Accountants to cease hostilities

PUBLISHED : Saturday, 12 June, 1999, 12:00am
UPDATED : Saturday, 12 June, 1999, 12:00am

The Hong Kong Society of Accountants (HKSA) is expected to sign a memorandum of understanding with the stock exchange within two months, thus ending a dispute between the bodies.

The memorandum will clarify the division of regulatory responsibilities.

HKSA president Kam Pok-man said all accounting matters prior to a listing would be regulated by the exchange.

After listing, all issues related to auditing of the company's annual report would be handled by the HKSA.

'The exchange can punish auditors if they find they breached the [listing rules] or else they can refer the case to us,' said Mr Kam.

'But after a company lists, it will be the HKSA's responsibility to handle issues related to a company's annual report.' The agreement follows tension between the two regulators over the HKSA's reports into three cases of suspected accounting malpractice.

The exchange had referred 11 cases to the HKSA for follow-up. The society's reports into three of the cases found no sign of malpractice.

Securities and Futures Commission vice-chairman Laura Cha said regulators could not ensure the accuracy of information disclosed. This should be the responsibility of professionals such as auditors and lawyers.