The Hong Kong Institute of Certified Public
Accountants (HKICPA) is calling on the Hong Kong government to
rethink proposed changes to financial reporting for SMEs and
auditors’ access to information.

The Hong Kong government is currently revising
the region’s company laws (Companies Ordinance).

The HKICPA said it supports the proposed
tightening of corporate governance and regulation, but is concerned
about two issues that relate to accounting and audit.

Financial reporting

Hong Kong has a three tier financial reporting
regime. Listed companies use standards based on IFRS, non-listed
large and medium-size companies use standards based on IFRS for
SMEs, and small companies use simple local GAAP.

To qualify to use local GAAP, companies must
meet two of three criteria: total revenue of less than HK$50m,
total assets of less than HK$50m or less than 50 employees.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData

The government has proposed to extend the use
of the local GAAP to groups of small private companies and private
companies that do not qualify as small companies by the size
criteria if shareholders holding at least 75 percent of the voting
rights resolve to do so and no other shareholders object.

The HKICPA does not agree, arguing that the
small company reporting standards were designed with small, single
private companies in mind, which are likely to have simple accounts
for which historical information is adequate.

Larger companies or groups of companies using
this standard may not disclose enough information to show the
financial performance and position of those companies, the
institute said.

Audit access

The HKICPA is also concerned about a
government proposal that auditors be allowed to interview employees
and ex-employees at any level.

The HKICPA suggested that these interviewees
may not be able to provide the necessary information and that
subjecting the company or its employees to criminal sanctions could
be unfair.

 

Related articles

HKICPA issues new private entity
standard