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Follow-up Letter after the Meeting with the HKICPA - Invitation to Comment on Exposure Draft of The Code of Ethics for Professional Accountants

14 September 2020

Ms Margaret W.S. Chan

Chief Executive and Registrar

Hong Kong Institute of Certified Public Accountants

37/F., Wu Chung House

213 Queen's Road East

Hong Kong

Dear Margaret

Invitation to Comment on “Exposure Draft of The Code of Ethics for Professional Accountants – Chapter G Section 100 Professional Ethics Relevant to Anti-Money Laundering and Counter-Terrorist Financing Compliance for Accounting Professionals” (“Exposure Draft”)

We thank you for arranging the meeting in the morning of 10 September 2020. The nine fellow accountants attend the meeting representing different group of stakeholders. We welcome the opportunity of sharing and having direct communication with the Hong Kong Institute of Certified Public Accountants (“Institute”) on the captioned issue.

In respect of the Exposure Draft of the Institute, we summarize below the key points raised by the attendants:-

  1. Although the HKICPA have said they are not targeting the PAIBs, the Code of Ethics are applicable to all HKICPA members. Are there any other examples elsewhere in the world for comparison and benchmarking?
  2. Why the specified transactions contained in the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (“AMLO”) would be expanded to the Professional Services as proposed in the Code of Ethics? The thirteen Professional Services which appear to be recommended by the Financial Action Task Force (“FATF”) are in a wider scope and less risky to Money LaunderingCounter-Financing of Terrorism than the seven specified transactions as stipulated in the AMLO. Do you mind to enlighten us the sources of the FATA’s recommendation? Why do we need to expand the scope and comply with the recommendations of the FATF?  Is there any legal backing for such recommendations?
  3. To extend the Institute’s governance to a non-practising entity appears to defeat the separate legal entity concept. What is the HKICPA’s legal opinion in this area? The attendants would like to have a copy of the legal opinion for reference and understanding.
  4. Can the HKICPA just take the questionnaire/survey approach instead of revising the Code of Ethics?
  5. To avoid duplication of control, the Hong Kong Government should conduct a review of the control exercises by various professional bodies, financial institution, regulators, etc.
  6. Any duplication of control would affect Hong Kong’s business sector and Hong Kong’s competitiveness, hence the consultation should include business sector for example trade association, trade chambers, etc.
  7. Would professional accountants who are non-HKICPA members and provide those professional services (but not TCSP services and thus not regulated by the Companies Registry) be regulated by the HKICPA?
  8. Would PAIBs work in consulting firms that provide the professional services and are not wholly owned by CPAs be subject to the changes in the Code of Ethics?
  9. If the FATF are not satisfied with the HKICPA’s supervision over the profession, they should direct the Hong Kong Government to amend the AMLO, rather than requesting, if any, the HKICPA to amend its Code of Ethics to extend its governance to a separate legal entity which is not a member firm of the HKICPA.
  10. We recommend HKICPA to hold seminarswebinars and disclose more information for the fellow members’ better understanding and evaluation.

Without the legal opinion and further clarification and explanation, it will be difficult for the fellow members to fully understand the situation, not to mention making a comment on the ED.

If you have any questions, please feel free to contact us.

Yours sincerely

Louis CHOW

Chairman, Accounting Development Foundation Limited

Chris Joy, HKICPA
Dennis Chan, HKICPA
Albert Law, IAM
Bernard Wu, HKBAA
Edmund Wong, SCAA
Edwin Yeung, ADF
Eunice Chu, ACCA
Godwin Ng, IAM
Nelson Lam, ACA
Stephen Law, HKBAA