Compliance Responses and Action Plans

  • Compliance Responses and Action Plans

    IFAC members and associates have provided self-assessment information about the regulatory and standard-setting framework in their countries (Part 1) and their organizations' activities in addressing IFAC's membership requirements (Part 2) as described in the Statements of Membership Obligations. Based on an analysis of this information, they are developing SMO Action Plans for continuous development and improvement.

    Some organizations have qualified to submit SMO Action Plans on a biennial basis by meeting eligibility criteria. These organizations are indicated with an asterisk (*).

    In the interest of transparency and providing information to the profession, regulators, and other stakeholders, all responses and SMO Action Plans are accessible below.

    Hong Kong Institute of Certified Public Accountants

     

    Introduction

    The information below has been submitted as part of the IFAC Member Body Compliance program. The Program has two components:

    Part 1: Assessment of the Regulatory and Standard-Setting Framework (provides information about regulatory requirements and standard-setting processes in member body countries); and
    Part 2: Assessment of Compliance (provides information on compliance by member bodies with the Statements of Membership Obligations). Part 2 of the Compliance Program will begin later this year, and the results will also be posted to the website.

    The responses to Part 1 are provided below. IFAC staff has reviewed the responses and, where necessary, validated them with external knowledgeable parties. A list of key terms is available to assist readers in understanding the responses.

    The purpose of this Part 1 Assessment is to collect information on the roles of IFAC member bodies and other organizations (including government, regulatory or other appointed authorities) with respect to:

    1. Setting auditing, accounting, ethics, public sector and education standards; and
    2. Regulating the accountancy profession.

    Sections 1 and 2 of Part 1 contain an introduction and instructions for member body respondents. For this reason, they are not included here, and the responses begin with Section 3.

    Questions or comments may be sent to complianceassessment@ifac.org.


    Section 3 -- Member Body General Information

    1. Country:

      Hong Kong, China


    2. Name of member body:
      Hong Kong Institute of Certified Public Accountants

      Or please specify name:



    3. Individual responsible for preparation:
      Mr. Patrick Tam


    4. Date member body became a member of IFAC:
      Note: Please enter a numeric date (e.g., 12/2001, Month/Year)

      10 / 1977



    Questions 5 - 22 are for internal use only


    Section 3G -- Affiliations


    23. Please list those regional organizations to which your organization belongs (e.g., FEE, CAPA, ECSAFA, IAA, etc.):
      CAPA
      Asia Oceania Tax Consultants Association
      INSOL International
      International Innovation Network



    Section 4 -- Statutory Framework


    Responses to this section will provide a description of the legal framework governing the commercial aspects of auditing and financial reporting in your country.

    Section 4A -- The Companies Act or Commercial Code


    The following questions concern the Companies Act (the Act) or Commercial Code (the Code) or similar Legal authority in your country. If no Legal authority exists, or the Legal authority does not address particular questions, please indicate "N/A" for Not Applicable.

    24. What is the full name of:
      a). the Act or the Code: Companies Ordinance
      b). the Enacting body: The Government of the Hong Kong Special Administrative Region (HKSAR Government)
      c). date the Act or Code came into force: / 1950


    25. How can IFAC obtain a copy of the Act or Code?
      The Companies Ordinance is available at the HKSAR Governmentâs website at http://www.justice.gov.hk/home.htm under Chapter 32.


    26. Is the Act or Code available in English?
      Yes   No


    27. What are the types of entities covered by the Act or the Code?
      Please check all that apply.
      Listed entities   Other (please specify):
      Private companies   Other (please specify):
      Governmental   Other (please specify):
      Not-for-profit   Other (please specify):


    28. Is there a requirement for the following entities to prepare annual statutory financial statements? If YES, please describe the financial reporting requirements including the accounting standards to be followed.
      Please check all that apply.
        No Yes (If YES, please describe)
      Listed entities The Accounting Standards issued by the Hong Kong Institute of Certified Public Accountants as well as the disclosure requirements in the Companies Ordinance.
      Private companies The Accounting Standards issued by the Hong Kong Institute of Certified Public Accountants as well as the disclosure requirements in the Companies Ordinance.
      Governmental
      Not-for-profit
      Other (please describe)
      Other (please describe)


    29. Is there a statutory requirement for the following entities to be audited? If YES, describe the requirement including the auditing standards to be followed:
      Please check all that apply.
        No Yes (If YES, please describe)
      Listed entities The Auditing Standards issued by the Hong Kong Institute of Certified Public Accountants
      Private companies The Auditing Standards issued by the Hong Kong Institute of Certified Public Accountants
      Governmental
      Not-for-profit
      Other (please describe)
      Other (please describe)


    30. Are the auditors ("statutory auditors") that are appointed for audits required by the Act or Code ("statutory audits") appointed for a specific period?
      Yes   No
      If YES, please indicate the term of appointment: 1 Year(s)


    31. Who appoints the statutory auditors?
      Please check all that apply.
      Shareholders   Management
      Board of directors   Other (please specify):
      Audit committee   Other (please specify):
      Government agency   Other (please specify):


    32. Does the Act or Code require joint auditors for the statutory audit?
      Yes   No
      If yes, please describe the requirement:


    33. Does the Act or Code require the rotation of the auditors or audit firms performing statutory audits?
      Yes   No
      If yes, please describe the requirement:
      The Act or Code does not require the rotation of the auditors or audit firms performing statutory audits. However, the HKICPA has adopted the provision of the IFAC Code of Ethics that for the audit of listed entities, the lead engagement partner should be rotated after a pre-defined period, normally no more than seven years.



    Section 4B -- Securities Market Regulations


    Responses to this section will provide a description of the financial reporting and auditing requirements for listed entities in your country.

    34. What are (a) the major items of Legal authority for such requirements, (b) the Enacting body(ies) and (c) the latest amendment date? Please identify the specific articles or sections that pertain to auditing and financial reporting:
    1. the major items of Legal authority for such requirements

      The requirements are set out in the Listing Rules, which have no authority of the law, but contractual agreements between the listed issuers and the Stock Exchange of Hong Kong (SEHK).

    2. the Enacting body(ies)

      SEHK

    3. the latest amendment date?

      10/2004


    35. How can IFAC obtain a copy of the Legal authority?
      The Main Board Listing Rules are available at http://www.hkex.com.hk/index.htm
      and Growth Enterprise Market Listing Rules at http://www.hkgem.com/root/e_default.asp.


    36. Is the Legal authority available in English?
      Yes   No


    37. Are there any additional or alternative financial statement reporting requirements for listed entities that are not described in your answer to Question 28?
      Yes   No
      If YES, please describe the requirement:
      The Listing Rules require additional disclosures in the annual financial statements to those of the Accounting Standards issued by the HKICPA, and publication of interim financial information.


    38. Are there any additional auditing requirements that apply to listed entities other than those described in your answer to Question 29 (e.g., additional GAAS requirements, additional independence requirements, requirements to report to those charged with governance, etc.)?
      Yes   No
      If YES, please describe the requirement:


    39. Who appoints the statutory auditors of listed entities?
      Please check all that apply.
      Shareholders   Management
      Board of directors   Other (please specify):
      Audit committee   Other (please specify):
      Government agency   Other (please specify):


    40. Are auditors who perform audits of listed entities appointed for a specified period?
      Yes   No
      If YES, please indicate the term of appointment: 1 Year(s)


    41. Are joint auditors required for audits of listed entities?
      Yes   No
      If YES, please describe the requirement:


    42. Is rotation of the auditor or audit firm for audits of listed entities required?
      Yes   No
      If YES, please describe the requirement:
      The Listing Rules do not have such a requirement. However, the HKICPA has adopted the provision of the IFAC Code of Ethics that for the audit of listed entities, the lead engagement partner should be rotated after a pre-defined period, normally no more than seven years.



    Section 5 -- Auditing Standards


    Responses to this section will provide a description of the legal and professional framework governing audit and other assurance standards in your country. The section focuses on the establishment of such standards. Please indicate the role your organization plays within this framework.

    Section 5A -- Statutory Framework


    43. Please provide the name of the Legal authority and/or self-regulatory rules that establish audit and other assurance standards in your country, the date of the last amendment of such authority or rules and the name of body responsible for setting audit and other assurance standards. If the standards are different for different entities (e.g., listed entities, private companies, governmental bodies, not-for-profit organizations, etc.), please specify the details that apply to each:
      Type of entity Name of
      applicable
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting audit and
      other assurance standards
      Listed entity Professional Accountants Ordinance 09/2004 Hong Kong Institute of Certified Public Accountants
      Other (please describe) Private companies Professional Accountants Ordinance 09/2004 Hong Kong Institute of Certified Public Accountants
      Other (please describe)
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      A copy of the Hong Kong Auditing and Assurance Standards can be accessed at:
      http://www.hkicpa.org.hk/index.php?mainLocation=/std/hbk/content.php

      All documents are available in English.


      b. Are the documents available in English?
      Yes   No


    Section 5B -- Standard-Setting (Hong Kong Institute of Certified Public Accountants)


    44. For Hong Kong Institute of Certified Public Accountants, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Statutory body for the accounting profession in Hong Kong as set out in the Professional Accountants Ordinance.

      Under the Professional Accountants Ordinance, the Council (governing body) of the HKICPA is empowered to set Auditing and Assurance Standards in Hong Kong. The responsibility is delegated to the HKICPA Auditing & Assurance Standards Committee (AASC).


      b. Name of standards

      Hong Kong Standards on Quality Control
      Hong Kong Framework for Assurance Engagements
      Hong Kong Standards on Auditing
      Hong Kong Standards on Review Engagements
      Hong Kong Standards on Assurance Engagements
      Hong Kong Standards on Investment Circular Reporting Engagements
      Hong Kong Standards on Related Services


    45. How many voting members does the standard-setting body have?
      16


    46. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    47. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      The AASC currently comprises 16 members (all volunteers, all voting members), supported by three full-time secretariat staff employed by the HKICPA. The Composition of the AASC, which is in-line with recommendations made by the Government’s Standing Committee on Company Law Reform (SCCLR), includes representatives from big-4 and non-big-4 accounting firms, users, preparers, regulators, and academia. A copy of the AASC’s composition (including details of representation) and Terms of Reference is available on the HKICPA website at: http://www.hkicpa.org.hk/professionaltechnical/committees/AASC.pdf.


    48. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Appointed by the Council of the HKICPA.

      With respect to Q49 below:
      Public interest members: 2 years
      Non-public interest members: 1 year.


    49. What is the term of appointment for members?
      2 Year(s)


    50. For how many years has the standard-setting body been in existence?
      22 Year(s)


    51. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      No separate budget

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      0.0



    52. To what entity is the standard-setting body accountable?
      Members of the HKICPA


    53. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Refer to the Attachment to HKICPA's response or go to http://www.hkicpa.org.hk/professionaltechnical for a diagram outlining the HKICPA's due process to adopt International Standards on Auditing and due process in the development of Local Practice Notes / Guidance.

    2. accessibility of meetings (i.e., public or private)

      Meetings are held in private but the AASC Meeting Summaries are published on the HKICPA website at:
      http://www.hkicpa.org.hk/index.php?mainLocation=/professionaltechnical/assurance/aasc/aasc.php


    3. approval process for final standards (i.e., majority required to approve final standards)

      Final standards are approved by the HKICPA Council

    4. other relevant due process activities



    54. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      12 Day(s)



    Section 6 -- Ethics


    Responses to questions in this section will provide a description of the legal and professional framework governing ethics standards for accountants in your country. This section focuses on the establishment of such standards. Please indicate the role your organization plays within this framework.

    Section 6A -- Statutory Framework


    55. For each of the following types of professionals, please indicate the name of the Legal authority and/or self-regulatory rules establishing ethics standards for accountants and auditors in your country, the date of the last amendment of such authority or rules and the name of body responsible for setting the ethics standards.
      Type of professional covered Name of
      applicable
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting ethics standards
      Professional Accountants in Public Practice Professional Accountants Ordinance 09/2004 Hong Kong Institute of Certified Public Accountants
      Professional Accountants in Business Professional Accountants Ordinance 09/2004 Hong Kong Institute of Certified Public Accountants
      Professional Accountants in the Public Sector Professional Accountants Ordinance 09/2004 Hong Kong Institute of Certified Public Accountants
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      A copy of the Hong Kong Ethics Standards can be accessed at:
      http://www.hkicpa.org.hk/index.php?mainLocation=/std/hbk/content.php


      b. Are the documents available in English?
      Yes   No


    Section 6B -- Standard-Setting (Hong Kong Institute of Certified Public Accountants)


    56. For Hong Kong Institute of Certified Public Accountants, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Statutory body for the accounting profession in Hong Kong as set out in the Professional Accountants Ordinance.

      Under the Professional Accountants Ordinance, the Council (governing body) of the HKICPA is empowered to set Ethics Standards in Hong Kong. The responsibility is delegated to the Ethics Standards Committee (EC) of the HKICPA.


      b. Name of standards

      Statements of Professional Ethics


    57. How many voting members does the standard-setting body have?
      19


    58. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    59. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      To maintain a wide and balanced representation with sufficient public interest members.

      The EC currently comprises 19 members (all volunteers, all voting members), supported by two full-time secretariat staff employed by the HKICPA. The Composition of the EC includes public interest members, representatives from big-4 and non-big-4 accounting firms, users, preparers and regulators. A copy of the EC’s composition (including details of representation) and Terms of Reference is available on the HKICPA website at: http://www.hkicpa.org.hk/professionaltechnical/committees/EC.pdf.


    60. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Appointed by the Council of the HKICPA.

      For Q61:
      Public interest members: 2 years
      Non-public interest members: 1 year.


    61. What is the term of appointment for members?
      2 Year(s)


    62. For how many years has the standard-setting body been in existence?
      26 Year(s)


    63. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      No separate budget

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      0.0



    64. To what entity is the standard-setting body accountable?
      Members of the HKICPA.


    65. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      The Due Process is similar to those for Auditing Standards as described in 53(a) above. (Refer Attachment 1)

    2. accessibility of meetings (i.e., public or private)

      Private

    3. approval process for final standards (i.e., majority required to approve final standards)

      Final Standards are approved by HKICPA Council

    4. other relevant due process activities



    66. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      4 Day(s)



    Section 7 -- Education


    Responses to questions in this section will provide a description of how education requirements for the profession are established. Please indicate the role your organization plays within this process.

    Section 7A -- Education Requirements


    67. Please describe in general terms the education system in your country including the different stages of education from early childhood education through to tertiary level study. Please indicate which aspects / levels are compulsory as part of the national education system:
      In Hong Kong, free and universal basic education is provided for children aged six to 15 (six years of primary education and three years of secondary).

      Tertiary education is offered through vocational training, universities and other institutes for higher learning.


    68. Is there a legal authority or regulation that specifies the requirements for an individual to operate as an accountant or auditor in your country?
      Yes   No

      If YES, please provide the name and describe the requirements, including any relating to education, experience or qualifications.

      Professional Accountants Ordinance & Professional Accountants Ordinance By-Laws

      To apply for membership, an applicant should:

      • Have completed the HKICPA's Qualification Progrmame (QP) or the former Joint Examination Scheme; or have acquired the full membership status of an overseas accountancy body currently recognized by the HKICPA's Council through completion of its professional examinations AND sat and passed the Institute's Aptitude Test on local law and practice; and

      • Have acquired the specified length and type of practical experience (3 years for approved degree holders, 4 years for approved accountancy diploma holders and 5 years for holders of other academic qualifications).


    69. Please select from below all the relevant key levels of requirements to obtain certification from your member body (i.e. to qualify as a certified or chartered accountant) and provide a general description of the requirement.
      Academic requirements
      1. Holders of a recognised accountancy degree or equivalent
      2. Holders of a recognised non-accountancy degree must complete a Conversion Programme; or
      3. Holders of a sub-degree qualification must complete the Hong Kong Accounting Technicians Examinations and complete a recognised Foundation Programme or the Professional Bridging Examinations.
      Professional examinations
      The HKICPA maintains a high standard of training and education for preparing professional accountants/auditors through the QP, overseen by the HKICPA’s Examinations Board.

      The QP is the only official qualifying programme/examination offered by HKICPA, Hong Kong’s only statutory body for the accountancy profession. It comprises a professional programme component consisting of four modules and a Final Professional Examinations (FPE).

      In the QP, assessment involves both oral and written examinations. The oral examinations are conducted during the four workshops of each PP module, comprising 20 percent of the total module marks. An open-book three-hour written examination is conducted at the end of each module, comprising 80 percent of the total module marks. The FPE is a six-hour written examination, testing the candidate’s ability to integrate knowledge and skills from the whole PP syllabuses.

      All areas recommended by IFAC’s educational guidelines are included, using competency-based standards. At the beginning of a module, students are given a Candidate Learning Pack for each module to guide them in their 120-hour self- study. The learning goals focus on application of technical knowledge and problem solving in a business context.

      Our curriculum is based on Hong Kong standards, which in turn are developed using International Accounting and Auditing and Assurance Standards promulgated by the IASB and IFAC respectively. The curriculum includes topics on practical application of accounting and auditing and assurance standards, and professional ethics.
      Practical experience
      A new competency-based framework for practical experience to define more accurately the types of skills that individuals should acquire during the period of practical experience before becoming a member of the HKICPA will be adopted, on a voluntary basis, on 1 September 2002. Mandatory implementation will occur on 1 January 2005. The new framework will bring closer the relationship between prospective members, their supervisors, employers and the Institute under a supervised training environment.

      Details of the new framework, Prospective Members’ Training Guidelines, and a copy of the blank Prospective Member’s Record of Practical Experience for Membership Admission, can be downloaded from http://www.hkicpa.org.hk/membership/registrationmatters/registration.

      Under the new framework, in line with practices of many overseas professional accountancy bodies, a more structured system of practical experience supervision and guidance is introduced. The scheme involves the Institute accrediting employers on a corporate level so that they have a clear understanding of their obligations in ensuring that prospective members attain the appropriate type and level of practical experience for membership admission.
      Final qualifying examination
      The FPE is the final qualifying examination
      Other (please describe)


    70. Which of the following arrangements best describes who establishes the education requirements for the accounting profession in your country? Please select one option.
      A government ministry, department or agency establishes education requirements for the accounting profession with no additional requirements set by the member body(ies).
      A government ministry, department or agency establishes minimum education requirements for the accounting profession, and member body(ies) supplement these requirements.
      Member body(ies) establishes the education requirements for the accounting profession.
      Other (please describe)


    71. Please provide the name(s) of the relevant body in the government ministry, department, agency and / or member body who establishes the education requirements.
      Hong Kong Institute of Certified Public Accountants

    1. A general description of the role of the relevant body(ies) including how it operates and its due process in establishing the education requirements.

      Incorporated by the Professional Accountants Ordinance (Chapter 50 of the Laws of Hong Kong) on 1 January 1973, the HKICPA is the only statutory licensing body of accountants in Hong Kong responsible for the regulation of the accountancy profession

    2. How many voting members does the relevant body(ies) have

      22,837 as at 15 December 2004

    3. Are the members of the relevant body(ies) involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: Council and Committee members served on a voluntary basis. However, they may be paid an honorarium to serve in specific roles e.g. as speakers, facilitators, assessors, etc.

    4. For how many years has the body been in existence?

      31 Year(s)


    72. How would you describe the authority that the education requirements have?
      Requirements are legally-based
      Requirements are set in the constitution, by-laws or other rules of the relevant body(ies).
      Requirements are set in member body(ies) policy document(s).
      Other (please describe)

    72 a. How can IFAC obtain copies of these documents?
      Contact HKICPA.

    72 b. Are these documents available in English?
      Yes   No


    73. Are the education requirements for accountants and auditors the same throughout your country, or do they differ among regions, provinces or states?
      Same   Different
      If different, please briefly describe the main differences:
      There is an examination requirement for obtaining the licence – a practising certificate (PC) - to practise as a statutory auditor in Hong Kong.

      The requirements for the issue of a practising certificate, as governed by section 29A of the Professional Accountants Ordinance (PAO), includes practical experience requirement. Applicants are required to have no less than four years’ full time audit experience. The HKICPA enforces this statutory requirement. All persons wishing to sign statutory audits are required to apply for a practicing certificate from the Institute.

      Holders of a practising certificate is required to complete a minimum of 40 hours of continuing professional development (CPD as CPE is known in Hong Kong), including at least 15 hours of structured CPD activities. The requirements are prescribed as a direction of the Council, the governing body of the HKICPA. The HKICPA's CPD Committee is charged with monitoring compliance through reviews of members’ annual declaration of compliance and an annual random audit of compliance. Compliance with CPD requirements is more than 99 percent.


    74. Please indicate the scenario that best describes who delivers the education and examination process for members of the profession. Please only select one option.
      The education program and final examination are delivered by the member body.
      The education program and final examination are delivered by the member body and other education institutions (e.g., universities, colleges, and others).
      The education program and final examination are delivered by education institutions (e.g., universities, colleges, and others).
      Other (please explain)


    75. Once qualified as a member of your professional body, can members offer their services directly to the public?
      Yes   No



    Section 7B -- Licensing


    76. Are there licensing requirements for auditors in your country?
      Yes (continue with Question 77)   No (proceed to Section 8)


    77. Who sets the requirements to obtain a license?
      Hong Kong Institute of Certified Public Accountants under the authority vested by the
      Professional Accountants Ordinance (“PAO”) (Cap. 50, Laws of Hong Kong).


    78. What are the requirements to obtain a license (please select all relevant requirements.)?
      Academic study specific for obtaining a license
      Practical experience
      Licensing examination
      Final qualifying examination
      Other (please describe)
      a. The applicant must be a HKICPA member
      b. Residence requirement.
      c. Commencement of practice within six months from the date the license is issued to an applicant.
      d. The applicant shall not be bankrupt or has entered into voluntary arrangement with his/her creditors within the meaning of the Bankruptcy Ordinance (Cap. 6, Laws of Hong Kong).
      e. The applicant has to comply with the HKICPA’s requirements for continuing professional development.


    79. Are there ongoing requirements to retain a license?
      Yes   No

      If YES, please select all relevant requirements.
      Continuing professional development
      Re-examination
      Other (please specify): See Q78 Other


    80. What entity grants the license?
      Hong Kong Institute of Certified Public Accountants.


    81. Describe any additional licensing requirements for auditors of listed entities (e.g., additional education requirements, registration, etc.).
      No



    Section 8 -- Public Sector Accounting Standards


    Responses to this section will provide a description of the legal and professional framework governing public sector accounting standards in your country. The section focuses on the establishment of such standards. Please indicate, where appropriate, the role of your organization within this framework.

    Section 8A -- Statutory Framework


    82. Please provide the name of the Legal authority and/or self-regulatory rules establishing public sector accounting standards in your country, the date of last amendment and the name of the body responsible for setting public sector accounting standards. If the standards are different for different entities (e.g., whole of government, ministry/department, statutory authority/agency, profit entity owned by government, state governments, local governments, other [please specify]), please specify the details that apply to each.
      Type of entity Name of
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting public sector
      accounting standards
      Whole of government The HKICPA has not issued any public sector accounting standards. In Hong Kong, private sector accounting standards are generally applied by the public sector entities.
      Ministry/department
      Statutory authority/agency
      Profit entity owned by government
      State governments
      Local governments
      Other (please describe)
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      Note to Section 8:

      The HKICPA has not issued any public sector accounting standards. In Hong Kong, private sector accounting standards are generally applied by the public sector entities.


      b. Are the documents available in English?
      Yes   No



    Section 9 -- Private Sector Accounting Standards


    Responses to the questions in this section will provide a description of the legal, statutory and professional framework governing private-sector accounting standards in your country. The section focuses on the establishment of such standards. Please indicate what role your organization plays within this framework.

    Section 9A -- Statutory Framework


    94. Please provide the name of the Legal authority and/or self-regulatory rules that establish private-sector accounting standards in your country, the date of last amendment, and the name of the body responsible for setting private sector accounting standards. If the standards are different for different entities (for example, listed entities, private companies, governmental organization, not for profit organizations, etc.), please specify the requirements that apply to each.
      Type of entity Name of legal
      authority or
      applicable
      rules
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting private sector
      accounting standards
      Listed entity Professional Accountants Ordinance 09/2004 Hong Kong Institute of Certified Public Accountants
      Other (please describe) Private Companies Professional Accountants Ordinance 09/2004 Hong Kong Institute of Certified Public Accountants
      Other (please describe)
      Other (please describe)
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      A copy of the Hong Kong Financial Reporting Standards can be assessed at
      http://www.hkicpa.org.hk/index.php?mainLocation=/professionaltechnical/accounting/standards/standards.php


      b. Are the documents available in English?
      Yes   No


    Section 9B -- Standard-Setting (Hong Kong Institute of Certified Public Accountants)


    95. For Hong Kong Institute of Certified Public Accountants, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Statutory body for the accounting profession in Hong Kong as set out in the Professional Accountants Ordinance.

      Under the Professional Accountants Ordinance, the Council (governing body) of the HKICPA is empowered to set private sector accounting standards in Hong Kong.The responsibility is delegated to the Financial Reporting Standards Committee (FRSC) of the HKICPA.

      At section 4 of this Questionnaire, the Companies Act, various regulations, codes, rules issued by the Securities and Futures Commission (SFC) and Stock Exchange of Hong Kong (SEHK) would have been mentioned and do apply to entities falling within their regulatory jurisdiction. Hong Kong companies are required to prepare financial statements that show a “true and fair view”. This is taken to mean that such financial statements should comply with the accounting standards set by the HKICPA, as discussed in a legal opinion available on the HKICPA website at: http://www.hkicpa.org.hk/professional/trueandfairview.pdf.


      b. Name of standards

      Hong Kong Financial Reporting Standards


    96. How many voting members does the standard-setting body have?
      17


    97. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    98. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      The FRSC currently comprises 18 members (all volunteers, all voting members), supported by two full-time secretariat staff employed by the HKICPA. The Composition of the FFSC, which is in-line with recommendations made by the Government’s Standing Committee on Company Law Reform, includes representatives from big-4 and non-big-4 accounting firms, users, preparers, and regulators. A copy of the FASC’s composition (including details of representation) and Terms of Reference is available on the HKICPA website at: http://www.hkicpa.org.hk/professionaltechnical/committees/FASC.pdf.


    99. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Appointed by the Council of the HKICPA.

      With respect to Q100:
      Public interest members: 2 Years
      Non-public interest members: 1 Year.


    100. What is the term of appointment for members?
      2 Year(s)


    101. For how many years has the standard-setting body been in existence?
      22 Year(s)


    102. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      No separate budget

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      0.0



    103. To what entity is the standard-setting body accountable?
      Members of HKICPA


    104. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      The FRSC’s Due Process is available on the HKICPA website at: http://www.hkicpa.org.hk/professionaltechnical/accounting/dueprocess/statementofdueprocess.pdf. Please note that, in line with the recently revised Preface to Hong Kong Financial Reporting Standards, references to “Statements of Standard Accounting Practice” (SSAP) and “Hong Kong Financial Reporting Standards”, as a collective term, refer to the body of GAAP issued by the HKICPA.

    2. accessibility of meetings (i.e., public or private)

      Meetings are held in private but the FRSC Meeting Summaries are published on the HKICPA website at:
      http://www.hkicpa.org.hk/index.php?mainLocation=/professionaltechnical/accounting/fascupdate/content.php


    3. approval process for final standards (i.e., majority required to approve final standards)

      Final Standards are approved by the HKICPA Council.

    4. other relevant due process activities



    105. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      11 Day(s)



    Section 10 -- Monitoring (Quality Assurance) and Enforcement


    Responses to the questions in this section will provide a description of the legal and professional framework governing regulation of the profession in your country. Please indicate what role your organization plays within this framework.

    Section 10A -- Securities Market Regulatory Authority


    106. Name the authority that regulates the securities market:
      The Securities and Futures Commission (the “SFC”)


    107. What responsibilities does this organization have for monitoring and enforcing compliance with accounting, reporting or auditing requirements? Please identify the Legal authority that establishes that responsibility:
      The SFC’s responsibilities include monitoring and enforcing compliance with accounting and reporting disclosure requirements of entities falling under its jurisdiction.

      Pursuant to the Securities and Futures Ordinance, any corporation, financial institution or individual carrying on a regulated activity is required to obtain a licence from the SFC. The nine types of regulated activities are: - dealing in securities; dealing in futures contracts; leveraged foreign exchange trading; advising on securities; advising on futures contracts; advising on corporate finance; providing automated trading services; securities margin financing and asset management.

      The SFC is responsible to ensure all licensed entities and individuals comply with the Securities and Futures Ordinance and its supplementary codes, guidelines, rules and regulations.

      Section 156 of the Securities and Futures Ordinance requires a licensed entity to submit its financial statements together with an auditor’s report to the SFC.

      Section 3 of the Securities and Futures (Accounts and Audit) Rules further requires that the financial statements submitted under Section 156 of the Securities and Futures Ordinance must be prepared in accordance with generally accepted accounting principles. Generally accepted accounting principles in Hong Kong includes the accounting standards issued by the HKICPA, the disclosure requirements of the Hong Kong Companies Ordinance, and, if the regulated entity is listed, the requirements set out in the Rules of the Stock Exchange of Hong Kong Limited.


    108. Briefly describe the role of the regulatory authority as it relates to the following:
    1. regulation of the audit profession

      The SFC does not regulate the audit profession. The audit profession is subject to self-regulation carried out by the HKICPA with statutory power conferred under the Professional Accountants Ordinance. However, under section 179 of the Securities and Futures Ordinance, the SFC is entitled to examine the working papers of auditors to assist the SFC’s investigation of listed companies. Guidance to HKICPA members on the application of section 179 is set out in the HKICPA General Guidance Statement No. 1.307 “Production of Audit Working Papers to the Securities and Futures Commission under section 179 of the Securities and Futures Ordinance” http://www.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeI/1_307.pdf.

      In the event that the SFC comes across any alleged misconduct of the auditors or their employees, the SFC, under section 378 of the Securities and Futures Ordinance, may disclose such alleged misconduct to the HKICPA or the relevant law enforcement agencies for further action. The HKICPA, SFC and the Hong Kong Stock Exchange have an agreed protocol for such referrals.


    2. accounting and auditing standard-setting

      The SFC is not responsible for the setting of accounting and auditing standards. The HKICPA is empowered under the Professional Accountants Ordinance to set accounting and auditing standards. However, the SFC is represented on the Financial Reporting Standards Committee, Auditing and Assurance Standards Committee and the Ethics Committee of the HKICPA.

    3. review of financial statements prepared by listed entities, and monitoring of their compliance with the accounting and disclosure requirements

      The SFC does not directly regulate listed entities. The Stock Exchange of Hong Kong Limited (“SEHK”) is the frontline regulator for listed entities. The SFC only regulates takeovers and mergers of listed companies under the Takeovers and Mergers Code.

      However, there is a dual filing requirement whereby the annual financial statements of listed entities are required to be filed both with the SEHK and the SFC. Under sections 7 and 8 of the Securities and Futures (Stock Market Listing) Rules of the Securities and Futures Ordinance, documents that are required to be filed with the SEHK under the Listing Rules are also required to be filed with the SFC. The SFC is able to exercise statutory enforcement powers to suspend dealings in the securities where it has reason to believe that disclosure documents filed contain information that is false or misleading in a material particular.

      Furthermore, if a listed entity carries on a “regulated activity” defined under the Securities and Futures Ordinance, it is required to apply for a licence with the SFC and be subject to the SFC’s supervision on compliance with relevant laws, rules, codes and guidelines including the accounting and disclosure requirements as mentioned in our response to question 107.




    Section 10B -- Stock Exchange


    109. Name the four largest stock exchangers (by market capitalization) and whether it is organized as a profit or not-for-profit organization:
      Profit Not
      for
      profit
      Stock Exchange
      The Stock Exchange of Hong Kong Limited (the âSEHK



    Section 10B -- Stock Exchange
    The Stock Exchange of Hong Kong Limited (the “SEHK Details


    110. For The Stock Exchange of Hong Kong Limited (the “SEHK, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      The SEHK maintains a financial statements review program with a view to encourage high standards of financial disclosure and to detect instances of improper disclosure. A representative of the SEHK also sits on the Professional Standards Monitoring Committee of the HKICPA. The Professional Standards Monitoring Committee reviews published financial statements with the aim of monitoring the accounting and auditing standards of members in public practice as evidenced by audited financial statements.

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.

      The financial reporting requirements of listed entities are set out in the SEHKâs Listing Rules. Non-compliance with the disclosure requirements may result in suspension in securities dealing or cancellation of the companyâs listing status by the SEHK.

    3. How enforcement actions are administered.

      Enforcement actions are administered by the Listing Department of the SEHK, which is responsible for monitoring continuing compliance with the SEHKâs Listing Rules and taking disciplinary action, where appropriate, in relation to breaches of the Listing Rules. There is a mandatory referral of cases of alleged breaches of the Listing Rules committed by professional accountants to the HKICPA under a Memorandum of Understanding signed between the HKICPA and the SEHK. The HKICPA has proposed and the Hong Kong Government has accepted the establishment of the Independent Investigation Board to investigate alleged accounting, auditing and/or ethics irregularities committed by professional accountants related to companies listed on the SEHK. The government also proposes to establish a Financial Reporting Review Panel to review and investigate financial statements of listed companies.



    Section 10C -- Regulatory Oversight of the Accounting Profession


    111. Has an audit profession oversight body been established (e.g., to oversee the external quality assurance review process, etc.)?
      Yes   No

      If NO, proceed to the next section.

      If YES, please describe :

    1. What are the name and duties of the oversight body?

      The HKICPA is the regulatory oversight body of the accountancy profession in Hong Kong.

      Pursuant to section 7 of the Professional Accountants Ordinance (“PAO”) the objects and principal duties of the HKICPA include, inter alia, issue of accounting, auditing and ethical standards; conducting examinations; the registration of professional accountants, firms of certified public accountants or public accountants and corporate practices; encouraging the study of accountancy; regulating the practice of the accountancy profession; and, representing the views of the profession and preserving the profession’s integrity and status.

      The governing body of the HKICPA is its Council. Council has been granted general and specific powers under the PAO to carry out the objects of the HKICPA.


    2. The number of members on the oversight body

      The number of elected members of Council is 14. The term of office for an elected member is for a period of two years. The immediate past President of HKICPA shall continue to hold office as a member of the Council for a term of 1 year. There are 6 government appointed members including 2 government officials (the Financial Secretary and the Director of Accounting Services of the Hong Kong Special Administrative Region Government) and 4 lay non-accountant members who will hold office for a term of 2 years.

      An additional 2 members are co-opted by the Council. A co-opted member is appointed for a one-year term.


    3. Its powers

      Pursuant to section 8 of the Professional Accountants Ordinance (“PAO”), the HKICPA has the power to make by-laws to carry into effect the purposes of the PAO and the objects of the HKSA.

      The governing body of the HKICPA is its Council. Council has been granted general and specific powers under the PAO to carry out the objects of the HKICPA under section 7 as outlined in our response to question 111(a) above.


    4. How the oversight body conducts or oversees a program of inspections to assess the degree of compliance of each audit firm/auditor with applicable auditing standards and regulations

      The HKICPA is empowered by Part IVA of the Professional Accountants Ordinance to conduct practice reviews. The Practice Review Committee is responsible for carrying out the HKICPA’s practice review programme.

      The objective of practice review is to ensure that all members in public practice maintain, observe and apply professional standards.

      For further details, please refer to our response to question 124 below.


    5. The sanctions the oversight body may impose in the event of non-compliance

      Where there has been non-compliance, the matter may be referred to a Disciplinary Committee. If the Disciplinary Committee is satisfied that a complaint referred to it under section 34 of the Professional Accountants Ordinance (“PAO”) is proved, it may make any one or more of the orders against the professional accountant or a practice under section 35 of the PAO.

      The disciplinary orders set out in section 35 of the PAO are:
      (a) an order that the name of the professional accountant be removed from the register, either permanently or for such period as a Disciplinary Committee may think fit;
      (b) an order that the professional accountant be reprimanded;
      (c) an order that the professional accountant pay a penalty not exceeding HK$500,000 (US$64,103) to the HKICPA;
      (d) an order that the professional accountant pay the costs and expenses of and incidental to an investigation against him under Part VA of the PAO;

      For further details, please refer to section 10I “Investigation and Discipline” below.


    6. How the oversight body is accountable to any public institution or body

      The HKICPA is accountable to its members. It is also accountable to the general public as one of its objects, as set out in section 7(b) of the Professional Accountants Ordinance, is to “regulate the practice of the accountancy profession” in Hong Kong.


    Section 10D -- Banks Regulatory Authority


    112. Name the authority that regulates the banks and similar financial institutions. Discuss how this authority differentiates between accounting requirements for regulatory reporting and general purpose external financial reporting:
      The Hong Kong Monetary Authority (the âHKMAâ) regulates licensed banks, restricted licence banks and deposit-taking companies, collectively known as Authorised Institutions. Pursuant to section 60 of the Banking Ordinance, every Authorised Institution is required to lodge with the HKMA a copy of its audited financial statements and a copy must be exhibited in a conspicuous place in the Authorised Institutionâs principal place of business and its branches. The HKMA has issued financial disclosure standards to be observed by all Authorised Institutions under section 16(10) of the Banking Ordinance. These financial disclosure standards, which are available from the HKMA website, supplement the financial reporting and disclosure requirements of the Hong Kong Companies Ordinance, the Stock Exchange of Hong Kong Listing Rules and the Hong Kong Financial Reporting Standards issued by the HKICPA. Authorised Institutions are also required to submit periodic returns (e.g. on liquidity and capital adequacy ratios) to the HKMA providing financial and other information according to requirements set out in the Banking Ordinance. Where the HKMA identifies non-compliance with accounting, reporting and auditing requirements, it may raise a complaint against the auditors and refer the matter to the HKICPA.


    113. Discuss briefly the legal requirements with respect to monitoring and enforcement by the regulatory authority of accounting and auditing standards that apply to the banks and similar financial institutions:
      Please refer to our response to question 112 above for monitoring accounting disclosures. The HKMA does not monitor or enforce âauditingâ standards.


    114. Briefly describe the role of the regulatory authority as it relates to the following:
    1. regulation of the audit profession

      The HKMA does not regulate the audit profession. The audit profession is subject to self-regulation carried out by the HKICPA with statutory power conferred under the Professional Accountants Ordinance.

    2. accounting and auditing standard-setting

      The HKMA is not responsible for the setting of accounting and auditing standards. The HKICPA is empowered under the Professional Accountants Ordinance to set Accounting and Auditing Standards. However, the HKMA has issued financial disclosure standards to be observed by all Authorised Institutions pursuant to section 16(10) of the Banking Ordinance. These financial disclosure standards are additional to the accounting standards issued by the HKICPA.

    3. review of financial statements prepared by listed entities

      The HKMA does not regulate listed entities except those that are Authorised Institutions.

    4. enforcement of accounting, reporting and auditing requirements

      The HKMA is responsible for the enforcement of accounting and disclosure requirements imposed on Authorised Institutions pursuant to the Banking Ordinance. Action may be taken against the directors, chief executive or managers of the Authorised Institution for non-compliance. Non-compliance may constitute a ground for the HKMA to make a complaint to the HHKICPA.



    Section 10E -- Non-Banking Financial Institutions Regulatory Authority


    115. Name the regulatory authority(ies) responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements imposed on non-banking institutions.
      The Securities and Futures Commission (the âSFCâ)


    116. What is the source of Legal authority of the regulatory authority(ies)?
      The Securities and Futures Ordinance


    117. Briefly describe the role of the regulatory authority(ies) as it relates to the following:
    1. regulation of the audit profession

      Please refer to our response to question 108(a).

    2. accounting and auditing standard-setting

      Please refer to our response to question 108(b).

    3. review of financial statements prepared by listed entities

      Please refer to our response to questions 107 and 108(c).

    4. enforcement of accounting, reporting and auditing requirements

      Please refer to our response to question 107.



    Section 10F -- Insurance Companies Regulatory Authority


    118. Name the regulatory authority responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements imposed on insurance companies.
      The Office of the Commissioner of Insurance is the regulatory body set up for the administration of the Insurance Companies Ordinance. The Office is headed by the Commissioner of Insurance who has been appointed as the Insurance Authority for administering the Insurance Companies Ordinance. The Insurance Companies Ordinance prescribes the regulatory framework, which includes the accounting, reporting and auditing requirements, for âinsurersâ and âinsurance brokersâ. âInsurersâ are required to obtain authorisations from the Insurance Authority to carry out insurance business. âInsurance brokersâ may seek authorisations directly from the Insurance Authority or become members of the Hong Kong Confederation of Insurance Brokers or the Professional Insurance Brokers Association Limited (collectively referred to as the âApproved Bodiesâ) under the delegated powers from the Insurance Authority. These Approved Bodies are charged with the responsibilities of ensuring that their members comply with the statutory requirements of the Insurance Companies Ordinance.


    119. What is the source of Legal authority of the regulatory authority(ies)?
      The Insurance Companies Ordinance


    120. Briefly describe the role of the regulatory authority(ies) as it relates to the following
    1. regulation of the audit profession

      The Insurance Authority and the Approved Bodies do not regulate the audit profession. The audit profession is subject to self-regulation carried out by the HKICPA with statutory power conferred under the Professional Accountants Ordinance.

    2. accounting and auditing standard-setting

      The Insurance Authority and the Approved Bodies are not responsible for the setting of accounting and auditing standards. The HKICPA is empowered under the Professional Accountants Ordinance to set Accounting and Auditing Standards.

    3. review of financial statements prepared by listed listed entities

      The Insurance Authority and the Approved Bodies do not regulate listed entities except those that are The Insurance Authority and the Approved Bodies do not regulate listed entities except those that are insurers or insurance brokers. âInsurersâ and âinsurance brokersâ are required to submit audited annual financial statements and business returns to the Insurance Authority or the Approved Bodies. Regulatory work is done primarily through the examination of these statements and returns.

    4. enforcement of accounting, reporting and auditing requirements

      The Insurance Authority and the Approved Bodies are responsible for monitoring compliance with accounting, reporting and auditing requirements of authorised insurers and insurance brokers pursuant to the Insurance Companies Ordinance. Non-compliance may constitute a ground for the Insurance Authority to make a complaint to the HHKICPA.



    Section 10G -- Other Regulatory Authority


    121. Name any other regulatory authority(ies) responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements.
      The authorities mentioned in sections 10A to 10F are the main regulatory authorities in Hong Kong.


    122. What is the source of Legal authority of each regulatory authority?
      NA


    123. Briefly describe the role of the regulatory authority(ies) as it relates to the following
    1. regulation of the audit profession

      NA

    2. accounting and auditing standard-setting

      NA

    3. review of financial statements prepared by listed listed entities

      NA

    4. enforcement of accounting, reporting and auditing requirements

      NA



    Section 10H -- Quality Assurance


    124. Does any organization of professional accountants/auditors organize a program of quality assurance review to monitor compliance with accounting, reporting and auditing requirements?
      Yes   No

      If NO, proceed to next Section.

      If YES, briefly describe the monitoring and enforcement mechanism.

      The audit quality assurance system is operated by the HKICPA and has two components: The Practice Review Programme and The Professional Standards Monitoring Committee.

      The Practice Review Programme monitors the compliance of professional standards by practice units in their audits of finanical statements, which include financial statements of public listed companies.

      The Professional Standards Monitoring Committee, which is a non-statutory committee, monitors the compliance of professional standards of auditors of listed companies.

      The Attachment to the HKCIPA response provides additional detilaed information about these two component activities.



    125. Under what authority does the organization conduct the program of quality assurance review?
      The Professional Standards Monitoring Committee was established by the Council of the HKICPA in 1988 pursuant to section 18(1)(m) of the Professional Accountants Ordinance (“PAO”).

      Part IVA of the PAO empowers the HKICPA to carry out its practice review programme.


    126. Who performs the review (e.g., one firm reviewing another firm, staff from the national professional organization, contractors, or a combination of these)?
      PSMC work is carried out by a team of external monitors who are practising members of major accountancy firms and they are assisted by full time employees of the HKICPA.

      Practice reviews are carried out by practice reviewers who are full time employees of the HKICPA. The Council of the HKICPA appoints practice reviewers under section 32B(1)(d) of the PAO. All practice reviewers are certified public accountants who, from experience, have at least 6 years post qualification experience in professional auditing and assurance work. Currently the practice review team has both recently joined members as well as staff who have been involved in practice review work since the practice review programme was introduced in 1992.




    Section 10 I -- Investigation and Discipline


    127. Is there a process for investigating and disciplining the accounting profession in your country?

    128. Which of the following best describes the responsibility for the investigatory and disciplinary function in your country?
      Government or other agencies are solely responsible for this function.
      Government or other agencies have this responsibility, but the member body or bodies participate in the process.
      Government formally delegates this function to the member body or bodies, to exercise on its behalf.
      Member body or bodies have separate and independent processes that operate alongside processes of legal authorities.
      Other (please explain)


    129. Please indicate the name of the body or bodies responsible for investigation and discipline.
      Investigations and disciplinary proceedings are carried out by Investigation Committees (“ICs”) and Disciplinary Committees (“DCs”) which are independent of the HKICPA Council. All ICs and DCs consist of five persons with the majority of members (including the Chairman) being lay persons (non accountant) selected by a government appointed convenor from a panel appointed by the Chief Executive of the Hong Kong Special Administrative Region Government (Panel A). The other members of the ICs and DCs are CPAs selected from a panel appointed by the HKICPA Council (Panel B). No members of the HKICPA Council may serve on the ICs or DCs.

      With respect to question 135, the HKICPA has been in existence since 1973 and provisions in the Professional Accountants Ordinance concerning the Disciplinary Panel and Disciplinary Committees have been in place since the establishment of the HKICPA which were last updated in November 2004 to introduce the new structure in our response to Q132 below.

      The power of the HKICPA to establish Investigation Committees was introduced in 1994.



    Responses to the remaining questions in this Section are required if your organization has responsibility for investigation and disciplinary actions.

    130. How many voting members does the body have?
      See Q129


    131. Are the members of the body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    132. What are the criteria considered in selecting members of the body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Investigation Committees:

      There are two Investigation Panels from which an Investigation Committee is formed. Panel A comprises not less than 18 lay (non accountant) members appointed by the Government and Panel B comprises not less than 12 professional accountants appointed by the HKICPA Council of whom not less than 6 are holders of practising certificates. Appointment is for one year and the renewal of the office of the Panel A members is at the discretion of the Government, and renewal of office of the Panel B members is at the discretion of the HKICPA Council.



      The Government appoints a Panel A member to be an Investigation Committee Convenor who is delegated the power to identify and appoint the Chairman and members of an Investigation Committee to deal with a particular case when an investigation is instigated by the Council. The Investigation Committee Convenor is not appointed to any Investigation Committee formed during his term as the Convenor, which is one year.

      Disciplinary Committees:

      There are two Disciplinary Panels from which a Disciplinary Committee is formed. Panel A comprises not less than 18 lay (non accountant) members appointed by the Government and Panel B comprises not less than 12 professional accountants appointed by the Council of whom not less than 6 are holders of practising certificates. Appointment is for one year and the renewal of the office of the Panel A members is at the discretion of the Government.

      The Government appoints a Panel A member to be a Disciplinary Committee Convenor who is delegated the power to identify and appoint the Chairman and members of a Disciplinary Committee to deal with a particular case. The Disciplinary Committee Convenor is not appointed to any Disciplinary Committee formed during his term as the Convenor, which is one year.

      Criteria:
      Members of the Investigation and Disciplinary Panels A who must be non accountant are selected and appointed by the Chief Executive of the Hong Kong Special Administrative Region Government.

      Members of the Investigation and Disciplinary Panels B are selected by the HKICPA Council based on their suitability and their availability.

      When dealing with a specific case, members of the Panels are required to declare any possible conflict of interest.



    133. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      With respect to questions 133 and 134, refer response to question 132.


    134. What is the term of appointment for members?
      Year(s)


    135. For how many years has the body been in existence?
      Year(s)


    136. Please indicate the budget in US$ of the body for the last fiscal year.
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      1.832.179

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      7.8 (specify currency)



    137. To what entity is the body accountable?
      Note to question 136: The operations of the HKICPA, including its monitoring and enforcement activities, are funded entirely by members’ “subscriptions and fees”. Members of the Council and the committees provide their services on an honorary basis. A secretariat staffed by full time employed personnel provides administrative support to the activities of the Council and the committees.
      Based on the HKICPA’s latest financial statements for the year ended 30 June 2004, the cost of the HKICPA Compliance Division was HK$14,291,000 (US$1,832,179).

      Question 137:
      The HKICPA is accountable to its members.

      HKICPA is also accountable to the general public as one of its objects, as set out in section 7(b) of the Professional Accountants Ordinance, is to “regulate the practice of the accountancy profession” in Hong Kong.

      Both Investigation Committees and the Disciplinary Committees are independent committees established by Council. An Investigation Committee reports its views and findings to Council. The Disciplinary Committee does not report to Council. A respondent aggrieved of an order made by a Disciplinary Committee may appeal to the Hong Kong Court of Appeal. The Court of Appeal may confirm, vary or reverse the Disciplinary Committee’s order. The CPA, firm or corporate practice aggrieved by the decision of the Court of Appeal may appeal to the Court of Final Appeal. The decision of the Court of Final Appeal shall be final.

      With respect to question 138:
      HKICPA’s Council meets monthly.

      Investigation and Disciplinary Committee are established to deal with specific cases. Meetings for these committees and the time incurred will depend on the nature, size and complexity of the case.



    138. Approximately how many days per year does the body meet in full session (including teleconferences)?
      12 Day(s)



     

     

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