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SMPs and SMEs corporate law firms use the Big Four or midtier accounting firms. However, there have been some recent regulatory pitfalls, such as CPAs falling foul of The Law Society of Hong Kong regulations, but these can be easily avoided. (See SMPs must keep a keen eye on legal pitfalls on page 19). Some CPAs believe consulting – specialist advisory services traditionally undertaken only by the Big Four and the largest of the medium-sized firms such as BDO, Grant Thornton, Mazars and RSM Nelson Wheeler – is not automatically closed to SMPs. In 2006, Thomas Wong, founding partner at CWCC CPA in Tsim Sha Tsui and an Institute member, launched a consulting desk for Latin American companies. He says, while auditing accounts for 50 percent of CWCC’s revenues, revenues from its con- 18 December 2012 sulting and business advisory practice have grown by about 35 percent per year over the past three or four years as a result. Under the Closer Economic Partnership Arrangement between Hong Kong and the Mainland, SMEs are encouraged to export products and services to China. Some SMPs believe the Mainland might help hold the key to success. They expect the Qianhai Bay free-trade zone in Shenzhen to present opportunities under CEPA that might create a model for other areas of the Mainland. “I see the future for SMPs as good because of the hinterland of China supporting us,” says Wong. “There are a lot of CPA firms in China that want to gear with local CPAs here, whether big, small or medium.” In such cases, Institute member firms could serve as an intermediary for Chinese companies “ In any organization you need to diversify, just as Hong Kong diversified from a manufacturing hub to a financial hub.”
(served by Mainland CPA firms) that want to establish themselves in Hong Kong. CWCC has already expanded into writing business proposals for Mainland clients. Taking the next steps Other SMPs who have made a transition beyond audit say choosing employees with the widest experience is essential, especially for smaller firms. “We encourage employees to broaden their exposure and to expand their competencies in order to offer a wider range of services to clients,” says Philip Fung, an Institute member and a partner with LAK Associates CPA in Central. He says transaction services – including internal control reviews, financial due diligence, merger and acquisition advice, business valuation and liquidations – account for SMPs must keep a keen eye on legal pitfalls One task often undertaken by small- and medium-sized practitioners is to give an accountant’s report on compliance with the Solicitor’s Accounts Rules by a solicitor’s firm. This report must be submitted annually by legal professionals and firms regulated by The Law Society of Hong Kong. Linda Biek, the Hong Kong Institute of CPAs’ compliance director, says that there is a rising incidence of improperly filed or substandard reports by Institute members brought to her attention by the society recently, but it appears that the problems are not hard to address. Some cases appear trivial, such as the failure to use the correct forms or adequately document the work performed. However, the filing of accountant’s reports are subject to specific rules and regulations. “The Institute provides tools and resources to enable members to do this work 25 percent of his firm’s turnover. Networking is another critical skill for SMPs wanting to expand their business opportunities, Fung adds. “We have been developing networks and cooperating with other accountants and other professionals such as lawyers, corporate financial advisers, tax experts, executive and independent non-executive directors of listed companies, chartered secretaries and qualified valuers,” he says. Au at BDO sees three areas where the Institute can help: • Communicating with regulators on the burdens faced by SMPs; • Facilitating contact and advocacy with stakeholders such as investors and the general public about the value of auditors and professional accountants; well,” says Biek. “There’s clear guidance,” she adds, referring to Practice Note 840. Improperly filed reports cause some concern because solicitors often hold in trust large amounts of money on behalf of their clients. Chris Joy, the Institute’s executive director, says that legal sector regulators take a grave view of any apparent breaches of the rules governing client accounts. “Once you hold third-party client money, the public expectation of correctness increases,” he says. Despite the recent problems, Biek says that solicitors make ideal clients for SMPs who seek to broaden their customer base. “It’s a great business for them,” she says. “It should not be a high-risk engagement if CPAs utilize the available resources.” Biek adds that the procedures to perform the engagements are not complicated and the tools are available on the Institute’s website. “PN 840 sets out the requirements like a cookbook,” she says. “Just follow the recipe.” • Providing technical support and professional guidance for SMPs. While the Institute can advise and guide, some CPAs say there’s no substitute for initiative. “In any organization you need to diversify, just as Hong Kong diversified from a manufacturing hub to a financial hub,” says Wong at CWCC. “One should not just hang on. If you stuck with manufacturing you would be dead.” Wong credits the Institute for helping him develop his Mainland client roster by organizing a delegation of CPAs to China more than 15 years ago, of which he was a member. “Go to China,” he advises SMPs who want to prosper. “My advice is get a girlfriend up there!” he jokes. December 2012 19
Page 1 and 2: ISSUE 12 VOLUME 8 DECEMBER 2012 Acc
Page 3 and 4: REGULARS 01 President’s message 0
Page 5 and 6: Two lay members named to Council Th
Page 7 and 8: Talks over European Union budget en
Page 9 and 10: NEWS GREATER CHINA eBay to embark o
Page 11 and 12: CCB chairman defends Mainland bank
Page 13 and 14: As audit work becomes less profitab
Page 15: executive officer of TeleEye, a med
Page 19 and 20: GUNS Roy Leung Partner, audit and a
Page 21 and 22: PHOTO: ALAN CHEUNG AND SUNNY YU wat
Page 23 and 24: Alpha Tsang Senior manager, assuran
Page 25 and 26: December 2012 29
Page 27 and 28: was a really huge step up and a com
Page 29 and 30: 38 million The number of electronic
Page 31 and 32: December 2012 35
Page 33 and 34: maintain a diversified visitor port
Page 35 and 36: CPAs make a difference Giving back
Page 37 and 38: CPAs make a difference Patrick Lo C
Page 39 and 40: CPAs make a difference Richard Chen
Page 41 and 42: Fair value How your property valuat
Page 43 and 44: 121 TechWatch The latest standards
Page 45 and 46: Tech Q&A The Institute has issued a
Page 47 and 48: Events Your guide to courses, works
Page 49 and 50: Previous page: The Tivoli Gardens T
Page 51 and 52: Moonwatching Timepieces are enhance

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