Accounting society beats off legal challenge to investigative powers

The Hong Kong Society of Accountants (HKSA) has triumphed again in the latest challenge to its powers with a court ruling that bolsters its right to probe potential misconduct.

A judge has refused to strip the regulator of its power to crack down on suspected malpractice based on anonymous tip-offs and materials, a crucial element of the body's watchdog role.

The ruling reinforces the HKSA's investigation powers, the third time in less than four months the body has been forced to do so in the courts.

Attempts by Deloitte Touche Tohmatsu and Ernst & Young to quash decisions by the HKSA to probe controversial audits will return to the High Court this summer.

Both firms failed to convince the court that the HKSA was wrong in law by deciding to form investigative committees to scrutinise the audits of Guangnan (Holdings) and Cosco International Holdings.

A legal challenge was launched by accountant Peter Chan Po-fun earlier this month after the HKSA decided to probe an audit based on a mystery letter from an informer claiming to work for the Inland Revenue Department.

He sought permission from Mr Justice Michael Hartmann for a judicial review of the HKSA's decision, claiming the body had overstepped its powers.