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Institute news

New Institute president and council electedMabel Chan, the Deputy Managing Partner and National Head of Outbound Market Development of Grant Thornton Hong Kong, was elected as the Institute’s President for 2017 at its 44th annual general meeting on 15 December 2016. At the same time, Eric Tong and Patrick Law were elected as Vice Presidents.

Chan has served on the Institute’s Council for nine years and was elected vice president in 2015 and 2016. Since joining the Council, she has served on many committees, including the Registration and Practising Committee, Audit Profession Reform Working Group, Nomination Committee, Practice Review Committee, Regulatory Accountability Board, and the working group on co-operations with Mainland small- and medium-sized practices.

Tong, Audit Partner at Deloitte China, and Law, Partner and Deputy Assurance Leader (Hong Kong and Macau) at EY, joined the Council in December 2012 and December 2013 respectively.

Seven members have been elected to serve on the Institute’s Council for a term of two years. Newly elected but returning members are Raymond Cheng, Johnson Kong, Stella Cho and Eric Tong. Other newly elected Council members are Fong Wan-huen, Ronald Kung and Charbon Lo. For lay members, the government has reappointed Melissa Brown, Partner of Daobridge Capital, and Tam Wing-pong, a veteran administrative officer of civil service, for a two-year term commencing 1 December 2016. Two co-opted members will be announced later. Institute position paper finalizes new CPA qualifying processAfter completing a three-month public consultation on the enhanced CPA qualifying process, the Institute released a position paper this month setting out the final content, structure and design of the new Qualification Programme, which will be launched in June 2019.

Newly elected Institute President Mabel Chan (centre) with immediate past president Ivy Cheung (far left), Vice Presidents Eric Tong (second from left) and Patrick Law (second from right), and Chief Executive Raphael Ding (far right).

4 January 2017

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Disciplinary findingSo Kin Po, CPA

Complaint:  So was guilty of dishonesty under section 34(1)(a)(ii) of the Professional Accountants Ordinance.

So registered as a student of the Hong Kong Institute of CPAs in 2010 and later became a certified public accountant after completing the Institute’s Qualification Programme. He applied to the Continuing Education Fund of the Hong Kong government for reimbursement of QP course fees. In the application, So submitted falsified documents showing a false commencement date of the course in order to qualify for the reimbursement. So was reimbursed a sum of HK$10,000 by the fund. The CEF Office subsequently discovered the falsified documents and reported the matter to the police. So was convicted in the Magistrates’ Courts for fraud.

Decision and reasons:  So was removed from the register of certified public accountants for five years with effect from 17 January 2017 and was ordered to pay costs of the disciplinary proceedings of HK$88,326.30. When making its decision, the Disciplinary Committee took into consideration the seriousness of the complaint against So’s dishonesty, his personal circumstances and his conduct throughout the proceedings.

Resolution by AgreementLai Man Shing, Stephen (practising)

Complaint: Failure or neglect to observe, maintain or otherwise apply the Fundamental Principle of Professional Competence and Due Care in sections 100.5 and 130.1 of the Code of Ethics for Professional Accountants.

Lai was engaged to set up a Hong Kong company and provide other services for an overseas client. He failed to properly carry out the client’s instructions in setting up the company. In addition, Lai did not obtain the client’s authorization before creating an e-Registry account with the Companies Registry and filing a form which bore the client’s electronic signature and indicated the client’s consent to act as the company’s director.

Regulatory action: In lieu of further proceedings, the Council concluded that the following should resolve the complaint:1. Lai acknowledges the facts of the case and his non-

compliance with the relevant professional standards;2. Lai be reprimanded; and 3. Lai pay an administrative penalty of HK$25,000 and

costs of HK$10,000.

Details of the disciplinary findings and the Institute’s complaint handling process and guidelines for resolution by agreement are available at the Institute’s website:www.hkicpa.org.hk.

Mabel Chan, the new Institute President, stressed the importance of the new QP in not only training professional accountants to meet current needs but also in getting them future-ready. “In pursuance of its Sixth Long Range Plan, the Institute ensures its CPA qualification is in step with the continual changes in business needs and professional markets in Hong Kong as well as international best practices,” she said.

The new structure, comprised of three progressive levels with 14 modules and an integrated final examination, offers greater flexibility for students with different educational backgrounds, including sub-degree holders and non-accounting majors, to become CPAs. Attracting more students from other disciplines to join the profession will help develop a

sustainable talent pool of accounting professionals.

Despite the expanding entry routes, the training has to remain rigorous, noted Chan. “The exit level of the new QP remains at the highest standard to ensure graduates have the required professional knowledge and ethical quality. A wider discipline also addresses the fact that nowadays, accountants are performing even more versatile roles, exceeding traditional functions to become experts in areas such as data analytics and performance management to help business growth,” said Chan.

A key feature is an increased emphasis on developing and assessing

skills such as problem solving, critical and lateral thinking to enhance students’ ability to identify problems, including aspects of ethical dilemma, and to develop effective solutions.

The Institute conducted eight information sessions and a questionnaire survey to garner

stakeholder input. “In response to the consultation paper, the Institute received 11 written responses and more than 160 online responses. In general, there is a strong support for the new QP and its proposed changes to the CPA qualifying process,” said Raphael Ding, the Institute’s Chief Executive.

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NewsAccounting

6 January 2017

Snap Inc, the maker of the messaging app Snapchat, selected London as its international headquarters this month and announced that its revenues from sales in the United Kingdom and in countries where it has “no local entity or salesforce” will be booked through the U.K.

The move contrasts with other United States-based tech-nology companies, such as Apple, Facebook and Microsoft, which have come under scrutiny from government regulators for choosing countries such as Ireland or Luxembourg as their European base, taking advantage of lower tax regimes there.

The move is a win for the U.K. as it attempts to lure busi-nesses to the country following the June 2016 vote to exit the European Union, reported the media. The U.K. already has

one of the lowest corporation tax rates in the EU at 20 percent, but ministers plan to cut it further to help keep companies in the U.K. and attract new investment.

Snap, which is preparing an initial public offering, has 75 staff in the U.K., up from less than 10 last year, with an office in London’s Soho. The company said it plans to open a new site nearby soon. It is reportedly seeking an IPO that would value the company at around US$25 billion. Snap declined to com-ment on its IPO plans, Bloomberg said.

“The U.K. is where our advertising clients are, where more than 10 million daily Snapchatters are, and where we’ve already begun to hire talent,” Claire Valoti, General Manager of Snap’s London office, said in a statement.

Snapchat owner makes London international HQ amid global tax battle

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FSDC calls for tax rule changes post-BrexitThe Financial Services Development Council called for Hong Kong’s tax laws to be simplified to attract international financial institutions to move to the city, given the changing political environment in Europe. It proposed to simplify rules for profit tax relating to financial products trading and new offerings. Com-panies currently must calculate how much of these operations are carried out in Hong Kong to determine their tax rate. “If this could be simplified into a con-cept of 50:50 onshore and offshore operations for these companies’ tax payment, it would encourage more global offerings in Hong Kong,” said Florence Yip, Convenor of the business committee at the FSDC.

Hong Kong to rank top again for global IPOsHong Kong will continue to hold the top ranking glob-ally for initial public offerings in 2017, with companies expected to raise up to HK$220 billion, according to PwC this month. The estimated figure is a 13 percent increase from last year’s total. Eddie Wong, Partner at PwC Hong Kong’s Capital Markets Services, told the South China Morning Post that the estimate did not include potential mega IPOs of payment service providers and new economy companies due to their unconfirmed listing timetables and venues. In 2016, the city retained the top spot for a second consecutive year.

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Toshiba face fresh scandal evidenceA news report that Japanese regulators have new find-ings alleging that Toshiba’s former top management had padded profits by ¥40 billion (US$339 million) over a three-year period saw the conglomerate’s shares dive as much as 6.9 percent on the morning of 4 January, before recovering to gain as much as 6.5 percent. The Asahi newspaper reported a day earlier that Japan’s Securities and Exchange Surveillance Commission planned to present the findings to Japanese prosecutors. Toshiba’s former executives denied any wrongdoing. The allegation is part of the SESC’s investigation into the company’s 2015 scandal where it overstated its net profits by ¥155 billion over seven years.

PCAOB releases guidance for auditors of U.S.-listed Chinese companiesThe Public Company Accounting Oversight Board last month published answers to questions about the obligations of PCAOB-registered firms when performing audits in China. The staff question and answer document relates to the obligations of auditing firms based outside of China that provide audit services subject to certain Chinese regulations, Accounting Today reported. The U.S. audit regulator said it has received questions from firms about how a 2005 Ministry of Finance circular, Interim Provisions on Auditing Operations Conducted by Accounting Firms Concerning the Overseas Listing of Domestic Chinese Companies, applies to audits of U.S.-listed Chinese companies by auditors based outside of the Mainland.

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The percentage of respondents to a Deloitte poll who expect

their organizations to increase the amount of time and effort

spent on implementing the new Financial Accounting Standards

Board and International Accounting Standards Board

lease standard this year.

54.7%

The number of years Philadelphia has been using its accounting software purchased in 1981.

Rather than moving on to upgraded high-tech accounting

tools, the city still relies on Financial Accounting and

Management Information System to manage its US$4 billion annual

expenditures and revenues, according to Philly.com.

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A world of numbers

The amount Alibaba Group and its affiliate Ant Financial Services Group paid in tax in China last year,

according to the e-commerce giant. The figure marks an

significant increase from the 17.8 billion yuan paid in 2015 and 11

billion yuan in 2014.

¥ 23.8billion

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Mary Jo White

NewsAccounting

Coach names new CFOLuxury accessories retailer Coach named Kevin Wills its new chief financial officer this month after its former CFO, Jane Nielson, was poached by Ralph Lauren, The Wall Street Journal reported. Wills, who joins Coach in March, will move from Alix-Partners LLP, where he served as managing director and chief financial officer since March 2014. Prior to AlixPartners, he was with retail company Saks Incorporated for nearly 16 years in various finance, strategic-planning and operations positions.

Outgoing SEC chair: Keep on convergingMary Jo White, the outgoing Chair of the United States’ Securities and Exchange Commission, urged accounting standard-setters to continue their efforts to converge U.S. GAAP with International Fi-nancial Reporting Standards. “While U.S. constituents have advised us that they do not support a move to, or an option to use, IFRS... this does not lessen the importance of their engagement on IFRS or in the broader work to further enhance globally accepted standards,” she said in a statement outlining the SEC’s work on the convergence effort. President-elect Donald Trump announced on 4 January that he will nominate attorney Jay Clayton to succeed her.

Japan’s towns lure taxes with beef and beerJapan’s Furusato Nozei (Hometown Tax) system, in which people send part of their taxes to rural areas struggling with falling populations and declining tax revenues, is causing other cities like Tokyo to see significant net losses in revenues. Money can be sent to any town, and the majority is going to communities that offer local produce – such as beer and high-grade beef – in return. Setagaya, a special ward in Tokyo, estimates the system will cost it ¥1.6 billion (US$14 million) in tax revenue in the fiscal year through March, enough to build five nursery schools, Akihiro Sasabe, Chief of the Policy Planning Division told Bloomberg.

EY kicks off Hollywood awards seasonEY oversaw the voting process for the Hollywood Foreign Press Association’s Golden Globe Awards, which took place on 10 January, for the 43rd consecutive year. Three senior EY professionals knew the results in advance, and were seen on the red carpet donning handcuffed briefcases that contain the names of this year’s winners. EY’s responsibilities for the balloting process include overseeing the ballot gathering and tabulation process for both the nominations and final results.

Actors Ryan Gosling and Emma Stone at the 74th

annual Golden Globe Awards

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