White Collar | Hong Kong’s accountancy regulator may have new powers, but does it have the funding to get the job done?
The newly empowered Financial Reporting Council has been granted a budget that’s lower than other regulators in the city
Hong Kong will finally have an independent regulator of auditors, but whether it has sufficient resources to get its job done is the next question. It has been given a smaller budget than any other regulator in Hong Kong.
After several years of lengthy debate the government is finally pushing through a law change which, if successful, will see the Financial Reporting Council’s powers expanded to inspect, investigate and discipline auditors in more than 2,000 listed companies.
The Financial Reporting Council (Amendment) Bill 2018 will be submitted to lawmakers on Wednesday and discussed in the coming months before a final vote is taken.
The council would take over its additional powers from the industry body, the Hong Kong Institute of Certified Public Accountants (HKICPA). Set up in 1973, the HKICPA is a self-regulatory body that issues accounting licences, sets industry standards, provides training and regulates the city’s 42,000 accountants.
The Hong Kong government followed global standards by setting up an independent body, the Financial Reporting Council (FRC), in 2006. But it only handled investigations, while the other regulatory functions were carried out by the institute. Its remit was not generally considered broad enough when compared with other markets, which had independent auditor regulators with full powers.
The current reform would mean the institute loses all regulatory powers over auditors of listed companies to the council.