The Hong Kong Society of Accountants has, sensibly, decided to become part of the solution rather than remaining a problem. Accepting that self-regulation has manifestly failed to improve accounting practices, it has proposed a government-backed oversight body to police the profession.
The conversion would seem to be a case of enlightened self-interest. Only last month the body opposed such an expansion of outside oversight. Smug arguments were made that Hong Kong had not seen United States-style accountancy failings and the system merely needed tinkering with.
That position was always tenuous considering the lack of progress made in 11 cases passed to the body for investigation in 1998. Credible arguments can be made that it lacks the statutory power to compel evidence, and the funding necessary. But as in all instances of gentlemanly self-regulation, the suspicion remained that the logjam had more to do with a lack of will by the clubby accountants' body.
Hong Kong is rarely at the forefront of market regulatory developments. The city's ever- vocal professional interest groups are skilled at protecting their turf. However, as with the aftermath of the 1987 crash and the unregulated excesses that triggered the 1998 stock-market intervention, it had become clear that change was needed lest Hong Kong fall critically behind international norms.
Last week's Independent Commission Against Corruption arrest of 21 for alleged bribery scams at listed firms included three accountants. The arrests highlighted the deficiencies of the market oversight system, in that it was left to criminal enforcement authorities to make headway against commercial malpractice.
While the government and the HKSA appear to have belatedly recognised the system's failings the solution looks suspiciously like another patch-up job rather than one aimed at forging a better regulatory system.
Above all, Hong Kong needs clarity in its overlapping regulatory bodies, not merely another under-resourced watchdog lacking a mandate to rattle cages and mete out punishment.
The HKSA has skilfully proposed reforms that would increase fines for malpractice and dilute its members' influence on the body's disciplinary committees.
That is to be welcomed, but the bigger issue is reforming Hong Kong's oversight bodies to make them directly accountable. This should include an independent regulator of listed companies which could also have ultimate responsibility for overseeing accountants.