Hong Kong’s accountancy sector needs to add talent
- City regulator concerned over work of medium and small firms, accusing them of malpractices that risk hurting city’s status as a financial centre
A free flow of information is one of the pillars of Hong Kong’s standing as a regional and global financial hub. But the information needs to be accurate, objective and trustworthy if it is to sustain investor and public confidence.
Financial reporting is a case in point. It is reassuring to hear from the city’s accounting watchdog that the work of the six big firms, benchmarked by more than 100 corporate audit clients each, is generally good – presumably less than perfect.
That assessment from Janey Lai, head of inspection at the Accounting and Financial Reporting Council, suggests the regulator is not easily satisfied; nor should it be, given that the city’s reputation is at stake.
It certainly found reason for concern in the work of medium and small accounting firms, accusing them of malpractices that could imperil the city’s status as a financial centre.
These firms show a “disappointing” tendency to cut corners, failure to learn once deficiencies are found, and an “unacceptable” attitude that compromises audit quality. This could have a severe impact on public confidence in the quality of financial reporting.
It should be remembered that the 3,000-odd listed companies in Hong Kong include legacy stocks from the past at the bottom end of the market, which is where the problems are. It needs to be cleaned up.
Auditors have a role to play. Kelvin Wong Tin-yau, chairman of the reporting council, said if the firms in question made no improvement in the coming years, the watchdog may refer them to the disciplinary committee.
Edmund Wong Chun-sek, a lawmaker who also runs an accounting firm, said smaller players faced difficulties in recruiting the best talent for handling more complex audits.
The government should consider how to train more talent, and small firms should consider forming partnerships to enlarge their talent pools. Training was the concern of the industry as well as the government, said Wong, whose ideas are well worth considering.
One thing the government can do is to ensure that accounting talent among the 100,000-plus applicants to various visa schemes this year does not slip through the net. Since about 60,000 people have been approved in total there should be no excuse for that.
