Dear members,
It has been sometime since my last update to you and there is a great deal I’d like to share with you.
Possible changes to regulatory structure
You may have seen news reports about possible changes to the regulatory structure for the auditing profession. As you may recall, we went through a thorough regulatory overhaul in 2004. It is time for us to look at this again because we need to get our system recognized by our overseas counterparts; many have adopted regulatory models with external oversight, and an international forum of independent audit regulators has emerged. We need to study the different models that have sprung up in the past few years and adopt features that are essential to get Hong Kong recognized in this global community.
The Institute is developing a position paper on the audit profession for discussion with the government and our stakeholders. This will encompass consideration of the role of audit, audit quality, oversight of audit regulation, and auditor risk and liability. We expect to engage you in these deliberations.
Auditor risk and liability
On auditor risk and liability, we've sent to the government an update on our proposals for liability reform and the work the Institute has done over the past year, for example, the meetings we've held with stakeholders to explain the issues surrounding liability reform and future plans to move this forward. The update also reiterates what we would like to see introduced, which is statutory capping of auditors' liability with the lower of a proportionality cap and a maximum cap to cater to firms of all sizes.
Why is the liability and regulatory issue important?
Hong Kong's capital market needs strong auditing firms and strong auditing firms are also important for the whole profession: About 65 percent of prospective CPAs start their careers and receive practical training with the large firms. We need those firms to stay strong for the future of the profession.
In mid-April, I received an anonymous letter from a "group of SMPs" asking for the Institute to consider their survival when considering regulatory changes and asking us not to "protect" the Big Four.
I’d like to say that as a profession, we are not separate, competing groups – we are a unified set of people with one unified set of values. The liability and regulatory issues affect us all, not least our future generation of CPAs coming through the firms. I can assure all members we will approach these issues with the entire profession in mind and will endeavour to do what is right for the whole profession.
On our agenda, too, is to work with the firms to improve the working conditions during training time, so the stress on accountants in training and in their early years in the profession is less pronounced.
Investment projects
In last year's annual report, I set out several investment projects we would undertake to enhance our service support for members and students. This is a quick update of where we stand on those projects:
| 1. | Technical training and support service for members We have invested in building up our in-house training team. A look at our website will show you that we've launched a comprehensive and structured training programme for members on all three areas of our core professional standards – financial reporting, auditing and ethics. The update evenings, seminars and workshops are also offered at heavily discounted prices at the rate of $60 per hour (half the usual rate of $120 per hour) to help you with your CPD in these important areas. |
| 2. | Thought leadership Audit quality is a topic very close to the core of our business and very often misunderstood by companies, investors, regulators and other stakeholders. We have chosen "audit quality" as our first thought-leadership project under our enhanced research initiative. You will find two publications being launched by the Institute this week: "Audit quality" is a general introduction to the topic, and "Audit quality and audit committees" will explain the link between the two. These are the first of a series of publications and events from the Institute to involve our stakeholders in discussions on audit quality and how audit quality is the very root of the integrity of Hong Kong's financial markets. |
| 3. | Training academy Further investment in technology and facilities to better deliver training, especially CPD and specialist qualifications, are moving along with a view to introduce an expanded suite of quality e-learning programmes in the first quarter of 2011. With more and better e-courses to choose from, you'll have more flexibility in fulfilling your CPD requirements in addition to choosing courses relevant to your career. Our library is becoming "virtual" bit by bit and from the present through 2011, we are working on improving online library facilities.
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| 4. | Enhanced QP The QP has been reviewed to take into account professional and business developments from around the world. The enhanced QP, benchmarked against the top qualification programmes in other leading financial centres, and its accompanying new QP study manual and materials will be introduced in September 2010. We're also planning on harnessing technology to make our qualification process more efficient, with e-testing, online examination setting and e-marking. |
| 5. | QP in China We have created and refined a blueprint of how we will offer the QP in the mainland, by determining how we accredit mainland universities and to groom facilitators for workshops in mainland cities. We are also planning to expand the pool of authorized employers and supervisors in the Mainland to train QP students within their organizations under our practical experience guidelines. Our presence in China is aimed at strengthening our brand position, while allowing us to provide more services to all our members. |
New members and new guide to member services
We welcomed 1,631 new members who joined the Institute during the year to 31 March 2010 at the new members' cocktail hosted by the Institute in April. Eighty percent of these new members came through the Institute's qualification programme, as opposed to 8 percent in 2005. We now have a stable student intake of about 3,000 per year with 1,600 new members per year.
As part of welcoming our new members, we produced a "Guide to Member Services," a brochure that for the first time summarizes all our member services in one place. You should have received yours and we would welcome your comments on it.
New CPA brand campaigns
SMPs
As part of a request from our small- and medium-size practitioners, we have started a campaign urging SMEs to use "real" certified public accountants instead of accounting agents. The campaign began with an article in A Plus magazine, which will be translated and turned into a reprint that SMPs can send to clients and potential clients, warning them against using accounting agents.
The campaign will continue with radio programming this summer along with print advertising.
May Moon
The new May Moon book, May Moon Rescues the World Economy, the second in our series, is now out and is getting very strong reviews from members and other readers. Most say it is an excellent explanation of basic economic concepts for kids and shows the value of accountants and our skills.
New premiums
As a treat, we've produced "CPA chocolates" – real chocolate embossed with the CPA logo and the legend, "The Success Ingredient." The chocolates are available for order and make a great gift for family and friends.
Young members
A new forum for young CPAs will be formed soon with the aim to facilitate interaction and exchanges, promote understanding and relationship between the Institute and these members. Please watch out for the news coming out soon. We are thinking of calling this new forum for our young members “25.35” which is our target age group, or “18.22”, a synonym for "young". I welcome your thoughts.
International
We've been very active on the international front, too.
In February, I travelled to the IFAC chief executive's meeting and GAA meeting in New York, where we discussed IFAC's role in supporting SMEs, SMPs and PAIBs in the wake of the financial crisis, improving corporate governance, how to strengthen sustainability reporting and a host of other issues.
The main news to emerge from the IFAC meeting is the stronger focus on small- and medium-sized enterprises and their accounting partners, SMPs. We are represented on IFAC's SMP committee by our past president Albert Au, supported by the Institute's director of professional development, Alison Wilde, who make sure your voice is heard. Some of the new initiatives coming from this committee include monitoring regulatory reform to make sure it is suitable for SMEs and SMPs, increasing the visibility of SMEs and SMPs so their importance to the world's economy is better known, and collaborating with IFAC member bodies to develop resources to assist SMPs.
I have been invited to join IFAC's constitutional review working group, which involves a lot of late night conference calls, but the end result should be better governance of our global accounting body.
The Global Accounting Alliance has been busy, too, working on a number of very big projects that will link the member bodies across the world. I am due to attend the GAA meeting in Vancouver where both the IFAC meeting and IOSCO 35th world meeting are also taking place and I'll participate. I'll cover this in my next communication with you.
The World Congress of Accountants will be upon us very soon – in November in fact. It will be held in Kuala Lumpur, close enough to us that we should be able to make a good showing at the Congress, so please join if you can. The Institute will be taking a delegation to the meeting and will network with the other member bodies from 124 countries around the globe. Here to register for the Hong Kong delegation and enjoy early bird prices before 30 June 2010.
In the meantime, should you have any comments you would like to send to me, please email me at CE@hkicpa.org.hk. I look forward to hearing from you.
Sincere regards,
Winnie C.W. Cheung
Chief Executive