Cepa no help as Beijing set to ban city's accountants

Brokers already at a disadvantage under cross border pact, now it is the turn of auditors as SFC wins 'state secret' ruling

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Students attend an accounting career forum. Meanwhile, Cepa has not opened the mainland market to local brokers. Photo: Edward Wong

Published: 5:00am, 26 May 2014Updated: 1:31pm, 27 Nov 2015

First brokers, now accountants. Its been 10 years since the Closer Economic Partnership Arrangement (Cepa) was introduced, but the mainland market seems to be as elusive as ever for Hong Kong professionals.

With a Hong Kong court ruling that Ernst & Young cannot use the "state secret" clause to withhold information on mainland businesses from the local regulator, it may be sliding further away.

It is feared the verdict will prompt the mainland's Ministry of Finance to speed up its audit reforms, which propose to bar the city's accountants from plying their trade across the border.

The Court of First Instance on Friday rejected EY's plea that it could not hand over to the Securities and Futures Commission the auditors' working papers relating to mainland listing candidate Standard Water as they constituted a "state secret".

Joseph Tong Tang, executive director of Sun Hung Kai Financial, said this may prompt Beijing to push ahead faster with its new audit rules to prevent overseas regulators from accessing information on mainland companies and individuals.

"This is why foreign accounting firms will be restricted from working on the mainland in future," said Tong, referring to the 10 new rules proposed by the Ministry of Finance.