Hong Kong Government Proposes New Regulatory Body For Auditors

by Mary Swire, for LawAndTax-News.com, Hong Kong

04 March 2005

The Hong Kong government this week proposed the establishment of a Financial Reporting Council, which would regulate the audit sector.

Under the terms of the new proposal, upon which which consultation is invited until April 15, the Council would have 11 primarily non-accounting members, with the Hong Kong Stock Exchange, the Securities and Futures Commission each appointing one member.

The three bodies have additionally agreed to share the cost of funding the new regulatory body, contributing HK$2.5 million each annually for the first three years following its creation.

However, the Financial Reporting Council would, in the main, be an investigatory body, with few powers to enforce penalties or pursue wrongdoers.

Speaking with regard to the need for such a body this week, Financial Services and Treasury Secretary, Frederick Ma observed that:

"The wake of some notable corporate failures in other parts of the world in the past few years has highlighted the importance to strengthen the regulatory regime for the accounting profession in Hong Kong."

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