LEADING A BREAKTHROUGH YEAR FOR ACCOUNTANTS PLUS - The Hong ...

 
LEADING A BREAKTHROUGH YEAR FOR ACCOUNTANTS PLUS - The Hong ...
Plus:
                                      Brexit
                                      How businesses are preparing
                                      for the potential scenarios
                                      Drones in audit
                                      How firms are scaling the use of
                                      the technology in auditing
                                      Wine connoisseurs
                                      CPA members share their
                                      passion for wine

Issue 2 / Volume 15 / February 2019

             LEADING                                   President
                                                    Patrick Law
                                                    will lead the
                                                      profession
                          A                       through some
                                                  major changes

BREAKTHROUGH

                   YEAR

                     FOR

  ACCOUNTANTS

                   PLUS

                                                    HK$70.00
LEADING A BREAKTHROUGH YEAR FOR ACCOUNTANTS PLUS - The Hong ...
LEADING A BREAKTHROUGH YEAR FOR ACCOUNTANTS PLUS - The Hong ...
President’s                                                                                                                     aplus
message

    “We have many major changes
      ahead of us this year, including
      the new Qualification
      Programme, recruitment of
      a new chief executive and
      registrar and beginning the
      Seventh Long Range Plan.”

     Dear members,

     Kung Hei Fat Choi! I wish you and         area, and I expect the importance of     transfer of responsibility for the
     your families good health, happiness      our relationships with our colleagues    regulation of auditors of listed com-
     and fortune in this year of the           across the border to continue to grow,   panies from the Institute to the FRC.
     pig. The pig is an auspicious year,       especially in light of the central       The Financial Reporting Council
     symbolizing luck, wealth and good         government releasing the long-           (Amendment) Bill 2018 was passed
     fortune. Feng shui masters expect         awaited Greater Bay Area blueprint,      by the Legislative Council at the
     that this year of the earth pig will be   which cements Hong Kong’s role           end of January, and gazetted mid-
     particularly auspicious and I hope        as an international financial centre     February. We will be working with
     they are correct!                         and seeks to expand our role in asset    the government and FRC to ensure
        The Institute kicked this              management and risk management.          the outstanding issues are resolved
     auspicious year off with our annual           After the plan was released,         before the new regulatory regime
     spring cocktail event, welcoming          I attended an event hosted by            becomes effective. This develop-
     over 300 guests including the             Carrie Lam, the Hong Kong Chief          ment caps over 10 years of work by
     Council and members of the                Executive, with representatives from     the Institute, and will help to main-
     Institute’s various committees            governments and professional bodies      tain Hong Kong’s competitiveness
     and working groups, as well as            across the region, where the plan was    as a global financial market.
     special guests from government and        discussed in detail. I am confident          I took part in the 10km
     business, to celebrate the year of the    that our members’ skills in Hong         Chairman Cup at the Standard
     pig and prepare for the vital work        Kong and the other Greater Bay Area      Chartered Marathon Hong Kong
     over the year ahead to prepare the        cities will play an important role in    2019. I enjoyed representing the
     Institute for the future.                 the success of the project.              profession against other bodies
        We have many major changes                 We talk a lot about how new          (and racing many ex-Institute
     ahead of us this year, including the      technologies will change the way we      presidents!) and even ran a better
     new Qualification Programme,              do business, without seeing many         time than last year. It was good
     recruitment of a new chief executive      results in practice. That’s why I        to meet so many successful CPA
     and registrar and beginning the           found this month’s article on drones     runners after my race, and welcome
     Seventh Long Range Plan. You can          and their use in audit particularly      them into the Institute’s tent
     read about my views on these and          interesting. Accounting Plus will        after their hard races. If you’ve
     other issues in my interview with         require us to be able to use new         ever thought about putting on
     A Plus this month, which can be           technologies like drones, and it’s       your running shoes, getting out
     found on page 18.                         interesting to think how we can use      of the office and racing, I would
        On Valentine’s Day we organized        them in our own work. You can find       encourage you to go for it. Exercise
     a special evening in Guangzhou for        the article on page 26.                  is a good way to maintain work-life
     our members and guests from local             Another major development in         balance, and I find that hitting the
     government, regulators, professional      Hong Kong this year is the expan-        trails or Bowen Road helps me to
     organizations and firms. This annual      sion in the powers of the Financial      clear my mind of distractions and
     event is one of our key events in the     Reporting Council (FRC), and the         reduce stress.

                                                                                                          Patrick Law
                                                                                                          President

                                                                                                                      February 2019 1
LEADING A BREAKTHROUGH YEAR FOR ACCOUNTANTS PLUS - The Hong ...
Contents
Issue 2 / Volume 15 / February 2019

   26
   Ready for
   take off
   With PwC having
   completed the world’s
   first audit using a
   drone, what are the
   opportunities and
   challenges that large-
   scale deployment
   would create?

    01                                    18 Leadership:
                                             
                                             Patrick Law
                                              Recently-elected Institute
                                                                                  44
    NEWS                                       President on his plans for         SOURCE
                                               the year ahead, and how
    01 President’s message                     Accountants Plus can prepare       44 China’s new IIT regime:
                                               for the future of work                  Improvements for
    04 Institute news                                                                  residents, headaches for
                                          25 How to                                  non-residents
    07 Accounting news                        Agnes Lo, Founder and Chief              n overview on how the
                                                                                      A
                                              Trainer of Solution Bulb Training       Mainland’s Individual Income
                                              Consultancy Company, on what            Tax Reform could affect

    10                                        to do before, during and after
                                              networking for the most benefit
                                                                                      residents and non-residents

                                                                                      echWatch 196
                                                                                  48 T
    FEATURES                              26 Ready for take off
                                              How the use of drones could
    10 Bracing for Brexit                    change the way audits are done
        A look at how a no-deal Brexit
         could affect businesses and      32 Success ingredient:
         employment in Britain, and the       Alan Lee
         possible implications for            The Chief Financial Officer of
         Hong Kong                            Oliver’s Real Food in Sydney
                                              on running a unique restaurant
    17 Thought leadership:                    franchise
       Harjeet Baura and
       Ali Tse                            38 Great minds drink alike
        T he Financial Services              Four Institute members share
         Consulting Leader and the            why wine is more than just a
         Director of Financial Services       beverage
         Tax (Transfer Pricing) at PwC
         Hong Kong on workplace gender
         preconceptions
LEADING A BREAKTHROUGH YEAR FOR ACCOUNTANTS PLUS - The Hong ...
32
                                                 Food for
                                                                        About our name
                                                                        A Plus stands for excellence,
                                                                        a reference to our top-notch
                                                                        accountant members who are success
                                                 thought                ingredients in business and in society.
                                                                        It is also the quality that we strive for in
                                                                        this magazine — going an extra mile to
                                                 Chief Financial        reach beyond Grade A.

                                                 Officer of Oliver’s
                                                 Real Food, Alan
                                                 Lee, on the world of   President Patrick Law
                                                 organic fast food in   Vice Presidents Johnson Kong, Lam Chi Yuen, Nelson
                                                 Australia              Acting Registrar Jonathan Ng

                                                                        Editorial Manager Paul Smith

                                                                        Editorial Coordinator Maggie Tam

                                                                        Office Address
                                                                        37/F, Wu Chung House, 213 Queen’s Road East,
                                                                        Wanchai, Hong Kong
                                                                        Tel: (852) 2287-7228 Fax: (852) 2865-6603

                                                                        Member and Student Services Counter
                                                                        27/F, Wu Chung House, 213 Queen’s Road East,
                                                                        Wanchai, Hong Kong
                                                                        Website: www.hkicpa.org.hk

52
                                                                        Email: hkicpa@hkicpa.org.hk

AFTER HOURS

    ooks
52 B
    Eat Their Lunch: Winning
    Customers Away From                                                 Editor Gerry Ho
                                                                        Email: gerry.ho@mandl.asia
    Your Competition reviewed
    and interview with author                                           Copy Editor Jemelyn Yadao
    Anthony Iannarino                                                   Editorial Assistant Jeremy Chan

                                                                        Contributors Nicky Burridge, Michelle Perry,
54 L
    ife and everything                                                               George W. Russell
    From the annual Art Basel art
    exhibition, to FIA Formula E,
    to the Pet Shop Boys live in                                        Editorial Office
    Hong Kong                                                           G/F, Bangkok Bank Building, 18 Bonham Strand West,
                                                                        Sheung Wan, Hong Kong

    et’s get fiscal
56 L                                                                    ADVERTISING ENQUIRIES
                                                                        Advertising Director Derek Tsang
    Dictionary definitions still                                        Email: derektsang@mandl.asia
    can’t keep up with us, says                                         Tel: (852) 2164-8901

    Nury Vittachi                                                       A Plus is the official magazine of the Hong Kong Institute of
                                                                        Certified Public Accountants. The Institute retains copyright in
                                                                        all material published in the magazine. No part of this magazine
                                                                        may be reproduced without the permission of the Institute. The
                                                                        views expressed in the magazine are not necessarily shared
                                                                        by the Institute or the publisher. The Institute, the publisher
                                                                        and authors accept no responsibilities for loss resulting from
                                                                        any person acting, or refraining from acting, because of views
                                                                        expressed or advertisements appearing in the magazine.
                                                                        © Hong Kong Institute of Certified Public Accountants
                                                                        February 2019. Print run: 7,250 copies
                                   Book review                          The digital version is distributed to all 43,573 members,
                                                                        18,371 students of the Institute and 2,358 business
                                                                        stakeholders every month.
LEADING A BREAKTHROUGH YEAR FOR ACCOUNTANTS PLUS - The Hong ...
News
Institute news

Institute news
                  Accounting news

Institute calls for deeper review
of Hong Kong’s tax system amid
challenging outlook
The Institute highlighted the need for          In addition, the Institute notes that    of a dynamic business sector, with new
a broader review of Hong Kong’s tax          Hong Kong faces a number of local and       business models, a comprehensive review
system as it is becoming increasingly        external challenges and uncertainties,      of the tax system is called for, in order to
complex and losing its competitive edge,     including the Mainland’s economic slow-     ensure that Hong Kong can maintain its
in its recommendations for the 2019-20       down, the ongoing United States-Hong        competitive edge in the long term.”
Budget, which was announced on               Kong trade war, and continuing high             The Institute believes Hong Kong
27 February.                                 property prices.                            should also review the existing
    The budget proposals, titled Rising         “The Financial Secretary Paul Chan       preferential treatments and tax
to Challenges and Staying Competitive,       has indicated his preference for driving    incentives in its tax legislation to
focuses on tax policies and measures on      economic development through specific       ensure that they are achieving the
the revenue side of the budget.              tax policy measures instead of lower-       objective of maintaining Hong
    It notes that a low rate and simple      ing the general profits tax rate. Various   Kong’s competitiveness in the global
system used to be Hong Kong’s competi-       incentives will be used to promote the      marketplace, and are cost effective.
tive edge, however many jurisdictions        development of different industries,            It adds that the coverage and exper-
have reduced corporate tax rates in recent   which will make Hong Kong’s tax system      tise of the Tax Policy Unit should be
years and moved towards an increased         more and more complex,” said KK So,         expanded to take up more strategic tax
emphasis on indirect taxation. Hong          Chairman of the Institute’s Taxation        issues that could help support Hong
Kong’s profits tax rate of 16.5 percent,     Faculty Executive Committee. “With the      Kong’s economic development and
therefore, may no longer be as attractive    international tax developments that are     competitiveness. “The government’s tax
as it was to foreign investors.              also affecting Hong Kong and the needs      policy unit has successfully completed

 President Patrick Law (centre), Vice-Presidents Johnson Kong and Nelson Lam (left and right of centre), senior management
 and guests at the Guangzhou cocktail reception

4 February 2019
LEADING A BREAKTHROUGH YEAR FOR ACCOUNTANTS PLUS - The Hong ...
aplus

 Council celebrates new year at the spring cocktail

its initial tasks of helping implement       regulators joined the Institute’s Council    from all race categories are welcome to
the two-tier tax system and the super-       and committee members in celebration of      attend the post-marathon drinks to be
deductions for research and development      the year of the pig at the spring cocktail   held soon where trophies will be pre-
(R&D), proposed by Chief Executive           reception on 15 February.                    sented to those with outstanding results.
Carrie Lam. It should now expand its                                                      Submit your race time and stay tuned for
scope of work and expertise to consider      Guangzhou cocktail reception                 event details.
more fundamental issues, such as look-       The Institute welcomed over 100 guests
ing into tax policies needed to support      to its annual Guangzhou spring cock-         U.S.-China trade war –
Hong Kong’s long-term economic               tail at the Sheraton Hotel on 14 Febru-      a closer look
growth and infrastructure development,”      ary. The evening offered members the         A lunch seminar on 12 March will feature
said So.                                     opportunity to meet the Institute’s new      a panel of three highly experienced foren-
    The Institute estimates that the         leadership team of President Patrick         sic accounting and legal practitioners who
fiscal surplus for 2018-19 will reach        Law, and Vice-Presidents Johnson Kong        will explore the trade measures imposed
HK$50 billion at the end of March, and       and Nelson Lam; and members of the           by the United States government against
the fiscal reserves will increase to over    Institute’s senior management. Guests        Mainland China, and the sanctions
HK$1.15 trillion. These figures are          from the Mainland government, regula-        compliance issues for businesses. They
similar to the government’s budgeted         tory authorities, professional organiza-     will discuss the background of the trade
position.                                    tions, universities and professional firms   dispute, impact on business operations, as
    The submission also includes recom-      attended the reception.                      well as tips on managing export control.
mendations on tax support for R&D and                                                     Interested participants should enrol on
for rental deductions, as well as measures   Hong Kong marathon                           the Institute’s website by 8 March.
to improve roadside air quality and to   Around 350 CPA runners participated in
mitigate the impact of economic pres-    the Standard Chartered Hong Kong Mar-            Hong Kong and global
sures on the community. The proposals    athon 2019 on 17 February. The Insti-            pronouncements comparison
are available to read online on the      tute’s President Patrick Law, Council            The Institute has published a comparison
Institute’s website.                     member Ken Li, and four past presidents          table showing differences between Hong
                                         ran in the 10km race of the Corporate            Kong and international quality control,
Spring cocktail                          Challenge Chairman Cup, and 12 elite             auditing, review, other assurance, and
Three hundred guests from the Hong       CPA runners represented the Institute in         related services pronouncements, as at
Kong Special Administrative Region and the Corporate Challenge Marathon Cup               31 December 2018. The table is available
the central governments, businesses, and in all three race categories. CPA runners        on the Institute’s website.

                                                                                                                   February 2019 5
LEADING A BREAKTHROUGH YEAR FOR ACCOUNTANTS PLUS - The Hong ...
News
Institute

        Disciplinary findings                                          financial reporting, ensuring its financial integrity and
                                                                       overseeing and supervising all financial information of the
        Pan-China (H.K.) CPA Limited, Fung Pui Cheung, CPA             group.
        (Practising) and Wong Ho Yuen, Gary, CPA (Practising)              As a result of fraud perpetrated by other members
                                                                       of the senior management, the group’s audited financial
        Complaint: Failure or neglect by Pan-China and Fung to         statements for the years 2000 to 2004 contained
        observe, maintain or otherwise apply Hong Kong Standard        materially false information about sales, projects,
        on Auditing (HKSA) 620 Using the Work of an Auditor’s          bank deposits and bank loans of certain subsidiaries in
        Expert, HKSA 500 Audit Evidence and HKSA 230 Audit             Mainland China. The Market Misconduct Tribunal started
        Documentation. Failure or neglect by Fung and Wong to          proceedings in 2014 in relation to the identified accounting
        carry out their work with professional competence and          fraud.
        due care in relation to the identified non-compliance areas.       The tribunal’s proceedings revealed that at the time
        Pan-China was also guilty of professional misconduct as        of the fraud, Mok tried to remove himself from any
        a result of its systemic failure to comply with professional   responsibility for the subsidiaries’ activities. He accepted
        standards.                                                     a limitation of his role as financial controller to only
            Pan-China issued an unmodified auditor’s opinion on        carrying out financial reporting at group level, and entered
        the financial statements of a Hong Kong listed company,        into a self-imposed compromise with the directors that
        China Yunnan Tin Minerals Group Company Limited (now           potentially damaged the financial integrity of the group.
        known as GT Group Holdings Limited) for the year ended         Mok failed to implement the recommendations of the
        31 December 2010. Fung was the engagement director             group’s auditor to address their concerns about the finance
        and Wong was the engagement quality control reviewer of        department’s inability to maintain appropriate financial
        the audit.                                                     supervision and control over the group subsidiaries. In the
            The Institute received a referral from the Financial       circumstances, the subsidiaries were given free rein over
        Reporting Council (FRC) about irregularities in the audit      an extended period, working under the management of
        of the financial statements. The respondents failed to         directors complicit in the accounting fraud.
        perform adequate audit procedures and prepare adequate             The tribunal found Mok negligent in relation to the
        audit documentation in respect of the carrying amounts         financial statements and, therefore, culpable of market
        of mining rights and goodwill, which were material assets      misconduct. It issued sanctions against Mok in 2017 and
        included in the financial statements.                          recommended referring the findings to the Institute. After
                                                                       considering the information available, the Institute lodged
        Decisions and reasons: All the respondents were                a complaint under section 34(1A) of the Professional
        reprimanded. The Disciplinary Committee ordered Pan-           Accountants Ordinance.
        China, Fung and Wong to pay penalties of HK$250,000,               Mok admitted the complaint. The Disciplinary
        HK$50,000 and HK$50,000 respectively. In addition, the         Committee found that Mok failed to carry out his
        respondents were ordered to pay costs of the disciplinary      professional work with a proper regard for the technical
        proceedings and the FRC totalling HK$124,914.10.               and professional standards expected of him as a CPA, and
        When making its decision, the committee took into              to conduct himself in a manner consistent with the good
        account the particulars of the breaches committed in           reputation of the profession and Institute. The committee
        this case, the parties’ submissions, and the respondents’      further found that Mok was guilty of dishonourable
        conduct throughout the proceedings and their personal          conduct.
        circumstances.
                                                                       Decisions and reasons: The committee ordered that the
        Mok Wing Kai, Henry, CPA (practising)                          name of Mok be removed from the register of CPAs for
                                                                       six months with effect from 19 February. In addition, Mok
        Complaint: Failure or neglect to observe, maintain or          was reprimanded and ordered to pay costs of the Institute
        otherwise apply paragraphs 2 and 4 of Statement 1.200          of HK$56,494. The committee noted the case involved a
        Professional Ethics Explanatory Foreword and being guilty      serious breach of professional standards over an extended
        of dishonourable conduct.                                      period, and the incidence of fraud in a listed company
            Mok was the company secretary and financial                had a great impact on public interest and damage to the
        controller of Greencool Technology Holdings Limited,           profession’s reputation. In mitigation, the committee noted
        which was formerly listed in Hong Kong. He was also a          the respondent’s early admission to the complaint and his
        “qualified accountant” of the group under the GEM listing      cooperative attitude in the proceedings.
        rules applicable at the time. The group conducted its
        commercial activities through various subsidiaries in          Details of the disciplinary findings and are available at the
        Mainland China. Mok’s responsibilities covered the group’s     Institute’s website: www.hkicpa.org.hk.

6 February 2019
LEADING A BREAKTHROUGH YEAR FOR ACCOUNTANTS PLUS - The Hong ...
News                                                                                                           aplus
Accounting

              Financial Reporting
             Council (Amendment)
                 Bill gazetted
                    The Hong Kong government gazetted the Financial Reporting Council
              (Amendment) Ordinance 2019 on 15 February, enabling the Financial Reporting
              Council (FRC) to become an independent oversight body that regulates auditors
                  of listed companies. The development comes after a decade of work by the
                 Institute and the government, and brings Hong Kong’s regulatory regime for
                 auditors of listed entities in line with international standards and practices. It
               will also enable Hong Kong to be eligible for joining the International Forum of
              Independent Audit Regulators. As part of the new audit regime, the Institute will
              continue to perform the statutory functions of registration, setting requirements
                    for continuing professional development, and also setting standards on
             professional ethics, auditing and assurance in respect of relevant auditors, subject
               to oversight by the FRC. The date the FRC will take over is yet to be confirmed.
                  “The Amendment Ordinance enhances the existing regulatory regime for
             auditors of listed entities, allowing it to be independent from the audit profession,
               thereby providing better protection to investors. This is crucial to strengthening
                Hong Kong’s status as an international financial centre and capital market. We
             are working closely with relevant parties on the preparations for implementing the
              new regulatory regime as soon as practicable,” said a government spokesperson.

                                                                                                                   Illustration by Harry Harrison

                                                                                                      February 2019 7
LEADING A BREAKTHROUGH YEAR FOR ACCOUNTANTS PLUS - The Hong ...
News
Accounting

Beijing unveils Greater Bay Area blueprint
The central government of China published its
long-anticipated document setting out its Greater                                              A world of numbers
Bay Area development plan to integrate Hong
Kong and 10 cities around the Pearl River Delta.
The 11-chapter document, released this month,
confirms that Hong Kong, Macau, Shenzhen and
Guangzhou would be the four key cities and the
core engines for driving growth in nearby regions.
It says the framework for the bay area should be
defined by 2022, and realized by 2035. It also
includes goals and directions to push the develop-
ment forward, such as improving infrastructural
connectivity and quality of life, building a globally
competitive commerce and industrial system,
protecting the environment, and energy security,
                                                                                                          208
as well as supporting the Belt and Road Initiative.                                               The total number of companies
                                                                                                   that went public in Hong Kong
                                                                                                 last year, according to the South
HKEX to buy Shenzhen-based FinTech company                                                     China Morning Post. Together they
Hong Kong Exchanges and Clearing (HKEX) has signed a letter to buy a 51 percent stake             raised HK$286 billion in funds,
in Shenzhen Ronghui Tongjin Technology, as part of its efforts to upgrade its technology       more than double the amount from
capabilities, the South China Morning Post reported this month. Ronghui Tongjin is a            the previous year, helping the city
subsidiary of Shanghai-listed Shenzhen Kingdom Sci-Tech, and specializes in financial           overtake New York and Shanghai
exchanges, regulation technologies and data applications. “Technology capacities will be       as the world’s initial public offering
an important element for the HKEX to compete with other stock exchanges,” said law-                           capital.
maker Christopher Cheung Wah-fung, who represents the financial services constituency
in the Legislative Council. Brokers believe the deal, which is expected to be completed in
the second quarter, will enable HKEX to become a depository and settlement company.
                                                                                                 US$678
                               BDO officially fifth-largest firm in U.K.
                               BDO is now the fifth-largest accounting firm in the United
                               Kingdom after it completed its merger with Moore Stephens
                                                                                                 billion
                               earlier this month. The merger gives BDO a combined                The value of Mainland China’s
                               workforce of 5,000 staff members and 350 partners work-           merger and acquisition activity
                               ing across the U.K. The firm is expected deliver revenues        in 2018. Chinese outbound M&A
                               of £590 million, more than Grant Thornton. “This merger        activity fell for the third straight year
                                                                                               in 2018, dropping to less than half
                               is one of growth and creates a new force in the market,
                                                                                               of the peak level recorded in 2016,
                               enabling us to challenge our existing competition and
                                                                                                    according to a PwC Hong
                               deliver an increasingly impressive range of services to help                  Kong report.
                               our people and clients succeed,” said Simon Gallagher,
                               former managing partner of Moore Stephens and now Head

                                                                                                       30%
                               of Advisory at BDO.

U.S. delays tariff hike on Chinese imports
United States President Donald Trump said the U.S. would delay an increase in tariffs on          The revenue growth rate that
                                                                                                   KPMG’s global legal branch
US$200 billion of Chinese goods originally scheduled for 1 March. In a tweet, Trump said
                                                                                              reported in 2018. This is reportedly
there had been “substantial progress in our trade talks with China on important struc-
                                                                                               a result of a surge in multinational
tural issues including intellectual property protection, technology transfer, agriculture,       organizations demanding legal
services, currency, and many other issues.” He also said that if Washington and Beijing       services. In January, the firm’s legal
made additional progress, his administration would plan for a new summit with China’s         services network opened a new law
President Xi Jinping, at the U.S. president’s Mar-a-Lago resort in Florida to conclude an           firm in Hong Kong called
agreement. Stocks in China and Hong Kong rose in early trading on 25 February follow-                      SF Lawyers.
ing the news.

8 February 2019
aplus

                                                                          Norman Chan

  Gucci owner faces €1.4 billion tax claim                                 S
                                                                              weden, Estonia jointly probe Swedbank
Kering S.A., the French luxury goods group (and owner of                 The financial supervisory authorities of Estonia and Sweden opened
Gucci), owes €1.4 billion (HK$12.5 billion) to Italy in back taxes,      a joint investigation in response to a media report linking Swedbank
according to the conclusions of a government audit. The probe            to a Baltic money-laundering scandal involving Danske Bank,
scrutinized the business practices of Kering’s Swiss subsidiary,         the watchdogs said on 21 February. A television documentary on
Luxury Goods International, from 2011 through to 2017. Italian           Sweden’s public broadcaster SVT alleged at least 40 billion Swedish
tax authorities opened an investigation into the subsidiary in 2017      krona (US$4.3 billion) had been transferred between accounts
for allegedly avoiding tax on earnings generated elsewhere. The          at Swedbank and Danske in the Baltics between 2007 and 2015.
probe was largely centered on Gucci, Kering’s biggest revenue            Danske is being investigated in five countries over US$226 billion
driver, Reuters reported. Kering said it contests the findings           in payments found to have flowed through its Estonian branch from
of the audit, and that the company does not have the necessary           Russia, former Soviet states and elsewhere. Swedbank appointed
information to record an accounting provision for any potential bill     EY to carry out an external investigation into the allegations, and the
for back taxes or penalties.                                             results will be reported to the bank by the end of March.

   Kraft Heinz accounting investigated by SEC                              H
                                                                              KMA chief executive to retire
Food giant Kraft Heinz announced that it received a subpoena in          Norman Chan will retire as the Hong Kong Monetary Authority’s
October last year from the United States’ Securities and Exchange        (HKMA) chief executive at the end of September upon the expiry
Commission (SEC) in relation to its accounting policies. The             of his contract, the Hong Kong government announced this month.
SEC’s probe focuses on the company’s “accounting, policies,              Financial Secretary Paul Chan will head a selection panel to identify
procedures and internal controls” in procurement. Kraft Heinz            his successor. “Norman has been leading the HKMA since 2009 and
revealed the investigation in its annual results for 2018. In response   has worked tirelessly over the years to strengthen the city’s monetary
to the document request, the company launched an internal                and banking systems and promote Hong Kong’s position as an inter-
investigation into its procurement practices, and increased the costs    national financial centre in Asia. I respect his wish and decision to
of its products sold by US$25 million as a result. “We should have       retire upon completion of his second term as Chief Executive of the
recorded the US$25 million in prior periods, which we booked in          HKMA,” the secretary said. Norman Chan, aged 64, joined the gov-
Q4 2018,” the company said in a conference call. It also said it was     ernment as an administrative officer in 1976, and was appointed as
fully cooperating with the SEC.                                          an executive director of the HKMA when it was established in 1993.

                                                                                                                              February 2019 9
International business
Brexit

                   BRACING FOR
                     BREXIT

10 February 2019
aplus

                       Brexit – a ticking time bomb or a chance to
                       spread one’s wings? With Britain scheduled
                        to leave the European Union on 29 March,
                       Michelle Perry looks at how businesses are
                       preparing for potential scenarios, including
                                a disruptive “no-deal” one
                                         Illustrations by Gianfranco Bonadies

A
          lmost three years have         So, the current situation has ground   such as a disorderly exit, compared
          passed since a slim            to a deadlock.                         to their larger counterparts. The
          majority of Britons                Carolyn Fairbairn, Director-       flipside, however, is they often
voted to exit the European Union         General of the Confederation of        have greater flexibility to adapt.
(EU). But as the days pass by it         British Industry, which represents         More importantly though, it’s
is becoming less and less clear          around 190,000 businesses              costly and difficult for organiza-
exactly how the United Kingdom           covering around a third of the         tions to make contingency plans
will leave the EU and disentangle        private sector workforce, recently     because they don’t know what
itself from a 40+ year union. With       warned of the dangers of a             they are planning for. There are,
just weeks before the official           no-deal Brexit. “The economic          however, some things that all
exit date on 29 March – and an           consequences would be profound,        businesses should do. They involve
exit agreement agreed between            widespread and lasting. The            scenario planning based on the
governments – terms still have           International Monetary Fund has        threats and opportunities of the
not been approved. The British           warned that over the long-run, GDP     myriad possible outcomes, review-
government and parliament have           could be 5 to 8 percent lower than     ing supply chains as well as those
found little common ground on            in a no-Brexit scenario.”              of suppliers, and ensuring alternate
which to agree an exit strategy that         Of the most recent parliamen-      funding is available in the event of
would also suit the 27 EU nations.       tary Brexit votes, Fairbairn said:     an increase in costs.
    For foreign observers, this result   “The never-ending parliamentary            “One of the first things, if you
must seem incoherent given that          process limps on, while the eco-       are an export or import business,
Britain has typically been viewed        nomic impact of no- deal planning      is to review your supply chain and
a reliable, practical and diplomatic     accelerates.” Some companies are       see how it will be affected if there’s
nation. For British business and         still scrambling to put contingency    no deal. It’s difficult because busi-
overseas businesses trading with         plans in place for 30 March, the day   nesses don’t know the outcome, but
the U.K., the ongoing uncertainty        after the U.K. leaves the EU, while    it won’t hurt to have a contingency
weighs heavily. It has stalled           others such as the U.K.’s financial    plan,” says Rebecca Wilkinson,
investment plans and stymied             services sector began planning a       Corporate Tax Director at account-
economic growth.                         long time ago. But contingency         ing firm Menzies.
    Most British members of              plans need to be sufficiently              The outcome of scenario plan-
parliament want to avoid a no-deal       flexible to cope with the possible     ning may, for some, result in an
exit, considered as the worst-case       outcomes.                              organization having to open opera-
scenario for business and the                                                   tions elsewhere to mitigate the
wider economy. But there is also         Should I stay or                       risk of leaving the EU, especially
not a majority in favour of the          should I go?                           if your clients are based in the EU.
Withdrawal Agreement that Prime          Due to their size, small- and          Companies will need a clear strat-
Minister Theresa May brokered            medium-sized enterprises are more      egy and funding already in place to
with EU leaders in December 2018         exposed to the risks of leaving the    achieve this. Some companies are
which was defeated in parliament         EU because they have less capacity     exploring the option to move opera-
by a historic margin on 15 January.      and resources to respond to events     tions to the Republic of Ireland or

                                                                                                              February 2019 11
International business
Brexit

mainland Europe in the event of          Europe, so that whatever happens      an EU member, British financial
a no-deal, or a deal where tariffs       we will always be able to service     services firms can “passport” or sell
would rise. Larger companies may         those clients,” says John Gracey,     their services to customers in the
already have multiple overseas           TAM’s Chief Financial Officer         other 27 EU countries from a base
locations and can therefore redeploy     and a Hong Kong Institute of CPAs     in the U.K. But without a transition
resources and staff more easily to       member. “We are in a good position    period, which would result from a
suit their needs.                        to be ready come March if there’s     no-deal Brexit, firms in Britain need
    One example of such a strategy       a no-deal Brexit to operate within    to open new EU offices to continue
can be found with TAM Asset              Europe with our own European-         serving EU customers.
Management, a London-based               regulated entity.”                        “If there’s no Brexit agreement
boutique investment manager. TAM                                               then U.K. firms will lose their
has set up a second office in Spain     “The economic                         passporting rights. Organizations are
to be able to continue operating in                                            preparing for the worst-case scenario
Europe on behalf of its European-
                                          consequences                         and are moving offices and people
based clients should there be a           would be profound, to EU nations. The main concern is
disorderly exit from the EU.                                                   whether banks can continue to serve
    “We have a number of clients          widespread and                       their clients in the EU whatever the
whose pensions we manage who                                                   outcome,” says Chi Hong Li, an
are based in Europe – Spain, Malta
                                          lasting.”                            Institute member who works for a
and Cyprus. For us, it was always           The U.K.’s financial services      financial institution in London as
important that we didn’t lose the        sector began cutting jobs in London’s a manager. “In general, financial
opportunity to service those clients.    financial district and establishing   institutions in the U.K. need to
We made a decision over a year           new offices or redeploying staff to   reassess their existing operating
ago to set up a new entity based in      existing EU offices early on. As      model and work out a plan including

12 February 2019
aplus

“If there’s no Brexit agreement
  then U.K. firms will lose their
  passporting rights. Organizations
  are preparing for the worst-case
  scenario and are moving offices
  and people to EU nations.”

staff, resources, governance etc. to    Although manufacturers forecast       share of the workforce looking for
serve clients after Brexit.”            growth over the coming year,          work and unable to find it remains
    Another strategy companies          confidence remains at a low ebb.      at its lowest for over 40 years,
are employing is to shore up            Manufacturing will therefore be       helped by a record number of job
cash reserves. Santander, one           entering 2019 on a less than ideal    vacancies,” said Office for National
of the biggest business lenders         footing with Brexit uncertainty       Statistics’ Head of Labour Market,
in the country, said in January         having intensified considerably,”     David Freeman.
its manufacturing clients were          said Rob Dobson, Director at IHS
building up cash reserves and           Markit.                               Brexit-ready Hong Kong?
delaying capital expenditures in                                              The world is watching Britain
order to keep cash in the business.     Available skills                      over Brexit, with the decision
“It’s clear based on the research       Access to different workforce skills having a far reaching impact on
that companies, large and small,        will also be heavily impacted.        global politics, economies and
are resisting making any capital        Directors should know what            financial markets. Earlier this
investments because of Brexit.          the make-up of their employees        month, Japanese carmaker Nissan
Financial directors are likely to be    and skills base are in order to       confirmed that its new SUV model
advising boards to retain cash in the   know who to recruit. One in five      X-Trail, originally planned to be
business because of the potential for   small business employers rely on      built in its Sunderland factory in
increased costs,” says Tej Parikh,      skills and labour from the EU,        the U.K., will be made in Japan.
Senior Economist at the Institute of    according to the Federation of Small Its Europe division chairman
Directors in London.                    Businesses. Employers won’t be        said Brexit uncertainty had
    Manufacturers also ramped up        able to count on EU nationals as      played a part in the decision and
their stockpiling of raw materials      much as in the past once the U.K.     that continued uncertainty is not
in December in preparation              leaves the EU.                        helping businesses to plan for the
for a potential no-deal Brexit,             The U.K.’s planned exit is        future, according to British online
according to a survey from IHS          already having an impact. The         newspaper The Independent.
Markit and the Chartered Institute      latest official statistics from the       Hong Kong businesses are             If no deal is made,
of Procurement and Supply               U.K. Office for National Statistics   also not immune to the impact             projections show
(CIPS), released last month. The        published in November 2018            of Brexit. Some remain positive,       that by 2030, Britain
IHS Markit/CIPS manufacturing           showed that net migration from the such as Hong Kong conglomerate            would be 9.3 percent
purchasing managers’ index (PMI)        EU to the U.K. fell to a six-year low CK Hutchison Holdings. “The               smaller in gross
rose to 54.2 in December from           and that total immigration was at     impacts of Brexit negotiation            domestic product
53.6 in November. “The trend in         the lowest level since 2014.          remain unknown and could affect            terms, housing
production volumes remained                 While the future is uncertain,    the economic environment of the           prices could sink
lacklustre despite the safety           employers are shoring up their        U.K. As the group’s investments          by 30 percent and
stock-building, with the latest         workforce, and the latest U.K.        in the U.K. are businesses which          the pound could
survey consistent with a mild           employment figures revealed that      focus on utilities and essential        fall against the U.S.
decrease in the official measure of     the number of people in work has      consumer goods and services,             dollar to US$1.10,
manufacturing output over the final     reached a record high of 32.54        we believe these impacts will             according to The
quarter. Uncertainties regarding        million. “The number of people        be manageable and the key                 New York Times.
Brexit disruption on supply chains      working grew again, with the share fundamentals of the group will
and the exchange rate are also          of the population in work now the     remain solid,” a spokesman for the
weighing on business confidence.        highest on record. Meanwhile, the     company told A Plus.

                                                                                                                       February 2019 13
International business
Brexit

    However, some Hong Kong busi-
nesses are watching developments
                                       “The impacts of                        invoicing currency from British
                                                                               pounds to U.S. dollars, change their
anxiously. “In general, our clients      Brexit negotiation                    shipping hub from the U.K. to an
are most concerned about the cur-                                              EU member country, and should set
rency risk of the depreciated pound      remain unknown                        up an internal Brexit task force or
sterling, the potential increase of      and could affect                      steering group to manage short-term
customs duties, the potential delay                                            and long-term strategic plans for
in custom declaration and clearance      the economic                          any scenario, says Wong.
in the case of a “no-deal scenario,”                                               There are also opportunities to
the depreciation of the value of
                                         environment of                        prepare for. “It is expected that there
existing U.K. investments, and the       the U.K.”                             will be increasing demand from the
possible withdrawals of invest-                                                U.K. to use Hong Kong as a hub for
ments or change and termination of     declining trading business with the     trading in the Asia-Pacific region
projects, which negatively impact      U.K., as the consumers may switch       to compensate their loss of EU
the recruitment and retention of       to local goods when the prices of       markets due to increase in customs
staff,” says Andy Wong, Initial        imported products increase due to       duties after Brexit,” says Wong.
Public Offering (IPO) Leader and       weak GBP. Also, there may be pos-       He adds that as Brexit leads to the
Partner of Assurance and Business      sible disruption to the supply chains   depreciation of GBP, Mainland
Advisory Services, at ShineWing        of the business.”                       Chinese outbound investments
HK CPA Limited and an Institute            To gear up for the potential        may seek Hong Kong instead of the
member. “Our clients attach great      Brexit scenarios, Hong Kong busi-       U.K. for fundraising in the capital
attention to the possibility of a      nesses might have to change their       market. “To prepare for this, our

         Business Brexit Checklist                                       to apply these to imports from or exports to the EU?

         To help some businesses, the British Chamber of              • Potential delays at U.K./EU border
         Commerce (BCC) designed the Business Brexit Checklist,         The potential of customs checks to cause delays
         outlining key areas of operations that may be impacted         at the border will depend on how new policies are
         after the United Kingdom’s departure from the EU.              implemented in practice: customs checks are typically
         Indeed, the BCC suggests all companies – not just those        risk-based rather than universal. As yet there no
         directly and immediately affected such as importers            details on how enforcement might be executed in
         and exporters – should have undertaken a Brexit “health        practice.
         check,” and a broader test of existing business plans.
                                                                      • Tariffs on U.K.-EU trade
         • W
            orkforce and future skills needs                           Do you know the HS codes (international classification
           What percentage of your U.K. workforce is from the           system) for your products? Do you know the EU Most-
           EU.27? Do your staff know the next steps to take to          Favoured Nation (MFN) tariff that is applicable for
           register as an EU citizen working in the U.K.? What can      your product? If the U.K. and the EU do not reach an
           you do to help retain skills and labour?                     agreement that removes all tariffs, what would the
                                                                        impact of the MFN tariff be on your cost base?
         • Future staffing requirements
           What will be your skills and labour needs over the next    • VAT registration in the EU
           few years? Will you need to hire someone from outside        Do you know which country would be best suited to
           the U.K.? What steps will you need to take to hire them?     support your supply chain to EU customers/suppliers?
           Could different arrangements (remote working) be             Do you have access to bank guarantees required by
           feasible for your business?                                  Fiscal Representatives? Does your business model
                                                                        allow enough margin to absorb the increased costs
         • U.K./EU customs checks                                       these new processes will bring?
           What customs procedures do you comply with for trade
           with non-EU markets? Are you ready, if the need arises,    For the full checklist visit: www.britishchambers.org.uk

14 February 2019
aplus

clients should have a comprehensive     their overseas expansion plans.         common law framework – for
analysis on the future trends and       Now that the asset manager has a        companies seeking to access the
layouts of their businesses accord-     Spanish office it is already starting   Asia-Pacific region.
ing to certain Brexit scenarios, and    to think about the growth oppor-            “In addition, the Hong Kong
establish an effective and efficient    tunities available to the business.     IPO market, which has emerged as
mechanism for the allocation of         “Brexit has speeded us along the        one of the top global IPO markets
people to work out the scenarios at     line of expanding into Europe.          in recent years, will be seen as a
business level and the utilization of   Whereas we could have expanded          key gateway for U.K. companies
other resources.”                       from the U.K., the fact that we may     seeking access to international
                                        now not be able to do that has put      markets, triggering enormous
Brighter prospects                      the focus on having a European          investment and more free trade ties
For some companies the                  entity in Spain that is regulated       in Hong Kong” he says.
opportunity to investigate new          and can operate in Europe and be            Relocation and expansion deci-
markets overseas is a boon. For         passported throughout Europe,”          sions represent significant costs for
others it could also be a chance        says Gracey. “We see Brexit as an       businesses, but if the calculations
to sell up or seek new investors.       opportunity.”                           add up then organizations must
British assets are more attractive          Wong is optimistic about the        move quickly. Although the U.K.’s
with sterling so low, and therefore     prospects Brexit holds for business     exit from EU continues to be a mov-
much cheaper for foreign investors      opportunities between Britain and       ing target both in content and time-
who in their turn may be looking for    Hong Kong. “The U.K. is keen to         frame, businesses need certainty,
an opportunity in the U.K.              explore opportunities with the non-     and certainty is something that
    For Gracey at TAM, the              EU partners and Hong Kong main-         accountants are always good
prospect of a no-deal Brexit            tains its strategic advantages – free   at providing based on robust
forced TAM to bring forward             trade policy and a well-established     financial calculations.

                                                                                                                        February 2019 15
RELEVANCE
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Thought leadership                                                                                                                         aplus
Harjeet Baura and Ali Tse
Harjeet Baura, Financial Services
Consulting Leader, and Ali Tse,
Director, Financial Services Tax
(Transfer Pricing) at PwC Hong
Kong, test common preconceptions
about gender in the workplace

                    What are the obstacles to women’s
                      advancement in Hong Kong’s
                       financial services sector?
        T
                he importance of diversity and      organization’s culture, and by engaging    as a top-three priority in driving their
                inclusion in the workplace          smaller working communities to define      diversity and inclusion agenda.
                has grown in recent years. A        their own diversity and inclusion goals.
        representative workforce is important       One example of a group promoting           Men are paid more than
        not only for corporate governance           and supporting gender diversity is the     women
        but for society as a whole. This is         Male Allies Initiative in Hong Kong.       All the companies we surveyed have
        particularly true for the role of women,    Encouraging smaller groups of middle       processes to ensure there is no pay
        who are under-represented in leadership     managers to implement change is            disparity between male and female staff.
        positions in Hong Kong relative to          another way of ensuring that a change      However, the Women’s Commission
        most other Asia-Pacific economies.          in mindset is achieved throughout the      reports a pay gap of 22 percent in Hong
        The Women’s Foundation (TWF), a             organization.                              Kong across all sectors. And there is
        non-profit organization dedicated to                                                   a strong perception of a pay gap that
        improving the lives of women and girls      There are fewer women                      needs to be overcome: 72 percent of
        in Hong Kong reported that women            than men in senior positions               senior female employees feel that senior
        in Hong Kong occupy 29 percent of           because women leave work to                women do not earn as much as senior
        management positions (compared to           start families                             men.
        38 percent in Malaysia) and just 13.8       We found that lack of career
        percent of directorships of Hang Seng       progression and opportunities are the      Promoting diversity and
        Index-listed companies.                     main reason for women leaving work.        inclusion
            While women make up 52 percent          Among other measures in the report,        The main conclusion that we draw
        of entry-level positions in Hong Kong’s     we recommend that companies create         from this report is that when it comes to
        financial services sector, this falls to    strategic networking opportunities         diversity and inclusion, it is not enough
        33 percent at senior management level       for women to open up otherwise             for organizations to set the tone from
        and just 21 percent at board level. To      private networks. There should also be     the top. They also need to engage line
        understand what is going on behind          sponsorship (in addition to mentoring)     managers and middle management, as
        these numbers, PwC conducted a survey       programmes to support the progression      this will create a sustainable shift in
        on gender diversity in the financial        of female staff.                           the organization’s culture. In addition,
        services sector, with the support of                                                   leaders need to actively listen and
        TWF, and Women Chief Executives             Succession plans and                       acknowledge the obstacles women
        Hong Kong, a group of female financial      leadership programmes are                  face around career advancement. Only
        services leaders committed to achieving     important for female retention             then can organizations put in place
        greater gender balance. We looked at        and progression into senior                effective measures to prevent them from
        five common preconceptions about            roles                                      losing female talent. These measures
        gender in the workplace, and then tested    This was supported by our research:        can include flexible working policies,
        these against our survey data. This then    67 percent of senior women strongly        sponsorship opportunities for women
        informed a series of recommendations        agree that early identification and        and addressing perceptions relating to
        for employers in the sector. These are:     management of female talent is             unequal pay.
                                                    important.                                     The organizations that we surveyed
        Diversity recruitment                                                                  are already leaders in best practice and
        measures are needed                         Flexible working policies will             are influential in driving behavioural
        to increase female                          help improve gender balance                change in their customer base. But the
        representation in senior roles              Such policies are considered essential     diversity and inclusion agenda needs to
        Rather than specific diversity              to enable both men and women to            be adopted by a much broader range of
        recruitment measures, we found that         meet family responsibilities and other     companies to ensure that Hong Kong
        greater impact can be achieved through      commitments. Over 70 percent of the        keeps pace with other international
        driving diversity and inclusion across an   companies we surveyed ranked this          financial centres.

                                                                                                                                February 2019 17
Leadership profile
Patrick Law

Audit reform, the new
Qualification Programme,
the Greater Bay Area,
and other opportunities
beyond Hong Kong – the
profession faces a year
of big changes and new
possibilities. Patrick
Law, the Institute’s new
President, tells A Plus
how he will be leading
members through them,
while helping them
thrive in their role as
Accountants Plus
Photography by Theodore Kaye

A
          t the Institute’s Career Forum in
          2017, Patrick Law expected to
          share with the university students
about the profession as a speaker, but at
a career forum advisory panel meeting
beforehand he found himself reassuring
their professors. “They asked: ‘will the
number of graduates recruited by the
accounting firms be reduced?’ after I
suggested that audit innovation and the use
of new technologies should be a key topic
at the forum,” recalls Law, who was then
convenor of the panel.
    “In the past, some people thought
computers would have a negative impact

                                                 MASTER
on the profession. But what we’ve seen in
recent years is that even though computers
help with the tedious work, we actually
need more people in accounting – people
with different types of skills to do different
types of work.”

                                                 OF
    Sharing the message that the profession
remains relevant amid an ever-changing
business world, and is always learning and
improving, is what Law will continue to do
this year as the Institute’s President.
    Law, Deputy Assurance Leader at

                                                 CHANGE
EY Hong Kong and Macau, will also
be working to ensure that members get
the most out of the Institute’s services
and be prepared to meet the demands of
their clients and employers in the age of
Accounting Plus. He believes that the
Institute must be as communicative as

18 February 2019
aplus

   Patrick Law studied
          electrical and
electronic engineering
     at university in the
       United Kingdom
     before deciding to
     pursue a career in
    accounting. He has
  worked in assurance
and business advisory
      at EY since 1993.

    February 2019 19
Leadership profile
Patrick Law

                                                                                                 the Institute is of course one
                                                                                                 of Law’s focuses this year.
                                                                                                 The previous chief execu-
                                                                                                 tive, Raphael Ding, left the
                                                                                                 Institute at the end of June
                                                                                                 last year after serving out his
                                                                                                 contract. The Council has set
                                                                                                 up a search committee to work
                                                                                                 with a recruitment agency
                                                                                                 to find a replacement. “We
                                                                                                 have scheduled a meeting
                                                                                                 this month and we have some
                                                                                                 candidates on hand. I think
                                                                                                 the quality of these candidates
                                                                                                 is quite good. So I hope we
                                                                                                 can get a new CE sometime
                                                                                                 this year,” says Law.
                                                                                                     Without a chief execu-
                                                                                                 tive, the Institute’s next
                                                                                                 long range plan, its seventh,
                                                                                                 cannot begin, he says. “We
                                                                                                 are moving on from the Sixth
                                                                                                 Long Range Plan and need to
                                                                                                 start the Seventh Long Range
                                                                                                 Plan as soon as possible. The
                                                                                                 plan has already been deve-
                                                                                                 loped, but for the final nitty
                                                                                                 gritty details to be agreed we
                                                                                                 need the new chief executive
                                                                                                 to be on board.”
                                                                                                     The membership fee
                                                                                                 waiver for 2019 for members
                                                                                                 whose names were on the
                                                                                                 register at 31 December 2017,
                                                                                                 and reduced fees for most
                                                                                                 continuing professional deve-
                                                                                                 lopment (CPD) courses are
                                                                                                 helping members to become
                                                                                                 Accountants Plus. “We will
                                                                                                 review the Institute’s reserves
possible about how it is supporting       some members since he began serving         situation this year to determine an
members. “We have a large number          on the Institute’s Council in 2014. “I      appropriate level for a 2020 fee waiver
of members – over 43,000 – and            have met a lot of members and they          and see whether further things can be
are a regulatory body as well as a        have told me what they want. I also         done,” says Law.
membership body, so transparency          understand that we have a wide range            He points out that the Institute regu-
and effective communication are very      of members in different groups –            larly reviews its reserves, and that two
important for us,” he says. Publishing    professional accountants in business,       partial membership fee waivers have
abridged Council meetings minutes for     professional accountants in practice,       been introduced in the last four years.
members to read was a key development     young members, small and medium             “We regularly review the funding
last year to improving transparency, he   practitioners etc. I always take the time   needs of the Institute and how much is
adds. “Communicating with members is      to listen to their voices so that I can     needed for future plans. If there’s no
important as it allows us to understand   bring it back to the Institute.”            immediately identifiable need for the
their needs and see how we can enhance                                                funds, we should redistribute them to
and widen our services to them, and       Responding to change                        members,” he says.
also help them remain competitive.”       Following on from last year’s extra-            Concerning polling members for
   Law is looking forward to building     ordinary general meeting, getting a         the election of president and vice-
on conversations he has had with          new chief executive and registrar for       presidents, a task force is examining

20 February 2019
aplus

the feasibility of a “one member one     more detailed framework that was       success. “The importance of
vote” poll. “We have to really spend     announced this month will lead         Mainland China in the international
time to think about it,” says Law.       to clearer roles to be played by the   arena continues to grow,” he says.
“We studied the voting mechanisms        ‘9+2’ cities and how they will link    “Of course, we see a slowdown in the
of eight other professional bodies       with each other. With that, we will    business operations of some Chinese
and all of them are different.           have a clearer picture of how to       companies, but with the GBA and
These are mainly membership              position our members.”                 Belt and Road Initiative, the business
bodies, whereas the Institute is             Building productive                opportunities for our members will
both a regulator and a membership        relationships with accounting          remain very strong in the future.”
body.” Given that only the Council       bodies across the border is crucial
can elect the president and vice-        to helping members capture the         Staying ahead
presidents under the Professional        business opportunities, he notes.      Law has seen the profession go
Accountants Ordinance, the               “We have formed a strategic            through a series of significant
legislation will need to be amended,     alliance with Guangdong and            changes to get to where it is now,
he adds.                                 Macau CPAs to provide a platform       with CPAs going from being
    Other factors, such as the com-      for our members and CPAs in            “number crunchers” to forward-
position of the Council, also need to    Macau and Guangdong. They can          thinkers. “I can still remember my
be considered. “With the proportion      communicate with each other when       first big task when I was a trainee.
of practising and non-practising         collaboration opportunities arise,”    I was given a very bulky stack of
council members, should it still be      he explains.                           print-outs and I was asked to check
seven and seven? With presidents                                                the casting of the totals on all of
and vice-presidents, is a one-year       “A lot of companies                    them for the client. You can imagine
term really enough? There’s a lot of                                            how long that took!” he recalls.
moving parts, so it takes time.”
                                          and enterprises in                    “With the development of audit
    Hong Kong’s audit environment         the GBA will need                     innovation, our members can focus
for some practising members will                                                more on analytical work, playing
change drastically this year, with the    the services of our                   around with data to get high-value
Financial Reporting Council (FRC)         people because our                    interpretations that help them offer
taking regulatory responsibility for                                            meaningful advice to clients. That’s
the auditors of listed companies.         members are familiar                  all part of Accounting Plus.”
With the amendment bill having            with the international                    Members can’t afford to be
been gazetted on 15 February, there                                             complacent, he says. “Technology
are still some outstanding issues         business practices                    advancements will continue.
to resolve before the FRC can take        and cultures.”                        Members need to be conversant with
over, says Law. “The remaining part                                             FinTech (including blockchain),             The Seventh
would be the sanctioning measures            With the unique skills             and robotics. They have to keep              Long Range
– the details and guidelines. Going      and experiences of members,            learning, otherwise they will be out     Plan responds to
forward, the FRC, the government         recognized by clients and              of date very soon,” says Law. “On the      the three main
and the Institute will carry on          governments, Law is optimistic         other hand, this is what makes our        challenges that
looking into this part. Certain          about the vast business                profession interesting and exciting.”      the profession
activities of the Institute, including   opportunities the GBA provides             Helping the next generation              faces, says
professional development and             for Hong Kong firms. “A lot of         of the profession remain up-to-             Patrick Law:
registration, will be overseen by        companies and enterprises in the       date and dynamic will be the new            1. The impact
the FRC, so details on how this will     GBA will need the services of our      Qualification Programme (QP),               of changes in
be done would also be discussed,”        people because our members are         which rolls out in the third quarter      technology and
Law explains. “We will work              familiar with the international        of this year. “It will equip students       the business
closely with the government and          business practices and cultures,       with the skills needed to use and         and regulatory
the FRC to ensure these changes          so they can help enterprises that      embrace new technologies and meet           environment;
are implemented smoothly with as         want to go out, and they can           the requirements of employers and        2. Attracting and
little interruption to the profession    provide a wide range of services,      clients in the age of Accounting          developing the
as possible.”                            from mergers and acquisitions to       Plus. Other than the traditional areas    best talent; and
                                         international tax advisory.”           of audit, taxation and accounting,       3. Maintaining the
Greater opportunities                        Despite all eyes being focused     students of the new QP will need a       unique position of
The Greater Bay Area (GBA) will          on the evolving United States-         wider range of knowledge and skills,        the Institute.
also have a huge impact on the           China trade war, he believes that      including soft skills like teamwork
Hong Kong profession this year,          the Mainland will continue to play     and presenting, for them to be
he says. “I’m optimistic that the        a major role in members’ career        successful.”

                                                                                                                         February 2019 21
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