Proposal aims to protect partners from claims made against a colleague The Hong Kong Institute of Certified Public Accountants has agreed to submit a proposal to the government calling for a change in partnership structures that would limit the liability of accountants in the event of a major lawsuit. President Roger Best told the South China Morning Post the institute's ruling body felt the move was necessary to safeguard the personal assets of accounting professionals. Under current rules, accountancy firms in Hong Kong are set up in the form of unlimited liability partnerships. As a result, if one partner faces a claim from a client that exceeds the firm's professional indemnity cover, then the assets of all partners in the firm are at risk. 'This is unfair to the other partners, who have done nothing wrong but they have to share the responsibility of their colleague,' Mr Best said. Kenneth McKelvie, chairman of the institute's professional risk management committee, said that under the proposed plan, the insurance cover, the paid-up capital of the partnership and the personal assets of the partner who is being sued would be used to pay for the claim. The other partners' personal assets would be safeguarded. Mr McKelvie said: 'Similar rules were introduced in the US 10 years ago and it is the time to bring [them] to Hong Kong.' Accountants have become increasingly concerned about liability risks since the collapse of international accounting firm Arthur Andersen in 2002. The firm, once one of the Big Five, had its global operations sold to different rivals around the world after its US operation failed to identify the debt problem of audit client Enron before its collapse. The downfall of Arthur Andersen has not only reduced the Big Five to the Big Four but also triggered a number of accounting reforms worldwide. In Hong Kong, Andersen's collapse sparked calls for an independent board to investigate accounting scandals. 'We do not want to see the Big Four become the Big Three,' said Mr Best. 'Something must be done to put a cap on the liability individual accountants may face.' Besides the limited liability partnership, Mr McKelvie said the institute was also in talks with the government to introduce a proportional liability law that would put a cap on how much accountants, lawyers and directors of companies would have to pay when facing legal claims. One proposal is that accountants would be liable for up to 20 per cent of a claim, with the rest being borne by the lawyers or the directors. However, Mr McKelvie said this idea had not found much favour in Britain, where it was thought proportional liability schemes could limit the amount victims received. 'We will continue to fight for the proportional liability [law] for the longer term but we would like to see the limited liability partnership implemented first,' said Mr McKelvie.