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Mainland CPA firms can now have Institute members as partnersHong Kong CPAs can now become partners in a Mainland CPA firm based on the extension of the scope of the Closer Economic Partnership Arrangement from Guangdong province to rest of China.

Previously, Hong Kong CPAs were only allowed to be partners in Guangdong province-based firms. Now, as long as a Hong Kong CPA has obtained a Chinese Institute of CPAs qualification, maintains a place of abode and resides in the Mainland for more than six months annually, and is at a firm controlled by Mainland partners, the Hong Kong CPA can be a partner at the Mainland firm.

This latest development further reinforces the value of a Hong Kong CPA designation, says Raphael Ding, the Institute’s Chief Executive and Registrar, in his latest Chief Executive’s Update.

The Ministry of Finance has announced the detailed application procedures in pursuance of this new CEPA initiative on it’s website.

Hong Kong permanent residents who

have obtained a CICPA qualification and the required practical experience can now submit an application to the MoF office at the province where the CPA practice registered to join a Mainland CPA practice as partner. Hong Kong audit experience is also recognized, and the applicant is required to provide a certification by the Hong Kong CPA practice of the audit experience. Other specific provisions include:1. The partnership agreement should

specify that Mainland resident partners of the CPA practice will represent not less than 51 percent voting rights on operation and management decisions. A copy of such partnership agreement forms part of the supporting materials.

2. Hong Kong permanent resident with Chinese nationality can become the managing partner of a Mainland CPA firm. An applicant applying to become a managing partner has to provide a copy of his/her Hong Kong identity card and a declaration that he/she does not have other nationality.

3. The admitted applicant will be subject to regulation by the MoF offices at provincial level and above, and has to comply with Mainland laws and regulations, including the CPA law (註冊會計師法), the partnership law (合夥企業法) and the secrecy provisions that apply to non-Mainland officers.

Members and past Council member honoured for contribution to Hong KongThe Hong Kong government recognized three Institute members and a past Council member this year for their distinguished services to the society, by presenting them with a Gold Bauhinia Star, a Silver Bauhinia Star and two Bronze Bauhinia Stars.

This year, a total of 310 people were on the Honours List. Among them was past president Paul Chan, who received a GBS for his “dedicated and distinguished service to the government and the Hong Kong community,” particularly in his capacity as Secretary for Development.

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Disciplinary findingWu Kit Man, Athena, CPA

Complaint: Wu was convicted of an offence involving dishonesty.

Wu was convicted at the Magistrates Court of theft for having taken cash which did not belong to her from an ATM machine. Her subsequent appeal to the higher courts was unsuccessful. Wu notified the Institute of the conviction in accordance with her membership obligations. After considering the information available, the Institute lodged a complaint against Wu under section 34(1)(a)(ii) of the Professional Accountants Ordinance.

Decision and reasons: Wu was reprimanded and ordered to pay a penalty of HK$5,000 and the costs of disciplinary proceedings of HK$28,211. In making its

decision, the Disciplinary Committee took into consideration, among other things, the relatively light fine ordered by the court, Wu’s personal circumstances and the effect of the conviction on her career.

Resolution by AgreementLam Yat Chung, Paul, CPA (practising)

Complaint: Failure or neglect to observe, maintain or otherwise apply Hong Kong Standards on Auditing 500 Audit Evidence, HKSA 705 Modifications to the Opinion in the Independent Auditor’s Report and its preceding standard HKSA 701 Modifications to the Independent Auditor’s Report.

Lam was the sole proprietor of a CPA firm. In auditing the financial statements of a private company for each of the four years ended 31 March 2010 to 2013,

he failed to obtain sufficient evidence of a material amount due to directors included in the financial statements. Lam also failed to modify his audit opinion on the financial statements when he had not obtained sufficient evidence of the said amount.

Regulatory action: In lieu of further proceedings, the Council concluded that the following should resolve the complaint:

1. Lam acknowledges the facts of the case and his non-compliance with the relevant professional standards;

2. Lam be reprimanded; and 3. Lam pays an administrative penalty of

HK$35,000 and costs of HK$10,000.

Details of disciplinary findings and guidelines for Resolution by Agreement are available at: www.hkicpa.org.hk.

Hailed for providing valuable advice on various issues during her tenure as member of the Executive Council, Starry Lee, Chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong and Institute member, was awarded the SBS for her long public and community service, particularly her contributions to Kowloon City District.

Institute member Anthony Yeung earned a BBS, particularly for his contributions to the promotion of inclusion and rehabilitation of people with disabilities and fostering of employer-employee relationships.

Ambrose Cheung, a past Council member, also recieved a BBS for his community service over the years, particularly in his capacity as Chairman of Sham Shui Po District Council.

Standard Setting Department launches LinkedIn pageThe Institute’s Standard Setting Department has launched a LinkedIn

page, aiming to engage with members and other interested parties on the latest developments in standards relating to financial reporting, auditing and professional ethics.

Members should follow HKICPA SSD on LinkedIn to join in discussions on related hot topics.

A Plus wins SOPA awardThis magazine earned an editorial cartooning prize last month at the Society of Publishers in Asia Editorial Awards, a prestigious recognition for outstanding journalism in both traditional and new media throughout the region. The winning entry, Yahoo to stick to Alibaba spinoff plan without IRS backing, was created by well-known cartoonist Harry Harrison.

ObituariesThe Institute notes with regret the passing of Cheung Kit-yuk and Tam Tak-ding.

Institute in numbers

As of 30 June, the Institute has 1,784 registered CPA firms and

corporate practices, up from 1,763 in June last year.

Sole proprietor/practitioner

1,286Two to three partners

418Four or more partners

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NewsAccounting

6 July 2016

Several accounting organizations stressed the need for continuing international cooperation amid the economic and political turmoil surrounding the United Kingdom’s referendum last month to leave the European Union, known as Brexit.

The Institute of Chartered Accountants in England and Wales will continue its partnerships with EU governments and regulators and with European professional organizations, Chief Executive Officer Michael Izza said in a 24 June blog post on the ICAEW website.

Likewise, the International Federa-tion of Accountants called for continuing global cooperation and coordination to ensure development of quality account-ing standards as the U.K., Europe and other parts of the world grapple with

uncertainty. “The accountancy profes-sion will have an important role to play in the myriad issues that will need to be addressed,” IFAC CEO Fayezul Choud-hury said in a statement.

Among the uncertainties the U.K. accounting profession faces in Brexit is the fate of EU directives already trans-posed into U.K. law and what action the U.K. will take on future EU poli-cies, reported Bloomberg. The U.K., for instance, put into effect on 17 June the EU Audit Regulation and Directive, which introduced new requirements for statutory audits.

“Parliament and the government will have to decide which parts of legisla-tion will be discarded, and it can’t be assumed that every piece of legislation

will be overturned,” Financial Reporting Council spokesman Peter Timberlake told Bloomberg.

How the U.K. would handle policies currently underway through the EU sys-tem, is also questioned. The U.K.’s course of action is unclear if EU policymakers approve directives that must be incorpo-rated into member nations’ laws, “although logic would suggest the U.K. may choose not to adopt,” Timberlake said.

David Cameron, who resigned as prime minister soon after the referendum results were announced, led the campaign to keep the U.K. in the EU. Earlier this month, Britain’s Home Secretary Theresa May was confirmed to succeed him. She has said that “Brexit means Brexit” and that there will be no attempts to stay within

Accounting firms urge forEU cooperation post-Brexit

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More jurisdictions sign up to corporate tax avoidance rulesAnother 36 jurisdictions, including Singapore and Hong Kong, have signed up to new rules on corporate tax avoidance as part of a global crackdown on aggres-sive tax planning. The base erosion and profit shifting (BEPS) initiative, originally developed by the G20 and the Organization for Economic Cooperation and Development, aims to save as much as US$240 billion a year in lost tax revenue around the world. A group of developing countries also signed up to BEPS at a meet-ing, aimed at expanding the framework, in Kyoto on 30 June. The number of signatories is now at 82.

EY U.K. leads in leadership gender balanceEY in the United Kingdom is in the lead compared to other firms when its comes to appointing women into leadership roles (34.1 percent), according to survey results released this month by the Managing Partner’s Forum, a profes-sional firms organization. KPMG is second with 32.1 per-cent, with PwC (31.7 percent) and Deloitte (31.6 percent) in third and fourth place. Grant Thornton takes fifth place with 28.6 percent, followed by Smith & Williamson with 27 percent. MPF’s statistics is based on data provided by all 10 accountancy firms with annual U.K. revenues in excess of £100 million.

IESBA roll out new standardsThe International Ethics Standards Board for Accountants released its new standard, Responding to Non-Compliance with Laws and Regulations, this month aimed at resolv-ing potential conflicts of interest for accountants and auditors, by providing guidance on what to do if they uncover corporate wrongdoing. “The standards clarify that profes-sional accountants must be active and not turn a blind eye to noncompliance,” Stavros Thomadakis, Chairman of the IESBA, told the Wall Street Journal. “It’s trying to bring about early, early detection, if you will, but also early action by management or authori-ties.” He added that “in times of crisis, there may be more of a temptation to not comply.”

Deloitte University opens in SingaporeDeloitte has opened a branch of their Deloitte Uni-versity in Singapore on 27 June, in a bid to develop future leaders for the firm. The launch of Deloitte University Asia Pacific, located in Amara Sanctu-ary Resort in Sentosa, also comes amid the growing demand for talent in the region. According to the Asia Pacific Dean at Deloitte University, the firm expects 1,000 students will participate in the univer-sity’s curriculum by 2017.

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The percentage of the world’s initial public offerings launched in Asia Pacific in the first half of the year,

according to a report by EY, making the region the most active during

that period for IPOs. It was held back, however, from a slowing IPO market in Greater China, where the number

of deals dropped from 236 in the first half of last year to 101 this year.

A world of numbers

The percentage of accountants in the United States who said they had already decided who to vote for in November’s presidential election, according to a survey by Accounting Today. About 50 percent of those surveyed think

that the result will have a major or some impact on their firm.

Or 26%, the overall percentage of women sitting on FTSE boards in the United Kingdom, an increase

compared to a year earlier but showing signs of a slowdown in the

pace of change, according to the Female FTSE Report. Companies are targeted to reach 33 percent

female board composition by 2020.

65.5%

52%

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Mark Zurkerberg

Atsutoshi Nishida

Facebook faces probe into intangible assetsFacebook is facing an investigation over the transfer of intangible assets from the United States to its unit in Ireland. The Internal Revenue Service filed a petition to force Facebook to comply with the probe into whether it unscrupulously undervalued its intellec-tual property and then shifted resources between its Irish sub-sidiaries in order to pay Ireland’s 12.5 percent corporate tax rate instead of the 35 percent the U.S. charges. A Facebook spokesper-son said the company had complied with all local laws.

Toshiba ex-bosses to avoid criminal chargesThe three former presidents of Toshiba shamed over the electronic giant’s high-profile accounting scandal are unlikely to be held crimi-nally responsible, sources told The Japan Times. The Tokyo District Public Prosecutors Office’s special investigation unit informed the Securities and Exchange Surveillance Commission that it would be hard to press charges, according to reports. Atsutoshi Nishida, Norio Sasaki and Hisao Tanaka were at the helm of Toshiba at the time the company exaggerated its operating profit by US$1.2 billion.

British SMEs google financial adviceThe number of small- and medium-sized enterprises in the United Kingdom that turn to an Internet search engine for financial advice is almost equal to the portion that seek the counsel of an actual accountant. According to a survey conducted by the Association of Accounting Technicians, 19 percent of SMEs will simply google their questions when they need financial advice, while 22 percent said they would turn to an accounting professional. Moreover, only 8 percent said they would ask for help from trade bodies.

Wal-Mart cuts hundreds of accounting rolesThe retail giant Wal-Mart is cutting accounting and invoicing positions in approximately 500 locations in the United States in a bid to be more efficient. Money will instead be counted at each store by a machine to improve the speed and accuracy, and invoicing will be handled by a centralized team. A spokesperson for the company’s largest private-sector employer said that the two to three employees affected in each store would be offered new customer-facing roles.

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