging behind. The preliminary conclusions derived from one of the research projects appears to be that it is the norm for Hong Kong companies to be controlled by a single shareholder or family. Often this is done with structures of holding companies, which, for want of a better expression are referred to as a pyramid structures. It would appear that this would be true of more than 80% cent of the companies on the main board listing. This is higher than any other jurisdiction. Equally interesting, however, is that the results of the research are likely to indicate that family controlled companies are at least as successful as widely held APRIL 2002 SOCIETY NEWS companies. Indeed, those companies that have significant directorships and senior management posts held by members of the controlling family appear to be significantly successful. Nature of Hong Kong Listed Companies The prevalence in Hong Kong of single family control of listed companies is one factor which has to be taken into account in formulating proposals for corporate governance. Another special feature of the Hong Kong Stock Market is that 75 per cent of listed companies are incorporated overseas. This creates important attendant difficulties in that it is sometimes difficult to introduce legislative or other controls because of the extraterritorial considerations. Although the Stock Exchange listing rules can be used in respect of corporate governance matters it has to be borne in mind that: • Listing rules are primarily the province of the stock exchange which is a trading company. • Listing rules do not have statutory backing and it might be difficult to give listing rules statutory backing, since statutory, and thus legally coercive, force would be given to rules made by a commercial organisation. • In any event listing rules would not cover public but unlisted companies. • Listing rules cover companies which for the most part are incorporated overseas and may have listings overseas in addition to the Hong Kong listing. Directors’ Dealings One of the major areas which the Committee will be concentrating on in the next few months will be in relation to directors’ dealings with the company, subsidiaries and associated companies. This is an area where it is likely that abuses could more easily arise. The aim of any new rules would be to prevent unfair advantage being taken by directors of their position. Such unfair advantage could extend to appropriation of assets. Some of the matters that need to be resolved in formulating proposals include: • How the regulation is to be achieved e.g. by statute or listing rules. • How to formulate rules and regulations that would be effective in terms of not being open to easy circumvention and yet not be over restrictive. In this respect the control of transactions effected overseas is likely to be a matter of some concern. • The scope of the transactions covered needs careful consideration when it is appreciated that an “associated” company is not defined in legislation and is an accounting term. The real test is perhaps of one of quality i.e. the extent of actual control rather than an empirical test. The Enron case Until full details of the Enron case have emerged after investigations and inquiries, no comments on it can be authoritative, but the following preliminary observations might be made. • Dealings by directors with linked and associated companies appears to have been one of the problems. • The frequency with which those involved seem to have taken the 5th amendment would indicate that there were plenty of rules in place but that they have been breached. Independent and Other Non-executive Directors In relation to corporate governance considerable importance is often attached to the appointment of nonexecutive and in particular independent non-executive directors. These persons clearly play an important role in any company. However, amongst matters which should be borne in mind in relation to independent non-executive directors are: • The definitions of independence and classification of directors as independent in some cases would raise questions as to whether such persons are truly independent. • In view of the fact that nearly all companies listed on the Stock Exchange in Hong Kong are single family controlled it can only be surmised that that control extends to the selection of the independent directors. Indeed, the scope of action of those directors may well be circumscribed • The pool of suitable persons to be independent nonexecutive directors, in Hong Kong, may be limited because the pool of persons with experience as corporate directors who are available and willing to act as independent non-executive directors may be limited. Those involved in running family controlled companies are unlikely to retire early. • It may be that the most that should be expected of independent non-executive directors for the bulk of companies in Hong Kong would be the bringing of expertise to the company which the company does not already have. Future Progress It is expected that there may need to be a further consultation in respect of proposals arising from the Committee’s work. It is hoped that the Committee’s proposals on corporate governance can be put to the Secretary for Financial Services by the end of this year or soon thereafter. The full text of the presentation statement can be viewed a t ht t p://www.l e gc o.gov.hk/e ngl ish/inde x.ht m A suitable solution is not obvious. Nevertheless, the Committee has resolved to try to find a solution that can be put to the Secretary for Financial Services. The Hong Kong 32 ACCOUNTANT APRIL 2002 SOCIETY NEWS Achieving Convergence of Hong Kong SSAPs with International Financial Reporting Standards The Hong Kong Society of Accountants (HKSA) has a policy of converging Hong Kong Statements of Standard Accounting Practice (SSAPs) with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The Society’s Standard-Setting Strategy Review Task Force met on 4 July 2001. Key recommendations arising from that meeting, approved by the HKSA Council at its meeting held on 31 July 2001, were that: • The Society’s strategy in setting accounting standards is to achieve convergence with IFRS and to adopt IFRS in Hong Kong as far as possible without any “tinkering”. • Once an exposure draft (ED) of a proposed IFRS is issued by the IASB for comment, an identical Hong Kong ED should be issued simultaneously by the Society to obtain comments from members and interested parties in Hong Kong, which will form the basis of the Society’s submission on the proposed IFRS. • Upon finalisation, even if the IFRS failed to take into account the comments made by the Society, Hong Kong should still accept the international majority decision and accept the IFRS rather than deviate from them. In other words, we would adopt verbatim the final IFAS as a matter of policy, unless Council, by exception, should decide to deviate from a particular IFRS for specific reasons. Where there was a conflict between an IFRS and the law in Hong Kong, the Society would seek law changes, where appropriate. The following Statement of Due Process for setting accounting standards in Hong Kong was approved by the HKSA Council when it met on 26 February 2002. The due process is concerned with putting the vision of convergence into practice. Primarily its provisions relate to achieving “process convergence” (that is, setting the standards substantially in the same way and at the same time as is done internationally) which will, as a consequence, give rise to “product convergence”. Product convergence encompasses having the same standards as set out in the IFRS with differences only when necessary in rare and exceptional circumstances. Statement of Due Process 1. The Hong Kong Society of Accountants (HKSA) Financial Accounting Standards Committee (FASC) procedures ensure that Hong Kong Statements of Standard Accounting Practice (SSAPs) are of high quality and are introduced only after giving the FASC’s constituency opportunities to make their views known during the standards-setting due process. 2. The FASC has a mandate to achieve convergence (as far as practicable) with the International Financial Reporting APRIL 2002 Standards (IFRS) issued by the International Accounting Standards Board (IASB). Within this remit, the HKSA Council permits the FASC to work in whatever way it considers most effective and efficient and this may include forming advisory sub-committees or other forms of specialist advisory groups to give advice in preparing new and revised SSAPs. The procedures for developing SSAPs are as follows: 3. The FASC determines the scope and priority of any projects formally added to its agenda and reviews these with the HKSA’s Accounting Standards Advisory Panel (ASAP). 4. The process for the development of SSAPs will involve the following steps: • During the early stages of a project, the FASC may establish an advisory sub-committee to give advice on the issues arising in the project. Consultation with the advisory sub-committee occurs when required throughout the project; • The FASC may prepare and publish discussion documents for public comment; • The FASC will publish an Exposure Draft for public comment; • The FASC considers all comments received and, when appropriate, prepares a comment letter to the IASB; and • Following publication of the finalised IFRS, the FASC considers the changes made (if any) by the IASB and will recommend to the HKSA Council the approval of a SSAP. Additional Elements of the Due Process Meetings 5. Meetings of the FASC, the ASAP and Sub-Committees of the FASC (including the Urgent Issues and Interpretations Sub-Committee) are not open to public observation. However, as discussed further below, the constituency is kept updated on the FASC’s deliberations and correspondence from the constituency on the FASC’s technical agenda is welcomed at all times. 6. The Secretariat will publish a summary of the decisions made at such meetings promptly thereafter. 7. When the HKSA publishes a SSAP, it may also publish a Basis for Conclusions to explain publicly how the conclusions were reached and to give background information that may help users of the SSAPs to apply them in practice. Comment Periods 8. The FASC issues Exposure Drafts of Proposed SSAPs, Discussion Documents and other similar consultation The Hong Kong ACCOUNTANT 33 SOCIETY NEWS documents for public comment. To facilitate the FASC providing timely comment to the IASB, the usual comment period is between sixty (60) and ninety (90) days. Draft Interpretations are usually exposed for a comment period of sixty (60) days. Coordination with International Due Process 9. Close co-ordination between the FASC’s and IASB’s due processes is important to the success of both the HKSA’s and IASB’s mandates. 10. In its due process statement, the IASB states that it is exploring ways in which it can integrate its due process more closely with national due process (such as that operated in Hong Kong by the FASC). 11. In particular, the IASB states that it is exploring the following procedure for projects that have international implications: • IASB and national standard setters would co-ordinate their work plans so that when IASB starts a project, national standard setters would also add it to their own work plans so that they can play a full part in developing an international consensus. Similarly, where national standard setters start projects, IASB would consider whether it needs to develop a new IFRS or revise its existing IFRSs. Over a reasonable period, IASB and national standard setters should aim to review all standards where significant differences currently exist, giving priority to the areas where the differences are greatest; • National standard setters would not be required to vote for IASB’s preferred solution in their national standards, since each country remains free to adopt IASC standards with amendments or to adopt other standards. However, the existence of an international consensus is clearly one factor that members of national standard setters would consider when they decide how to vote on national standards; • IASB would continue to publish its own Exposure Drafts and other documents for public comment; • National standard setters would publish their own exposure documents at approximately the same time as IASB Exposure Drafts and would seek specific comments on any significant divergences between the two exposure documents. In some instances, national standard setters may include in their exposure documents specific comments on issues of particular relevance to their country or include more detailed guidance than is included in the corresponding IASB document; and • National standard setters would follow their own full due process, which they would, ideally, choose to integrate with IASB’s due process. This integration would avoid unnecessary delays incompleting standards and would also minimise the likelihood of’ unnecessary differences between the standards that result. The HKSA supports the integration of its standard setting process with that of the IASB as outlined above by adopting these procedures. Policy on Answering Technical Queries The Society’s Professional and Technical Department receives a large number of queries on the application of professional pronouncements and law. As a matter of the Society’s risk management, and to deal with such queries in an orderly manner, the Council gave its endorsement in February 2002 to a policy on handling such technical queries. • Queries shall be in writing. • Responses to queries shall also be in writing and shall be appropriately disclaimed in a number of respects. • Queries and responses in the form of “frequently asked questions” may be posted on the Society’s web site subject to the same conditions under which an original response is provided. A copy of the policy appears below. The main features of the policy are as follows: • The Society’s staff shall respond to members’ queries on the Society’s official pronouncements. • The Society’s staff shall not respond to queries on the application and interpretation of material not published by the Society, including matters of law and regulation (for example, company law, taxation law, Stock Exchange Listing Rules), as well as accounting, auditing and other professional requirements applying in jurisdictions other than Hong Kong. • The Society’s staff shall entertain queries only from HKSA members (with limited exceptions for regulatory bodies and the news media). Guidance for others is provided as to alternative sources of information for queries. The policy, which has also been published on the Society’s web site, may be modified from time to time as a result of experience. The Hong Kong 34 ACCOUNTANT Staff Policy on Handling Technical Queries Introduction 1. The Hong Kong Society of Accountants (“Society”) Council is empowered, in relation to the practice of accountancy, to issue or specify any: (a) statement of professional ethics; and/or (b) standards of accounting and auditing practices; required to be observed, maintained or otherwise applied by any professional accountant1 . 2. Statements of professional ethics and standard accounting and auditing practices (collectively “Professional APRIL 2002 SOCIETY NEWS Pronouncements”), together with relevant interpretative and other guidance approved by the Society’s Council, are published in the Society Members’ Handbook. 3. From time to time, the Society receives queries in relation to the application and interpretation of its Professional Pronouncements and also receives queries in relation to such other matters as the application of the law (for example, in relation to company or taxation law) or the accounting or ot her professi onal requirements applying in jurisdictions other than Hong Kong. 4. Outlined below is the Society’s policy in relation to dealing with members’ technical queries such that they may be dealt with in an orderly manner. The policy may be modified from time to time as a result of our experience. Addressing Technical Queries with the Society 5. The Society will receive queries on the application and i nt erpret at ion of the Soci et y’s Profe ssiona l Pronouncements. 6. The Society’s staff will respond to such queries subject to the conditions outlined below: • The query should come from a member of the Society2 (with limited exceptions for regulatory bodies and the media) – guidance for others as to alternative sources of information for queries is provided in para. 15 below; • The query should be in writing and addressed to the Society’s Senior Director via mail, e-mail or fax; • The query should include the member’s name, address, contact telephone number during normal office hours and membership number; • The query should include a written statement of all relevant facts and assumptions, and refer to available authoritative support and supporting rationale 3 . Sufficient information on the situation and circumstances to which the query pertains must be provided but the query should be generic in nature and not relate to a specific enterprise or transaction (either actual or contemplated). The query should preferably provide a suggested conclusion consistent with the authoritative support and other references cited; • Members should include details as to whether or not others have been consulted in respect of the query and, if so, the facts provided to that person, and the details of their response. The query to the Society should, however, be kept generic and not refer to a specific enterprise and/or fact situation. 7. If, in the Society’s view, the above conditions have not been met, the member may be asked to resubmit the query, as appropriately raised, or the query may not be responded to, at the Society’s discretion. In the latter case the member will be informed of the decision. The Hong Kong 36 ACCOUNTANT 8. The Society’s staff will not respond to queries on the application and interpretation of material not published by the Society, including matters of law and regulation (for example, company law, taxation law, Stock Exchange Listing Rules), as well as accounting, auditing and other professional requirements applying in jurisdictions other than Hong Kong. 9. As a matter of policy, the Society’s staff do not respond to the following requests: • Providing advice on enterprise-specific and/or detailed fact-specific questions; • Suggesting the appropriate audit opinion to be given; • Acting as an arbitrator regarding any issue or dispute; • Assisting in research for student assignments. 10. The Society staff will provide only written responses to queries on the following basis: • The response is essentially the personal view of the staff member providing the response and intended for general guidance only. It does not constitute an authoritative response on behalf of the Society; • The staff member’s response is based on the facts and assumptions provided and may not apply if there is a change or discrepancy in those facts or assumptions; • Reliance on the staff member’s response is entirely at the enquirer’s own risk; • Neither the Society nor its staff can accept any responsibility for the accounting treatment or for the application of auditing or other professional standards in the particular circumstances (as applicable) applied consequent to the staff member’s response; • Reference to the query and response, if any, may not be made – and shall not be permissible as evidence – in the case of any complaint furnished to the Society. 11. Because of the Society’s limited resources to deal with members’ queries, it is generally not possible for Society staff to attend to all queries necessarily in a timely manner. Staff will strive to answer 95% of queries, which contain all of the information specified in this policy, within 10 working days of receipt. Limitations Society’s Professional Pronouncements 12. Note should be taken that the staff member’s response is provided on a generic basis and should not be considered necessarily relevant to a specific enterprise or transaction. A query provides typically only a selected summary of the scenario about which advice is being sought and it is inevitable that the staff member will be less well informed, and consequently less able to provide appropriate advice, than an advisor who has become familiar with all the relevant facts regarding the matter in question. 13. The Society’s staff are able to assist members by providing information that guides them to the most appropriate source of information (such as the relevant Professional APRIL 2002 S O C IE T Y N E W S of its staff. The views expressed by a staff member do not necessarily reflect the views of the Society, the Society’s Council, or other members of the Society’s staff. The Society’s staff response to a query on the Society’s Professional Pronouncements reflects only the staff’s personal views in the light of the particular circumstances described by and the limited information provided by the enquirer and is purely for reference and discussion purpose only, and should not be regarded as the official interpretation of the Society Professional Pronouncements. Official interpretations of the Society’s Professional Pronouncements can only be established after extensive deliberation and due process, and with the approval of the Society’s Council. Pronouncements). To enable meaningful discussions, members are expected to c onsult and understand the relevant Professional Pronouncements themselves first before further questions are raised. 14. The Society appreciates that judgement may be involved in applying Professional Pronouncements and suggests me mb ers s eek in g spe ci fic a nsw er s t o de tai le d f ac tspecific questions investigate other avenues for opinion, such as seeking an opinion from a fellow member, before making up their own judgement. 15. As a last port of call for members’ queries on Professional Pronouncements, the Society encourages both members and non-members to use other sources of information available, which may include: • For members of t he publ ic à a profess ional a cc ou n ta nt 4 , t h e S oc i e ty ’ s F re e P u bl i c A d vi s or y Service Scheme 5 ; • For financial statement preparers à your external auditor; • For professional accountants à colleagues, fellow members, t he Society’s web si te including the discussion forum; • For students à library, lecturers, textbooks (see attached reference list), and the Society’ s web site where you will find electronic copies of the Society’s standards and details of other professional literature published by the Society; • Fo r e nte rpr ise -sp ec ifi c q uer ies à t he e nte rp ri se concerned 6 . Legal interpretations and Professional Pronouncements applying in other jurisdictions 16. The Society’s staff are not in a position to respond to queries on the application and interpretation of the law or of professional pronouncements not issued or specified by the Society. In the case of queries relating to the law, members are advised to seek independent legal advice. Society’s Official Response 20. Where members consider that there are deficiencies in certain Professional Pronouncements that give rise to the ambiguities or difficulties in the application of Professional Pronouncements, suggestions are most welcome. 21. Any such suggestions should be directed to the Registrar of the Society. These suggestions will be referred to the relevant standard-setting Committees for consideration, and the relevant Professional Pronouncements will be amended, where appropriate. 22. Owing to limited resources, the Society does not give individual responses to these suggestions. Publication of Queries and Responses 23. To widen the help to members, the Society may, where appropriate, publish, or post on the Society’s web site, frequently asked technical questions and answers. 24. These will be published in generic terms without disclosing the identity of the enquirer. Enterprise-specific queries 17. It is Society policy not to comment on the specific facts pertai ning to a company or its finan cial state ments. Enterprise-specific queries should be raised with the enterprise concerned. 1 2 3 4 18. On occasion, queries in respect of a specific enterprise may be, or become, part of a matter of complaint to the Society about the conduct of a member. Queries connected with an actual or proposed complaint should be directed to the Society’s Director of Professional Compliance. 5 6 Disclaimer 19. A s a m a tt e r o f p o l ic y , th e S o ci e t y d i s c la i m s re s ponsibility for any private comment or statement by any A P R IL 2002 Professional Accountants Ordinance, section 18A(1). Reference to “member” means an Associate or Fellow of the Society. For example, the requirements of the relevant SSAP. Note that the Society does not respond to queries on the application and interpretation of the Society’s Professional Pronouncements from members of the public because it is inappropriate for the Society to be in competition with its members. Refer to the Society’s web site: http://www.hksa.org.hk/ corporate_relations/community/index.php Auditors, who are under a duty of confidentiality, are generally not permitted to respond to queries from third parties in relation to queries on a client. The Hong Kong ACCOUNTANT 37 SOCI ETY N EWS Budget 2002/03 On 6 March 2002, Antony Leung, the Financial Secretary, announced his first Budget. As soon as the announcement was made, Mr Tim Lui, Chairman of the Society’s Taxation Committee, met the press on the same day to present the Society’s views on the Budget and how it would impact on the economy. Mr Lui said that the Society supported the approach adopted in the Budget of not introducing major revenue measures at a time when the economy in Hong Kong has still not recovered. The limited one-off measures such as lifting the cap of the rates concession, waiver of business registration fee, concessions in relation to water and sewage charges and the extension of the moratorium on the increase in ultralow sulphur diesel duty, should help to keep down the costs of doing business in Hong Kong and provide some relief for the community generally. According to Mr Lui, while there may be some question on whether any concession should be given in the light of a projected deficit of $45.2 billion in 2002, the Society believes that it is more appropriate to provide one-off concessions rather than further permanent benefits, given the widening gap between government revenue and expenditure. “In our Budget submission to the Financial Secretary in December 2001, the Society pointed to the need for the Government to look critically at and control its own expenditure. In this respect, we support the Financial Secretary’s target to achieve a balanced budget by 2006-07,” said Mr Lui. “The efforts to reduce the overall size of the civil service and the proposed salary reduction of 4.75% should help to some extent to achieve that target,” he added. On the other hand, the very modest revenue measures Mr Tim Lui commenting on the government budget 2002/03 introduced in this Budget in relation to liquor and tobacco duties and the Boundary Facilities Improvement Tax, suggest that the Government will need to consider seriously the introduction of a broad based consumption tax, such as a goods and services tax (GST), in the relatively near future. Mr Lui said that the Society suggested that the introduction of a land departure tax would be reasonable and equitable and should be given consideration. “We therefore support the Financial Secretary’s proposal to introduce legislation for a Boundary Facilities Improvement Tax in 2002-03,” added Mr Lui. The Society welcomes the references in the Budget to themes such as the importance of Hong Kong building on existing strengths in sectors like finance, tourism, professional services and logistics; strengthening the knowledge and skill base of the Hong Kong workforce; and enhancing cooperation with the hinterland of Hong Kong i.e. the Pearl River Delta. These accord with themes also touched upon in the Society’s budget proposals and it would in due course like to see further concrete measure in these areas. When the former Financial Secretary introduced the benchmark for fiscal reserves, he indicated that it would be reviewed in due course. “We are interested to see that the Financial Secretary has now reviewed this benchmark and has concluded that a significantly lower level of reserves would be sufficient. This may give the Government some breathing space while they consider further e.g. broader based revenue measures. We look forward to hearing more about the revised analysis,” remarked Mr Lui. As regards the need for broader-based taxation, the Financial Secretary has apparently accepted the findings that the fiscal shortfall is not due only to cyclical causes and that less reliance should be placed on land revenues and investment income. It is clearly reasonable and prudent that these sources should be regarded as volatile and that more stable sources of revenue should be found. The Financial Secretary’s outlook for the economy is positive in the medium term with GDP growth of 1% forecast in 2002 and a trend growth rate of 3%. According to Mr Lui, this is encouraging and should be welcomed. However, the ability to balance the budget in the medium term is dependent both upon the ability to keep a tight rein on expenditure and upon whether or not the revenue that is expected to result from the forecast trend growth is in practice attainable. This will be challenging for the community and it will be important to retain sufficient flexibility to make adjustments as we proceed if the assumptions contained in the medium term fiscal objective prove to be over-optimistic. The Hong Kong 38 ACCOUNTANT A P R IL 2002 SOCIETY NEWS Education & Careers Expo 2002 This year’s Education and Careers Expo was held on 21-24 February at the Hong Kong Convention and Exhibition Centre. Jointly organised by the Hong Kong Trade Development Council and the Labour Department, this annual exhibition had attracted participation from 343 professional associations, academic and commercial organisations. The Expo was an opportunity for the Society to disseminate information to school leavers, tertiary students and the working population about the Society’s Qualification Programme (QP) and the accountancy profession in general. The theme of the Society’s booth was ‘A Good Start in the Right Direction’. Response was overwhelming, our booth had attracted nearly 7,000 visitors during Career Seminar “ A head start in the Accountancy the four-day fair. Staff members from the Education & Training Profession” Department handled more than 500 enquiries on subjects ranging from the QP, mutual recognition agreements, accounting as a career to membership requirements. Literature on the QP and the accountancy profession was distributed. On 23 February, as part of the Expo programme, the Society held a career seminar entitled ‘A Head Start in the Accountancy Profession’. The seminar, given by Ms Helen Wong, Assistant Director of Education & Training, attracted over 150 people. Participants included parents, tertiary and secondary students and other members of the public. Many of the participants showed a keen interest in choosing accountancy as their career. HKSA staff answering public enquiries at the Expo IT Conference 2002 The Society’s 5th Information Technology Conference, held on 2 February 2002, on the theme of “IT2 Information Technology Information Trends”, attracted three excellent overseas speakers, who are at the forefront of innovation in accountancy services and products. A first-class programme of local speakers, including the Hon Sin Chung Kai, the LegCo IT Functional Constituency Repre-sentative, also spoke on a range of subjects related to the theme. The Hon Sin Chung Kai sharing his views on Hong Kong’s new IT laws and regulations The Hong Kong 40 ACCOUNTANT Mr Anthony Pugliese, Vice President, Member Innovation of the American Institute of Certified Public Accountants, explaining how the AICPA helps its members capture new markets by leveraging traditional skill sets, such as auditing, and creating new ones, such as IT APRIL 2002 SOCIETY NEWS BCPIG’s First Dinner Reception in 2002 The Society’s Building, Construction and Properties Interest Group (BCPIG) was honoured to have Dr Eden Woon, Director of the General Chamber of Commerce, present “Regional Trade Agreement between China & HKSAR” at its first Dinner Reception, held on 22 February 2002. In 2001, HKSAR Chief Executive Mr Tung Chee Hwa put forward a Regional Trade Agreement (RTA) proposal to the Central Government. During his presentation, Dr Woon discussed the background of Mr Tung’s RTA proposal and explained how it would benefit Hong Kong’s economy. Dr Woon also explored the opportunities that the agreement would bring to the construction industry. Inspired by his excellent presentation, members obtained a better understanding of the advantages and difficulties in carrying out the agreement. Participants listen attentively to Dr Woon’s presentation. Dr Eden Woon delivering his presentation at the dinner reception. Mr Alan Wong, convenor of the BCPIG Executive Committee, presenting a souvenir to Dr Eden Woon. Application Deadlines for 2002 The Society’s Registration and Practising Committee (R&PC), which deals with applications for membership, practising certificates, advancement to fellowship, registration of new firms/corporate practices and other related matters, has set its schedule for 2002 (please see below). Submission deadlines must be observed if applications are to be processed on time. Applications received after the deadline will be processed at the subsequent meeting. Formal approval by the Council will be granted to applications recommended by the R&PC. Results are normally available seven weeks after the submission deadline. 2002 Deadlines (Revised in March 2002) Submission deadline R&PC meeting at which applications will be processed 29 May 2002 21 August 2002 6 November 2002 June 2002 September 2002 December 2002 New Registrations The Council recently approved the registration of the following corporate practice with effect from March 2002: Corporate Practice FORWARD C.P.A. LIMITED 勵志會計師有限公司 APRIL 2002 Name of Directors Wong Yin Yin, Shally Pang Kam Wah (Non-Member Director) The Hong Kong ACCOUNTANT 41 SOCIETY NEWS HKAAT News Visit to Shenzhen University We then went on to a shoe-making factory, one of the top three companies in this industry in Guangdong Province, where a manager showed us around the production lines and described all the processes in detail. Did you know that there over 100 steps are needed in the production flow for a lady’s shoe! We also asked a lot of questions concerning the firm’s marketing, purchasing, quality control, and human resources. Dr Joseph Yau (first right) pictured with Ms May Wu (first left) and her colleagues The China Liaison Committee and Student Affairs Committee (SAC) organised a two-day Shenzhen Study Tour that was held between 8-9 December 2001. The purpose of the study tour was to provide opportunities for our student participants to learn about recent accounting, auditing, taxation and economic developments in Shenzhen. The participants of this study tour included twenty-seven students, eight SAC/Student Function Group members, three guests and one member of the secretariat staff. The Department of Accountancy of Shenzhen University was kind enough to receive us and arrange all the activities for the whole four-day study tour. On the morning of the second day, we were greeted by Professor Hiong Chu Hiong, Head of the Department of Accountancy of Shenzhen University, and a group of the accountancy students. The gathering started with brief introductions to Shenzhen University and the HKAAT by Professor Hiong and Dr Joseph Yau respectively. After the presentations, all the participants were divided into five groups for more intimate dialogues and exchanges. We had lunch with Professor Hiong and his students in one of the student canteens. After lunch, Professor Hiong and the students showed us around the campus, taking in not just academic buildings, but also the Arts Center, Sports Stadium and Library where we purchased a lot of books in an open fair. After leaving the university and before coming back into Hong Kong, we stopped over at Shenzhen Book Center for an hour where we all bought a load more books! All of the participants agreed that this was a “addedvalue” trip in terms of the accounting knowledge gained through the visits and interactions and friendships made with Shenzhen University students, the comfortable accommodation and transportation, the heavy and delicious Cantonese food and the purchases of books. Visit to shoe-making factory On the coach leaving Hong Kong, the tour leader and Vice-President of the Association, Dr Joseph Yau, briefed the participants on the whole program. Firstly, we arrived at the Chan, Wong, Chung Consultant Service (Shenzhen) Company Limited. This company is a fully owned subsidiary of Chan Wong, Chung & Company, a Hong Kong CPA firm. The Shenzhen office mainly provides accounting and consulting services to clients in Guangdong Province. Ms May Wu, a senior staff of the company, welcomed us and briefed us on the history of and services provided by the company. A few of May’s colleagues also answered our questions in relation to recent technical developments in the Chinese accountancy profession. The Hong Kong 42 ACCOUNTANT Group photo with Professor Hiong and Shenzhen University students APRIL 2002 SOCIETY NEWS Visit to the Hong Kong Productivity Council “What a meaningful journey!” said many of the participants who visited the Hong Kong Productivity Council. On the morning of 26 January 2002, 16 participants gathered excitedly in Kowloon Tong to visit the Council’s Headquarters. The Hong Kong Productivity Council was established in 1967 with a mission of promoting productivity excellence through the provision of professional services to achieve a more effective utilisation of available resources and to enhance the value-added content of products and services. It aims to increase efficiency and competitiveness in order to raise the standard of living of the people of Hong Kong. It also implements a value-adding strategy through People, Process, Product and Partnership development in assisting Hong Kong companies to move upmarket. This was a special visit arranged by the courtesy of the Hong Kong Productivity Council, which included visits to three centres as follows: 1. Institute of Information and Media Industries: DigiHall 21 2. Product Development and Innovation Institute: TechMart and Indoor Air 3. Quality Information Centre and Best Management Practices Institute: Powerhouse Managers from the Professional Services Industry Group of the Hong Kong Productivity Council also greeted us and answered our questions at the end of the visit. The Association would like to extend its special thanks to Hong Kong Productivity Council for making this educational and fun visit possible. Group photo after the visit APRIL 2002 The Hong Kong ACCOUNTANT 43
