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June 17, 2012

HKICPA opposes auditor’s criminal liability law

The Hong Kong Institute of Certified Public Accountants (HKICPA) said it is against a proposed law introducing criminal liability for poor audit work.

A clause contained in a Companies Amendment Bill will make the previously-self-regulating profession criminally liable in case the auditor “knowingly or recklessly” omits a required statement.

HKICPA chief executive Winnie Cheung said consequences and harm to the profession would be huge if the law is passed.

Instead the institute has proposed to amend the prosecution threshold introducing liability only when an omission is committed “dishonestly or with intent to defraud”.

HKICPA pointed out the clause will not actually apply to non-Hong Kong companies, which represent 75% of the market capitalisation of the Hong Kong stock exchange.

However, talented young members of the profession will seek other career options with fewer risks and the quality of the profession will suffer, Cheung said.

“Imposing a criminal liability on the managerial positions will only aggravate the job pressures and push aspiring young professionals away from public accounting service.

It will gravely impede the healthy development of the audit profession,” Cheung concluded.

 

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