Institute releases new guides on COVID-19-related issues
The Institute has published a quick guide advising auditors about the key issues and considerations impacting an audit of financial statements as a result of the COVID-19 pandemic. The guide also includes links to resources from global accounting bodies to help members navigate some of the challenges. For more details, read this month’s Thought Leadership column.
With the pandemic particularly having a significant impact on small- and medium-sized entities, the Institute has also issued educational guidance highlighting key considerations when preparing financial statements under the Small and Medium-sized Entity Financial Reporting Framework and Financial Reporting Standard. It can be found here.
The Institute’s Standard Setting Department welcomes comments and feedback on this guidance, which should be sent to firstname.lastname@example.org.
2020 Compliance Forum – A closer look at professional scepticism
The Compliance Forum is now available to watch online free-of-charge. The forum takes a closer look at applying professional scepticism in audits. It also explains the concept of professional scepticism and shows how it works in practice by taking viewers through some commonly encountered situations in the audit process. Register online via the Institute’s website.
HKFRS live webinars in September
Next month, members can access live webinars on three Hong Kong Financial Reporting Standards (HKFRS). They cover tips for performing impairment tests and preparing the disclosures under Hong Kong Accounting Standard (HKAS) 36 Impairment of Assets, the revised definition of a business and optional concentration test in HKFRS 3 Business Combinations, and how to apply HKFRS 16 Leases and the practical expedient for COVID-19-related rent concessions. Course and enrolment details are available on the Institute’s website.
Annual taxation conference 2020 e-Seminar now available
Missed the annual taxation conference 2020? The archived session is now available. Speakers, including the Inland Revenue Department’s Deputy Commissioner (Technical), discuss the latest changes in the Hong Kong domestic tax legislation and new tax practices, decisions from court cases and the Board of Review, and other popular international tax topics. It also includes a lively panel discussion on a hypothetical merger and acquisition transaction. Read the highlights of this discussion in this month’s Second Opinions.
Collaboration with Caritas on debt counselling services
Caritas is offering a series of webinars to the public to discuss individuals’ debt restructuring and bankruptcy-related issues. The Institute’s Restructuring and Insolvency Faculty Executive Committee has been invited to provide guest speakers for the webinars on 31 August and 24 September. Interested members can refer to the details on the Caritas Family Crisis Line and Education website: debt.caritas.org.hk.
Employee Assistant Programme for SMEs
With social distancing and quarantining being the new norms during the coronavirus pandemic, interacting with the world around us has changed. People might feel uneasy or even anxious. The Institute is mindful of the needs of our members and has arranged access to the Employee Assistant Programme run by The Hong Kong Council of Social Service, serving SMEs in Hong Kong. Through counselling services including interviews, talks and workshops and other professional support, the programme assists employees to relieve the negative impacts of work and personal difficulties and stresses. Join as a member of the Caring SME Alliance to enjoy a preferential by completing the application form available at caringcompany.org.hk/en_sme_pro.php.
Volunteer via Time Bank app
Volunteering is a way to make a difference. With Time Bank, a recently launched app initiated by the Hong Kong Inheritage Foundation and supported by the Institute, your volunteer service hours are redeemable for other services or commercial products. It also serves as a matching platform between volunteers and beneficiaries. Join us to build a better society by downloading the app at App Store or Google Play.
Resolution by Agreement
Kong Kam Yu, CPA
Complaint: Failure or neglect to observe, maintain or otherwise apply the fundamental principle of professional behaviour in sections 100.5(e) and 150.1 of the Code of Ethics for Professional Accountants.
Kong was formerly an executive director, qualified accountant and company secretary of Golden Meditech Holdings Limited, a Hong Kong-listed company. As a director, Kong was responsible for ensuring the company’s compliance with the Rules Governing the Listing of Securities (listing rules) of The Stock Exchange of Hong Kong Limited (stock exchange).
In 2018, Kong was sanctioned by the stock exchange for a breach of the listing rules and his director’s undertakings. The breach arose as a result of Kong’s failure to ensure that the company made timely disclosure and obtained shareholders’ approval of a series of transactions and events which occurred in 2011 and 2014, involving the company’s interest in a foreign listed company. Kong was reprimanded by the stock exchange and ordered to attend 24 hours of training on listing rules compliance and director’s duties.
The Institute concluded that the public censure of Kong by the stock exchange for the above matter would negatively affect the public’s view of the professional competence of a CPA.
Regulatory action: In lieu of further proceedings, the Council concluded the following action should resolve the complaint:
- Kong acknowledges the facts of the case and his non-compliance with the relevant professional standards;
- Kong be reprimanded; and
- Kong pay an administrative penalty of HK$50,000 and the Institute’s costs of HK$15,000.
Wong Tam Yee, CPA
Complaint: Failure or neglect to observe, maintain or otherwise apply the fundamental principle of integrity under sections 100.5(a), 110.1 and 110.2(a) of the Code of Ethics for Professional Accountants, and the fundamental principle of professional behaviour under sections 100.5(e) and 150.1 of the Code of Ethics. The respondent was also guilty of professional misconduct.
Wong was the sole director and shareholder of a foreign private company, which was holding shares of two Hong Kong-listed companies with a market value of HK$146 million as at September 2013. The identity of the beneficial owners of the company and the shares was in dispute among Wong and certain other parties.
In September 2013, Wong caused the company to sell the shares to a number of individuals at a substantial discount to their market price. A cheque drawn by one of the buyers for HK$4 million was given to the company as part of the purchase consideration, but Wong never cashed it. In the sold notes for the shares submitted for stamp duty purposes, Wong falsely stated that the shares were sold for full market value and that the consideration had been received.
Subsequently, a purported beneficial owner of the company initiated legal proceedings against Wong and others (the buyers and transferees of the shares) in relation to the disposal of the shares. The court found that Wong had been in breach of his fiduciary duties as a director when he caused the company to sell the shares at a substantially discounted price without first attempting to sell them in the open market, and there was no security for payment other than the HK$4 million deposit. The court also found that Wong had in effect misappropriated the shares, and had made a false and misleading statement in the sold notes. As a result, the court ordered Wong and some of the others to pay substantial equitable compensation to the company.
Decisions and reasons: Wong was removed from the register of CPAs for two years with effect from 21 August 2020. In addition, Wong was ordered to pay costs of the disciplinary proceedings of HK$128,202. When making its decision, the Disciplinary Committee noted that integrity and honesty are the cornerstones of the accountancy profession, but Wong had breached those fundamental principles in the dereliction of his duties as a director of the company. The committee also noted that the court’s findings and Wong’s blatant disregard for his fiduciary duties to the company had damaged the reputation of the accounting profession.
Details of the Resolution by Agreement and disciplinary finding are available at the Institute’s website.