Hong Kong Audit Crime Bill Excludes Junior Accountants From Criminal Liability

by CFO Innovation Asia Staff, 16 July 2012

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Accounting and Regulations Auditing

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audit fraud Companies Amendment Bill Hong Kong Institute of Certified Public Accountants

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The Hong Kong Institute of CPAs welcomed the clear support of legislators for excluding junior accountants from liability for criminal offence under clause 399 of the Companies Bill, by overwhelmingly voting down the government's proposed Committee Stage Amendment to the clause at the Legislative Council on July 12.

However, disappointment remains that the Hon. Paul Chan's CSA, removing the threshold of "recklessly" omitting a required statement from an audit report, did not gain sufficient support.

The institute made several submissions to the Bills Committee, met with legislators from different parties and wrote to all legislators to explain its concerns and seek their support.

"We have been successful in explaining our concerns to legislators and winning their support to prevent the net of clause 399 from being cast too wide," says Raphael Ding, chief executive and registrar of the Institute.

The institute has been concerned that quite junior staff, who may be relatively new to auditing, would have been put at risk of prosecution, due quite possibly to their inexperience in dealing with pressure.

"At the same time, we remain disappointed that the Committee Stage Amendment proposed by the profession's Legislative Council representative, the Hon. Paul Chan Mo Po, which would have narrowed the scope of the offence under clause 399 to "knowingly" causing an omission from an audit report, was also voted down," says Ding.

Had CSA been passed, Ding adds, it would have reduced the generally negative and discriminatory impact of the clause on the profession.

According to Ding, the profession has been repeatedly assured that the intention of clause 399 is not to target honest mistakes, so the Institute hopes the government would issue guideline on the application of the provision to make this point absolutely clear.

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