The congress brings together 5,000 international representatives in Hong Kong while the industry is embroiled in controversy. The US accounting scandals will be a central issue at the three-day gathering which will include 70 speakers.

Premier Zhu Rongji will host today's opening ceremony, the first time a Chinese leader has attended a non-government function.

According to Hong Kong accounting industry sources, government officials had recently held talks with senior officials of the Big Four international accounting firms to discuss how to step up regulation of accountants.

It is understood the government is studying whether Hong Kong should follow the US model of an independent body to regulate listed auditors.

An alternative may be to follow Europe's approach and add more independent directors to the board of the HKSA, sources told the South China Morning Post.

A spokesman for the Financial Services and Treasury Bureau said: 'The self-regulatory framework of the accounting industry has served us well. Nonetheless, we need to be alive for areas of improvement. We also need to be concerned with the international standards and development.

'As to the oversight board in the US, it appears the board has yet to function and we need to see how it would operate before we can assess its effectiveness. But we will monitor the situation.'

Sources told the Post that government officials had substantial concerns following the US accounting scandals and the collapse of Enron and WorldCom, prompting the government to consider if Hong Kong should follow overseas accounting reforms.

The recent scandal at Euro-Asia Agriculture (Holdings) has been a trigger, confirming the need to tighten regulation on auditors.

The Shenyang-based orchid grower, audited by Hong Kong's Arthur Andersen, was alleged to have inflated its income in the past four years by 20 times when listing in the SAR in July last year, according to the China Securities Regulatory Commission (CSRC).

Eric Li Ka-cheung, legislator for accountants, said he supported reform to protect investors' interests but opposed scrapping of the self-regulatory roles of the HKSA.

'It would not be a fair approach to allow independent members to investigate the work of accounting professionals,' Mr Li said.

Anthony Wu Ting-yuk, Ernst & Young chairman for Hong Kong, China and the Far East, said, however, the HKSA should take a pro-active approach on its self-regulatory role.

'Investors have lost their confidence in the accounting industry after Enron,' Mr Wu said.

'It has been a worldwide trend to reform the accounting industry and Hong Kong would lag behind if we were not doing anything,' he said. The accountants who were doing their jobs properly should not worry too much about an oversight board checking their work.

Mr Wu pointed out that the International Organisation of Securities Commissions had recently indicated that there would be a need for an independent body to regulate auditors. Hong Kong should also consider this international move.

He said since the HKSA was formed by accountants, members would have conflicts of interest when investigating other firms.

'It would be difficult for me to judge whether other accountants have done anything wrong,' Mr Wu said. 'We are all in the same industry and it would be difficult for me to give hard words against the others.'

'I would prefer a third party formed by independent persons to review our jobs. This would help benefit the public and the accounting industry.'

HKSA vice-president Edward Chow Kwong-fai, however, opposed allowing a third party to regulate auditors.

'The government should closely monitor the overseas markets' accounting reform but should not rush into it,' he said.

Mr Chow pointed out the US accounting oversight board would be an expensive option for Hong Kong to follow as it would need to hire more than 200 staff to monitor the work of auditors.

He also pointed out that the US accounting oversight board had many problems starting up; this was another reason why Hong Kong should not hurry to follow the US example.

US Securities and Exchange Commission chairman Harvey Pitt handed in his resignation two weeks ago after controversy erupted over his appointment of William Webster - who had been chairman of the auditing committee of troubled firm US Technologies - to head the new Public Company Accounting Oversight Board.