Lawmakers worry a proposed council to ensure accounting transparency will be hobbled in its duties Legislators have urged the government to ensure its proposed accounting watchdog pursues its duties fearlessly. The legislators said they wanted more scrutiny of the government's proposed Financial Reporting Council not to prevent it from becoming too powerful, but because they feared the body might be pressured into abandoning its job of investigating accounting scandals. A proposal to establish the council, which would include two investigative arms, was discussed at a Bill meeting of the Legislative Council yesterday. The two operating units envisaged are an independent Audit Investigation Board, to investigate alleged audit failures of listed companies; and a Financial Reporting Review Panel, to monitor corporate financial statements for non-compliance with accounting or disclosure regulations. 'If the Financial Reporting Council decides not to investigate a case just because the company concerned is very big, or because the Chief Executive forces it to stop the investigation, it will be very bad for the reputation of Hong Kong,' Democratic Party economic affairs spokesman Sin Chung-kai said. Mr Sin said the government should follow the model provided by the Independent Commission Against Corruption, which was obliged to report to an operating review committee established with independent members, if it abandoned an anti-graft inquiry. Alternatively, the government should require the FRC to explain to the public why it abandoned any investigation, he said. Mr Sin's view was echoed by Frontier legislator Emily Lau Wai-hing. 'I support the view of the Democrats. It would be better if the Financial Reporting Council operated under the same checks and balances as the ICAC,' Ms Lau said. Albert Lam, the deputy secretary for financial services and the treasury (financial services), said the Financial Reporting Council would be subjected to seven different kinds of checks and balances. However, the government would still consider the appeal from legislators for the establishment of an operating review committee. Mr Lam said the government had sent letters about the funding for the FRC to the Hong Kong Exchanges and Clearing, Securities and Futures Commission and the Hong Kong Institute of Certified Public Accountants. Legislators have attacked the government's funding proposal, which budgets an annual expenditure of $10 million for the council. 'That is not likely to be enough to enable it to carry out effective investigations,' Ms Lau said. Under the government's proposals, the FRC will have a reserve of $10 million and annual expenses of $10 million in its first three years - equally funded by the government, the institute of certified public accountants, Hong Kong Exchanges and the SFC. The lawmakers will have more meetings to study the Bill .before a vote is taken some time next year.