Accountants' trap

Accountants' trap  Bonnie Chen  Monday, April 30, 2012 ADVERTISEMENT (EXCLUSIVE) Hong Kong certified accountants could be tempted to use fake qualifications on offer that allow them to practice in the mainland. For even mainland candidates have a tough time qualifying as accountants with, apparently, only 50 percent passing the seven exams needed. Under the Closer Economic Partnership Agreement with the mainland, Hong Kong candidates need to take only three of the exams - namely taxation, tax law and integrated final exam. But these are tough, not least because all the papers are in simplified Chinese. Mainland tax rules are also extremely complicated and all answers have to be precise, with no interpretation allowed. The use of traditional Chinese is prevalent in Hong Kong. Also, local accounting exams are all in English. But demand for mainland qualified accountants is steep, especially as the local exchange, from December 2010, allows such professionals to audit locally listed mainland firms. Among the 160 H-shares companies, 27 of them use mainland auditors. "There is a rising trend among local accountants hoping to get a mainland professional qualification because more Hong Kong companies have cross- border business," said Jonathan Ng Tai-sing, deputy executive director of Hong Kong Institute of Certified Public Accountants or HKICPA. The fake certificates can be bought for just 20,000 yuan, according to an e-mail received by The Standard. "Our organization is responsible for completion of qualification for certified Chinese accountants, 20,000 yuan all inclusive," the e-mail claimed. It even claimed all the certificates on offer would be recognized by The Chinese Institute of Certified Public Accountants. Those who want to obtain the fake qualification need to submit a copy of their local accountancy bachelor degree, a copy of one's Hong Kong identity card, a photo and proof of professional experience. Mainland and Hong Kong auditors have come under the spotlight this year due to a spate of balance-sheet scandals involving several locally-listed mainland firms. In at least two cases, the auditors resigned and seven firms have stopped trading, prompting the Securities and Futures Commission to tighten the rules on sponsoring initial public offerings. Most of the scandals have occurred at recently listed mainland firms and, so far, three companies are being investigated for "false accounting." Among the 33,577 certified HKICPA members, only 141 have so far completed the three mainland examinations. Among them, 131 have met all conditions to become fully qualified accountants in the mainland. Several local accountants contacted by The Standard admitted that the mainland exams are very difficult and that they failed in their first attempt. But most said they are determined to pass as having both Hong Kong and mainland qualifications greatly enhances their job prospects. Under CEPA, mainland accountants, if they qualify, can also work in the SAR. So far, 64 mainland professionals have completed the HKICPA examinations and 45 are fully qualified. A government spokesman said it will continue to pursue mutual recognition of professional qualifications.