Britain's ACCA tells the HKSA to restore public confidence with more aggressive regulatory measures The Hong Kong Society of Accountants (HKSA) has been urged by its British counterpart to adopt more aggressive reform plans to restore public confidence in the industry. The Association of Chartered Certified Accountants' (ACCA) global president Sam Wong King-on said the local accounting regulator should do more to repair the damage done to the industry in the wake of recent scandals. Following high-profile accounting scandals in the United States and Hong Kong last year, the HKSA proposed setting up a full-time independent investigation panel in December to tackle false accounting cases involving listed companies, insurers and banks. Mr Wong said the HKSA suggestion was a good first step but urged the local accounting body to go further by setting up an independent panel to handle disciplinary matters. 'It is not good enough to have an independent panel in charge of investigating accountants, it remains the duty of the HKSA to handle disciplinary issues after an investigation,' he said. Under the present HKSA proposal, after an independent investigation panel had confirmed accountants had been guilty of malpractice, their penalties would be determined by an HKSA internal committee. Mr Wong said such a system might attract public cynicism because people might think accountants were not getting severe enough penalties and conclude the HKSA was protecting the interests of its members. 'Only if disciplinary action were totally in the hands of independent members would public confidence be restored,' he said. He said in Britain, the ACCA and other accounting bodies had abandoned the self-regulation model they had used for many years, opting for independent members to form two panels - one to handle investigations and the other to handle disciplinary actions concerning accountant malpractice. The disciplinary hearings are heard in public. 'Following the outbreak of scandals in recent years, it has become a worldwide trend for accountants to give up the self-regulation model,' Mr Wong said. 'We have to scrap a system which could be considered to be insiders regulating insiders.' However, HKSA president David Sun Tak-kei rejected the ACCA's suggestion. 'Hong Kong is very different from Britain and we cannot follow exactly the British regulation model for accountants,' Mr Sun said. He said the HKSA had already suggested to the government that it should change the composition of its disciplinary committee, and that it should be formed by three independent members and two accountants, with the chairman as an independent member. Allowing the public to attend the disciplinary hearing has also been suggested. 'The HKSA considers these proposed reforms to be enough to improve the regulations governing accountants and will restore the confidence of the public. The government has also supported suggestions by the HKSA for law changes to be made in the near term,' Mr Sun said. The HKSA has been accused of lacking the will to penalise its members after 11 investigations into alleged accounting scandals in 1998 yielded no firm results. The local industry is under pressure to reform after the chairmen and accountants of three listed companies were arrested by the Independent Commission Against Corruption in December. Scandals last year involving Enron and WorldCom led the US government to set up a board to regulate accountants, set accounting standards and issue licences. Mr Wong said the HKSA did not need to follow the US model as it was too expansive and expensive for local needs. 'The US has had serious accounting scandals that needed very aggressive reforms to restore public confidence. The accounting problems in Hong Kong are not so serious that it needs to follow the US' reform plans.'