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One Country, Two
Professions: Challenges for The Auditing Profession in Hong Kong
Special Administrative Region INTRODUCTION Professional accountants are regarded as professionals, equal in every respect to the more uniformly recognized profes- sions of law and medicine. In recent years, as the subject matter with which associations are concerned has increased in complexity and volume, their services have become more critical and more in demand. Our industrialized and information technology world of today cannot survive without the services of professional accountants. Perhaps, nowhere in the world is this more evident than in Hong Kong vis-a-vis the Chinese Mainland. STRUCTURE OF THE PROFESSION IN HONG KONG The profession in Hong Kong acquired legal and professional status under the Hong Kong Professional Accountants Ordinance (1995) on January 1, 1973. This ordinance empowers the Hong Kong Society of Accountants (HKSA) to regulate the practice of the accountancy profession, to conduct examinations to qualify its members and to issue practising certificates. As of January 1998, the Hong Kong Society of Accountants has 13,696 members, 918 accounting firms and 21,084 registered students. Student members need to pass all of the 14 professional examinations and acquire relevant accounting experience before qualifying as professional accountants under the Professional Accountants Ordinance. Currently, the HKSA conducts a Joint Examination Scheme with the Association of Chartered Certified Accountants (ACCA) for the 14 professional subjects. Graduates from recognized degree programs can obtain exemptions from up to ten papers. This Joint Examination Scheme is an implicit acceptance of the U.K. model by the HKSA. Similarly, the Statements of Standard Accounting Practice issued up to 1993 are practically identical to those issued in the U.K. This is perhaps what is known as the colonial legacy, since Hong Kong had been a British Colony for over a hundred years. With the change in sovereignty on July 1, 1997, it is expected that there will be new developments and directions in the auditing profession in Hong Kong. Since the return of sovereignty to the People’s Republic of under the framework of international trade organizations, will establish mutual recognition with internationally reputable professional accountancy bodies. To this end, a Steering Committee on Professional Accreditation was set up to draw up proposals for a new professional accreditation system. The Society carried out three phases of consultation. The first Consultation Paper “Into the 21st Century-Accreditation of Professional Accountants in Hong Kong” was published in 1995. This paper proposed to establish the Society’s own independent professional examination with graduate entry.1 This is based on the belief that graduate entry will have a positive effect on the quality of intake to the profession and strengthen the basis for further development. This graduate entry admission requirement will bring HKSA in line with many top tiered professional accountancy bodies around the world. With some 30 written responses and informal feedback obtained from numerous forums, the HKSA drew up a Position Paper with the help of a consultant in 1996. The details of the Position Paper included the proposals of a Conversion Program and a Foundation Program designed for nonaccountancy graduates and sub-degree diplomates respectively. There was widespread support for the Society to upgrade to graduate entry and to implement its own Professional examinations. In June 1997, the Society published the Position Paper “Accreditation of Professional Accountants in Hong Kong: Into the 21st Century: New Professional Accreditation System.” This paper sets out the objectives of the framework for membership requirements, identifying important elements and the detailed framework for membership requirements. The primary objective for this new professional accreditation system is to ensure that professional accountants in Hong Kong SAR possess the requisite competencies to meet the challenges in Hong Kong, mainland China and the Asia Pacific region. This development recognises the unique position of Hong Kong as an international financial centre and a major player in the Asia Pacific region. In particular, the development of mainland China has resulted in a significant impact on the Asia-Pacific economies with new challenges confronting professional accountants in Hong Kong SAR. The present Joint Examination scheme that HKSA has with ACCA does not explicitly address these unique challenges for professional accountants in Hong Kong. Associated with this unique development, there is a worldwide trend to require graduate entry in order to further upgrade the quality of future professional accountants. The Society recognizes that many of the generic skills included in graduate level competencies are becoming increasingly important to the accountancy profession. The focus of the Society is to identify competencies required of competent practitioners. The fields of competency include: Auditing, Financial Accounting and External Reporting, Financial Management, Information Management and Technology, Legal Environment of Business, Management Accounting, Professional Ethics and Taxation, and Tax Planning. The incorporation of communications, ethics, information technology and international accounting, and business will be integrated into each of the above fields of competency. The objective of the new Professional Program is to enhance candidates’ skills in advanced technical know-how in accounting and its related disciplines, and to develop a strong sense of professionalism and ethics. The program includes four professional core modules namely, External Accountability, Financial Aspects of Business Strategy and Management, Systematic Overview and Attestation of Information Processes, and Taxation and Tax Planning. Each module requires 120 hours of self-study with attendance and participation required in four workshops and satisfactory performance in a two-hour open book examination. There is a final professional examination requirement which comprises a six-hour examination held in two sessions. It is designed as an integrated case study type examination which tests the integration of all competencies required of a practitioner. Details of the routes to qualify as a professional accountant are given in table 1. An international consortium, consisting of the Institute of Chartered Accountants in Australia, Institute of Chartered Accountants of New Zealand and Deloitte Touche Tohmatsu, was established in 1997 to develop course materials for this new program. It is expected that this team will be able to further the long term cross-border cooperation amongst professional accountancy bodies. The materials developed will have an international focus with a strong local orientation, particularly in mainland China. Another contentious issue facing the profession after 1997 is the language issue. The new professional examinations will continue to be conducted in English since this is essential in maintaining Hong Kong as an international financial center. The use of English will further enhance the international recognition of the future HKSA qualification. There is a Chinese proverb that says “it takes a decade to grow a tree and a century to foster a man of virtue”. Though mother tongue teaching is highly promoted in Hong Kong in recent years, it will take many more years before professional accountants can communicate effectively in both languages. It will even take a much longer time before Chinese can take precedence over English. The need to continue to promote English as an international language cannot be overemphasized. On the other hand, the promotion of the Chinese language in the profession cannot be overlooked. In times to come, a parallel system may materialize. CONCLUSION The new professional accreditation system is introduced to ensure that Hong Kong’s professional accounting standards reflect international standards. This will facilitate the recognition of the accounting profession in Hong Kong as one worthy of international repute. With the higher professional standard of professional accountants in Hong Kong, we can serve as a bridge in cooperating with mainland China to achieve its targets in the modernization process including upgrading its accounting profession to meet international standards. In time, the accounting profession in Hong Kong and the mainland will converge smoothly and no doubt be one profession in one country. 
REFERENCES Hong Kong
Society of Accountants. 1997. Accreditation of professional
accountants in Hong Kong: Into the 21st century new professional
accreditation system. Position paper: HKSA. |