Home' A Plus Magazine : Dec 2012 Contents December 2012 19
keep a keen eye
on legal pitfalls
One task often undertaken by small- and
medium-sized practitioners is to give an ac-
countant's report on compliance with the
Solicitor's Accounts Rules by a solicitor's
firm. This report must be submitted annu-
ally by legal professionals and firms regu-
lated 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 re-
cently, 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 adequate-
ly document the work performed. However,
the filing of accountant's reports are subject
to specific rules and regulations.
"The Institute provides tools and re-
sources to enable members to do this work
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
Chris Joy, the Institute's executive direc-
tor, 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
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 per-
form the engagements are not compli-
cated 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."
(ser ved by Mainland CPA firms) that want to
establish themselves in Hong Kong.
CWCC has already expanded into writ-
ing business proposals for Mainland clients.
Taking the next steps
Other SMPs who have made a transition be-
yond 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 ser vices to clients," says Philip Fung, an
Institute member and a partner with LAK
Associates CPA in Central.
He says transaction ser vices -- including
internal control reviews, financial due dili-
gence, merger and acquisition advice, busi-
ness valuation and liquidations -- account for
25 percent of his firm's turnover.
Networking is another critical skill for
SMPs wanting to expand their business op-
portunities, Fung adds. "We have been de-
veloping networks and cooperating with
other accountants and other professionals
such as lawyers, corporate financial advis-
ers, tax experts, executive and independent
non-executive directors of listed companies,
chartered secretaries and qualified valuers,"
Au at BDO sees three areas where the In-
stitute 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;
• Providing technical support and profes-
sional guidance for SMPs.
While the Institute can advise and guide,
some CPAs say there's no substitute for ini-
tiative. "In any organization you need to di-
versify, 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
"Go to China," he advises SMPs who want
to prosper. "My advice is get a girlfriend up
there!" he jokes.
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