Standards meet strict guidelines
THE Hongkong Society of Accountants (HKSA) is responsible for the maintenance of auditing standards in Hongkong.
It undertakes this in two ways; through practice reviews and through a professional standards' monitoring committee.
For practice reviews, the HKSA employs two full-time staff who examine company files to check that standards have been met.
They work to requirements laid down in the HKSA's accounting standards and guidelines, auditing standards and guidelines and regulations for professional conduct.
Mr Louis Wong Lok-wah, executive director and registrar of the HKSA, said that although the procedure was to maintain standards, there was also an educational aspect.
''Having done the review, the reviewers point out pitfalls and discuss them with the firm concerned,'' he said.
Although the introduction of practice reviews generated ill feeling when the procedure was first announced, Mr Wong said that now it was welcomed by firms.
''We are very conscious of secrecy,'' he said.
''Even major firms accept visits because of the image of the profession.'' The International Accounting Standards Committee (IASC) recommends that all local associations should have a quality review system, and the HKSA plans to review all the certified public accountant (CPA) firms within a four year cycle.
The professional standards monitoring committee reviews all published statements of public companies, banks and other organisations, which the law requires to be published. It checks that the statements have followed the disclosure requirements, and havemet standards required by the association.
''Because we don't have any discretion over companies, we can only contact the auditor in case of problems,'' said Mr Wong.
This procedure started in 1988, and the cycle is beginning again.
No disciplinary action was necessary during this period, but to prevent errors recurring, the HKSA circulates reports highlighting the type of errors found.
Looking to the future, Mr Wong considered that the HKSA would become more involved with China.
''One of our concerns is how we will react to the environment in which members work,'' he said.
''There will be more clients from the mainland and smaller firms of practitioners expanding into China.
''Chinese standards must be compatible with Hongkong's, although there will be minor variations in laws, about disclosure of information, for example.'' Plans include the increase of self-regulation within the profession and proposals to amend the professional accountants ordinance to give the society statutory powers to investigate complaints.
Mr Wong also expected the society to become more involved in helping the authorities, such as the Commissioner for Banking.
''We have just set up a working group to make proposals for our third long-range plan,'' he said.
''Its aim is to advise the council on strategy for the next five to six years.
''In addition, we hope to provide more services, particularly information technology services, to our members.''