Constitution, governance &
As a body acting in the public interest, maintaining high quality governance as well as bolstering the confidence of our members, their clients and the general public is of prime importance to us.
This year, a great deal of work was undertaken to ensure our internal controls and the technologies we use are up to date to preserve and increase the efficiency, security and accountability of our operations.
We invested tremendous efforts to improve the data security and core infrastructure of the Institute. The security framework and governance of the Institute’s core infrastructure and systems were reviewed and strengthened, to ensure safeguarding of all stakeholder data possessed by the Institute at all times. A mandatory training course on data privacy and information security was also provided to all Institute staff, to enhance their awareness and keep their knowledge up-to-date on the latest cybersecurity and data privacy risks. Furthermore, the audio-visual system at the Wu Chung House facility was revamped to provide a much enriched experience to our members, students, and stakeholders when attending events and meetings.
Staff training and well-being continues to play an important part in the Institute’s success. Through building a positive work environment that attracts, retains and develops talented employees, we are able to deliver to members and students the highest quality services.
“The QP is a passport to the accounting profession not only in Hong Kong, but also around the world,” Nelson Lam says.
Major governance developments
There were a number of key governance developments approved by the Council this year, including recruiting a new Chief Executive and Registrar, enacting another membership fee waiver, creating biographies for Council members on the Institute’s website, and including a summary of members’ involvement with Council and committees in the candidates’ personal information sheets during the Council election period.
In June 2019, the Institute announced the recruitment of the new Chief Executive and Registrar, Margaret W.S. Chan, who joined the organization in mid-July. The recruitment allows the Institute to further develop the profession in Hong Kong and lead the implementation of the new Qualification Programme.
In May 2019, the Council determined that it would be appropriate to introduce a fee waiver for 2020, as proposed in May 2018. The fee waiver for 2020 is for the full fee (i.e. HK$2,300) and for members whose names were on the register at 31 December 2017.
This year, at the recommendation of the Governance Committee, biographies of Council members were created and uploaded to the website to promote Institute members’ understanding of the Council. The biographies detail the members’ involvement with the Institute’s Council, committees and working groups over the preceding two years, professional qualifications, positions in their organizations, other public appointments and their skills and experiences.
The Council also continued its discussions and investigations into how to poll members for the election of the president and vice-presidents.
The Council serves as the governing body of the Institute, and makes decisions on the overall strategy, policy and direction as well as matters stipulated in the Professional Accountants Ordinance. It provides guidance on the Institute’s governance and operations with the assistance of several monitoring and advisory committees.
The Council consists of 21 members this year, all of them being non-executive and non-compensated. Fourteen individuals are CPAs directly elected by the membership and the immediate past president who completed his elected term also remains on the Council for an additional year to provide continuity. There are also six government-appointed members to provide independent views, including two ex-officio government members and four lay members of high standing in society.
Through a balance of members from within and outside the profession, the Council benefits from a wide scope of views when debating and addressing issues. All Council members follow strict rules to avoid conflict of interest, such as the forbiddance of members in taking part of discussions or decisions where a real or apparent conflict of interest is present. Council members are also not to disclose any information pertaining to their work while serving as a member of the Council.
With the exception of a break in August, Council meetings are held monthly. Attendance of individual members can be found on the Institute’s website and abridged Council minutes in the Members’ area of the website.
“I believe the QP nurtures young talent in the profession and provides our newly qualified CPAs with an internationally recognized designation,” Shirley Woo says.
Under the Council, the Institute is further guided by monitoring committees including the Audit Committee, Qualification Oversight Board and Regulatory Oversight Board. They ensure that the operations of the Institute’s management and relevant committees are aligned with the strategies and policies set by the Council.
The Audit Committee is appointed by the Council and consists of five members who help the Council fulfil its governance and oversight responsibilities in relation to financial reporting and internal controls. It reports directly to the Council and holds regular meetings with management, and both internal and external auditors in order to effectively discharge its delegated responsibilities.
The two oversight boards are in charge of monitoring the regulations, standards and quality, assurance activities and professional qualifications of the Institute. By maintaining a vigilant eye over the work of management and relevant committees, the boards are able to ensure that the Institute’s operations follow the directions provided by the Council.
“The QP is not just an exam, but a holistic training and development programme to nurture professional accountants and leaders,” says Paul She, who graduated from the QP in 2003.
The Regulatory Oversight Board ensures that the activities of the Quality Assurance, Compliance and Legal departments, and the Practice Review and Professional Conduct Committees are carried out in accordance with strategies and policies determined by the Council. Its oversight work includes receiving and reviewing work plans of the departments and committees and progress reports from management. The board also provides its views and advice to the Council on the Institute’s policies, priorities and resource allocations in respect of monitoring and regulation of the professional conduct of its members and member practices and the outcomes of those activities.
The role of the Qualification Oversight Board is to provide oversight of the activities of the Education and Training and Admission departments and the Qualification and Examinations Board, HKIAAT Board and Registration and Practising Committee. The board ensures these departments and committees activities are carried out in accordance with the strategies and policies determined by the Council and in the public interest. The board also measures the Institute’s activities against its strategic goals. The board acts as advisors to management and the Council for developing strategies and policies, receives reports on qualification and admission matters.
Advisory committees include the Governance Committee, Nomination Committee, Remuneration Committee, and Registration and Practising Committee.
The Governance Committee is tasked with the development and review of the existing policies and rules that the Institute adheres to, in relation to Council meetings, Council elections, the election of the president and vice-presidents, co-option of Council members, committee appointments and the role of the Institute during public elections. Through recommendations to the Council, the Governance Committee aims to strengthen the Institute’s standards of governance through objectivity and efficiency.
The Nomination Committee provides recommendations to the Council over the appointment of Institute members to committees, panels and working groups, the co-option of Council members and nomination of Institute representatives to take on positions in overseas bodies. It also approves, on behalf of the Council, the nomination of Institute representatives to take on positions in external local bodies.
The Institute is committed to effective corporate governance. The Remuneration Committee is one of the leading forces behind the Institute’s strong management of human resources, providing recommendations to the Council on annual salary reviews, performance bonuses and other employment terms and conditions.
The Remuneration Committee’s recommendations are of paramount importance as the Institute is committed to employing and motivating highcalibre personnel to achieve strategic and operational goals by offering competitive remuneration packages. The Institute conducts a salary survey every year to ensure remuneration packages are developed based on competitive benchmarking and staff performance.
The Council takes the recommendations from the Remuneration Committee and chief executive into account when it decides on the overall remuneration for general staff. Decisions for individual staff are made based on documented performance evaluation.
For the remuneration of directorate staff, the Council takes into account the recommendations of the leadership team, comprising the president, vicepresidents and the chief executive, and the parameters established by the Remuneration Committee. Council members and relevant committee chairs also provide input for the performance appraisals of directorate staff.
The remuneration of the chief executive is determined on an annual performance review by the Council.
The Registration and Practising Committee is a statutory committee responsible for examining the qualifications of applicants for registration as CPAs. It provides recommendations to the Council as to whether to accept or reject the applicants.
In addition, it serves as an advisor to the Council on applications of CPAs for practising certificates, and will conduct necessary inquiries to determine whether applicants have the qualifications needed according to the Professional Accountants Ordinance. It also advises the Council on the applications of members for specialist designations and other matters as required.
EXECUTION AND FINANCE
The chief executive takes charge in the execution of the Council’s policies and decisions. Appointed by the Council, the chief executive oversees the Institute’s activities and day-to-day operations, and serves as the Council’s secretary and policy advisor.
The chief executive together with a management team of two executive directors, a general counsel and 12 department and section heads, direct a group of over 200 staff alongside a network of statutory and decision-making committees, as well as advisory committees and panels.
Additionally, the chief executive chairs the Executive Committee, which consists of the executive directors and heads of finance and operations, legal, and member support, as well as the president and two vicepresidents serving as ex-officio members. The Executive Committee holds monthly meetings to make management decisions and consider reports and recommendations to the Council.
The prudent financial management of the group’s assets safeguards the Institute’s resources for the benefits of its members and students. At the conclusion of the financial year on 30 June 2019, the group reported a deficit of HK$61 million. Despite this, the net asset balance was healthy at HK$382 million for this financial year. The deficit is mainly the result of the membership fee waiver for 2019.
With a similar headcount to the previous financial year, the Institute further enhanced its support to members and managed another eventful year with significant changes and challenges. These included the development of the new Qualification Programme, commencement of the Member Activity System, the launch of the Digital Strategic Plan, increase in the number of activities held with international and Mainland stakeholders, revamp of the Professional Accountants Ordinance, and formulation of the Seventh Long Range Plan.