As we approach the annual general meeting after another busy and productive year, it is an opportune time to provide an update on the activities of the Institute and what we have achieved in delivering our strategy to you, as members, the wider profession, and Hong Kong.
This year was the final year of the Sixth Long Range Plan. Agreed in 2013, the plan cemented the position of the Institute as a world class, top quality professional body, which serves the business community and public interest of Hong Kong.
The Seventh Long Range Plan is being assessed and finalized by Council and responds to three challenges the profession faces over the next few years. Firstly, the impact on the profession of changes in technology and the business and regulatory environment; secondly, attracting and developing the best talent; and thirdly, maintaining the unique position of the Institute. The Seventh Long Range Plan seeks to make accountancy a preferred career choice for top talent. It is about creating a dynamic, relevant, and up-to-date profession and securing recognition of the Institute as a premium body both in Hong Kong and internationally.
Amidst the fast changing business world, much of the work of the Institute over the year (as it will be for the years ahead) has been preparing the CPAs of the future. The concept of Accounting Plus represents a profession which is rich-in-variety and specializations. Accounting Plus signifies a continuously learning and improving profession, utilizing the newest technologies to answer increasingly complex questions raised by businesses and society.
Accounting Plus is the key to our future, ensuring the profession remains relevant by strengthening CPAs’ ability to embrace new technologies; analyse increasingly complex datasets; provide timely and insightful business advice; investigate and assess businesses; scenarios and investment proposals; and develop new skills and services to help our clients navigate business and technology disruption.
This year has seen significant changes in the governance of the Institute. In January, Council agreed to release abridged versions of its meeting minutes. This new level of transparency allows members to gain a deeper understanding of the activities of Council and how the Institute supports the profession.
At the extraordinary general meeting held in March, members in attendance and by proxy passed three resolutions. The resolutions have been important inputs into Council’s actions over the year, and will likely remain significant in future decision-making regarding the Institute’s support for the membership.
Based on the results of a holistic review of the fee structure which started in October 2017, Council decided to introduce a membership fee waiver for 2019 and 2020 for members whose names were on the register at 31 December 2017. The fee waiver for 2019 is for the full fee (i.e. HK$2,300), and a review is planned before the renewal period for 2020 to determine the appropriate level of the waiver, ensuring sufficient reserves are maintained for expected operating expenses.
In addition, fees for most CPD seminars were reduced by 20% from 1 July 2018, non-practising certificate holder partner’s annual registration fees halved, and the eligible age for waiver of membership fee lowered to 65.
Council also discussed various proposals to poll members for the election of president and vice-presidents. To further investigate the proposals, Council set up a taskforce to consider several options with the objective of holding a poll of all members under the current Council election framework. The taskforce is examining practicality and seeking legal advice. Given the potential bearing on the Professional Accountants Ordinance, amendment of the legislation is being considered in parallel.
The previous Chief Executive and Registrar left the Institute at the end of the financial year, upon the expiry of his contract. Council thanks Raphael for his dedicated service to the Institute over his six years in charge. Since then Jonathan Ng, Executive Director, Education and Training, has been Acting Registrar. To oversee the replacement, Council set up a search committee, which engaged a recruitment consultant to undertake a global search for suitable candidates.
Moving on to some of the highlights of the Institute’s activities over the year. This year, the annual membership survey was conducted alongside the first studentship survey, to solicit the views of the whole profession on three topics, employment prospects, earning power, and CPA qualification and development. Regarding the employment market and economic outlook over an 18-month timeframe, the results were the most positive since surveying began on the topic in 2016 for members, while the Institute’s Qualification Programme (QP) received good reviews from those who had undertaken it and was reported as adequate for meeting their job requirements.
The surveys also asked respondents about the support their employer provides for continuous professional development activities. The Institute continues to work with employers to ensure that it is offering courses that help members in all fields, and increase the number of courses made available through its digital learning platform which are available to members at any time.
After consistent efforts over almost two decades, the Institute’s Best Corporate Governance Awards is firmly established as one of the most respected in the city. At the 18th awards presentation luncheon last year, featuring guest of honour Secretary for Financial Services and the Treasury, James H Lau Jr, 20 awards, special mentions and commendations were given out – including new awards for sustainability and social responsibility reporting. The support given to the awards by both the government and business community is instrumental to their success and improving corporate governance in Hong Kong.
Throughout the year, the Institute hosted a number of seminars to further promote good corporate governance through inviting award winners to share their experiences and practices.
Another key development advocating for improvements in the corporate governance regime this year, was the release of the Institute’s substantial Report on Improving Corporate Governance in Hong Kong, covering the findings of an independent comparative study of corporate governance in Hong Kong, the United States, the United Kingdom, Mainland China and Singapore. The report’s recommendations were widely covered by the media and strengthened the thought leadership of the Institute in a topic very dear to our core values.
The Institute regularly interacts with the government regarding the development of a number of new legislative and regulatory regimes, making the views of the profession known throughout the legislative process. Two of the biggest developments this year include the Financial Reporting Council (Amendment) Bill, and the anti-money laundering and counter-terrorist financing regime.
In January, the government gazetted the Financial Reporting Council (Amendment) Bill 2018, further outlining its legislative approach to the regulation of auditors of listed entities. Since then the Institute has engaged with the Legislative Council Bills Committee on a number of occasions, in person and in writing, to make the views of the profession known, and ensure that the legislation works for the profession and for Hong Kong. To accompany our official engagements, a series of opinion pieces were published in newspapers to underpin the Institute’s position on a number of key points of contention.
For many practitioners this year the introduction of new anti-money laundering and counter-terrorist financing regime led to significant changes in the way they do business. The new regime brings Hong Kong into line with the Financial Action Task Force on Money Laundering (FATF) Recommendations, the internationally endorsed global standards against money laundering and terrorist financing.
To support members in complying with the new regime, the Institute produced a guidebook and commissioned the production of the Anti-Money Laundering Procedures Manual for Accountants to provide practical reference on procedures and forms. The Institute also supports members through specially-arranged discounts on anti-money laundering screening solutions to enable practitioners to carry out the due diligence required under the new regime. Finally, the Institute organized a series of seminars and workshops to walk through the regime and explain to members the new requirements placed on them.
A task group of members of the FATF is due to visit Hong Kong later in the year to ensure compliance with the recommendations and we look forward to meeting them to discuss the on-going efforts and challenges of implementation.
A vital role of the Institute is the shaping of international standards to work for Hong Kong. The Institute’s early involvement at the development stage ensures that the views and concerns of our members and other local stakeholders are effectively expressed and considered on the global stage.
Over the year we collaborated with international standard setting bodies, such as the International Financial Reporting Standards (IFRS) Foundation, the International Auditing and Assurance Standards Board, and the International Ethics Standards Board for Accountants, and other national standard-setters. One highlight this year was the Joint Institute-IFRS Foundation stakeholder dinner we hosted in January. The dinner featured a panel debate on the theme of Hong Kong and IFRS Standards: Past, Present and Future, with business leaders from Hong Kong and the Chair of the International Accounting Standards Board. A recording of the panel is available on the Institute’s YouTube channel.
Not only are we interested in shaping standards, but once implementation begins we help practitioners and the wider investor and analyst communities to understand the new standards. This year we held an education session, specifically targeted at the investor community, on two new standards, Hong Kong Financial Reporting Standard (HKFRS) 15 Revenue from Contracts with Customers and HKFRS 9 Financial Instruments, both effective for reporting periods from 1 Janurary 2018, to run investors and analysts through changes to financial reports as a consequence of the new standards and how they may affect their work.
HKFRS 9 was developed to make financial reporting for financial instruments more relevant and understandable. HKFRS 9 brings together the classification and measurement, impairment and hedge accounting phases. Also introduced this year was HKFRS 15, which establishes a single, comprehensive framework for revenue recognition. The Institute works with practitioners, users of financial statements and other stakeholders to ensure the new standards are effective, and seek feedbacks on the new standards.
A number of accounting, auditing and ethics standards were also revised this year and we organized consultations with stakeholders on improving audit quality, company reporting, and the effectiveness of the standards.
Looking beyond Hong Kong, the strength of our ties with the profession and government in the Mainland are vital for the long-term success of the profession. As the Greater Bay Area transforms the region we live into become one of the world’s leading bay areas, strong relationships with our peers in Guangzhou and Shenzhen are essential.
The founding of the Hong Kong and Guangdong CPA Practices Alliance in December 2017 demonstrates the importance of the Greater Bay Area to the long-term future of the profession on both sides of the border. The first meeting of the alliance was held in June, with over 30 delegates from Hong Kong meeting 40 of their counterparts from Guangdong for a seminar and roundtable on the further collaboration opportunities.
As the Greater Bay Area plan develops, the Institute will continue to work with the governments of the Hong Kong Special Administrative Region and the People’s Republic of China to ensure recognition and utilization of the unique skills of our member for the benefit of all.
Hong Kong is expected to be an important gateway for the Belt and Road Initiative and represents a one-stop shop of world class professional services needed to deliver projects. In February, the Institute leadership and management attended the Seminar on Strategies and Opportunities under the Belt and Road Initiative organized by the Belt and Road General Chamber of Commerce in Beijing. The seminar aimed to promote Hong Kong’s highly internationalized platform and distinctive edge, including its CPAs, to Mainland government ministries and state-owned enterprises.
The Institute and the profession were also represented at the Hong Kong Trade Development Council’s third Belt and Road Summit in June.
The Institute also hosted a cocktail reception in Guangzhou in March for Institute members and guests from Mainland government and regulatory authorities, professional and business organizations, universities and professional firms. Networking opportunities such as this are important for connecting our members with potential business partners.
Before I end, I wanted to detail some of the preparations for the future and the age of Accounting Plus.
The new QP entered the implementation phase this year, with major groundwork being laid for the three levels, which will be rolled out stage-by-stage. The first examination session for the Associate Modules, the Professional Modules and the Capstone will be held in June 2020, December 2020 and June 2021 respectively. Students will begin to notice changes with the introduction of the new online Student Information System in September 2019 and the publication of new study packs for exam preparation.
We also launched a consultation on changes to the Practical Experience Framework. The proposed changes aims to ensure the revised framework aligns with international standards and the best practices of leading accountancy bodies through enhancing the flexibility of the practical experience requirements, strengthening the quality assurance of the Authorized Employer and Authorized Supervisor system, and promoting communication through an online system.
Together, the new QP and the Practical Experience Framework will ensure that the profession is future ready, and prepares the “Accounting Plus” professionals who will be needed to ensure Hong Kong’s status as a global financial capital.
To support a future-ready profession it is vital that the Institute itself is digitally enabled. Council approved the Digital Strategic Plan to upgrade the Institute’s online presence to more effectively engage with members and deliver member service. This three-year project will see the development of a new website with enhanced navigation and search capabilities, and digital marketing tools to bring more relevant information and insights, events and resources to suit the various needs of our diverse membership.
The project was kicked off in June, and the first phase implementing the new website finishes with the launch in mid-November. The new website includes a new homepage design, reorganized content to be more user-focused and intuitive, making it easier to navigate to relevant content. The Institute will collect feedback from website users to make usability improvements, and new features will be rolled out on a regular basis.
Building on these changes and preparing for the Seventh Long Range Plan means that there will be many more busy and fulfilling years ahead for the Institute.
Lastly, I would like to thank the two Vice-Presidents, Council and committee members for their diligent work over the year. Future-readying our profession is a challenge we all must face together, and as a united profession we can succeed in the age of Accounting Plus.