Accounting change to ease burden on SMEs
The Hong Kong Society of Accountants is to introduce accounting standards tailor-made for small and medium-sized companies in a bid to help them save time and money.
David Sun Tak-kei, newly elected president of the HKSA, said the society this year would study details of the new standards - to be called Small GAAP (generally accepted accounting principles).
The initiative comes amid concern that Hong Kong's generally accepted accounting principles may put an undue disclosure burden on smaller companies.
'Many of the small and medium-sized companies are privately held [and] are operating on a much smaller scale than the larger players,' Mr Sun said.
'But these small players are now following the same set of accounting rules as larger players, while many of the disclosures are tailored for large companies.'
He said the HKSA would study ways of making accounting rules simpler to reduce compliance costs for SMEs.
'We want to introduce a set of rules more suitable for their operation models. This will benefit them as well as our economy as a whole.'
Herbert Hui Ho-ming, a member of the government-appointed small and medium-sized enterprises committee and deputy chairman of Hong Kong Institute of Directors, welcomed the move.
'The proposed accounting guidelines will foster the healthy development of these companies,' he said.
While he was in favour of simplifying the rules, he said the HKSA should retain key figures - such as cash flow - in disclosure requirements.
SMEs often had small shareholders who were not involved in the daily management, he said.
'These shareholders can only rely on the financial statements to learn about the operations of the companies. It is therefore important that the HKSA ensure these companies give sufficient information to their shareholders.'
Another key focus for the HKSA this year will be reforming the regulation of accountants.
Mr Sun last month announced a range of measures to tighten regulation of the profession. The proposals were approved by the HKSA's ruling council but it will need to consult its 20,000 members before recommendations can be made to the government.
The proposals include an independent investigation board to be funded by the government or a shareholder levy. The board would hire a team of full-time staff to investigate alleged malpractices of accountants of banks, insurers or listed companies.
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