Aims and Process

The purpose of this letter is to ensure that members are properly informed of the Institute's plans regarding future recognition of overseas qualifications.  To do that, I wish to make it clear at the outset that we have a strong desire to renew our mutual recognition arrangement with CPAA and ACCA and to enter into further MRAs with other overseas accounting bodies. However, this recognition will now need to go through a process.

Future recognition will be based on an evaluation process that has been specifically developed to assess the comparability of the standard of the admission process of the other professional body as measured against the HKICPA's QP and admission requirements.  The evaluation process will be conducted by an independent outside expert consultant to ensure independence and our evaluation process and methodology are published on our Website to ensure transparency.  < http://www.hkicpa.org.hk/whatsnew/recognitioninfo040728.pdf > We will work together with the relevant bodies to build bridging programmes should any gaps be identified in this process.

As the statutory licensing body of CPAs in Hong Kong , the HKICPA has the responsibility to ensure the quality of entry into the profession.  The changes that we have introduced in the way we prepare our prospective members via the HKICPA QP, with its competency-based programme of learning, its graduate entry and the Authorised Employer/Authorised Supervisor (AE/AS) requirement for recognised practical experience, sets the benchmark for the qualification of future Hong Kong CPAs.

Review of Recognition Agreements

The Institute currently recognises the qualification of 14 overseas qualifications.  There are seven Reciprocal Membership Agreements (RMA) signed with 7 Chartered Accountants bodies (ICAEW, ICAS, ICAI, ICAA, ICANZ, ICASA & ICAZ) in November 2002. Given that the QP was modelled on the Chartered Accountants' qualification programme and we have recently gone through a very comprehensive process of evaluation for comparability of the QP with these programmes, it was decided that there was no need to put the seven chartered qualifications through the HKICPA's new evaluation process.  Negotiations with CICA for an RMA are near completion.

With regard to the remaining 6 overseas professional bodies - ACCA, CPAA, AIA, AICPA, CIMA, CIPFA - we currently have a Mutual Recognition Agreement (MRA) with ACCA and CPAA signed in May 2000, but not with the other 4 bodies which have been unilaterally recognised by us. None of these six bodies have undergone a similarly vigorous evaluation process before their recognition by us.

In mid-June this year, HKICPA announced its intention to introduce the Institute's evaluation process with these six bodies with a view to reaching a mutual recognition agreement after 30 June 2005 based on a proper and fair evaluation of their professional programmes and admission requirements.  With this in mind, we also notified the relevant bodies that our current recognition arrangements with them will end on 30 June 2005 if we fail to reach an agreement by then.  All bodies were fully briefed about our intention to review our recognition of their qualification, the aim, processes and rationale behind our decision prior to our formal written notice to them. 

The termination of the MRAs with ACCA and CPAA by 12 months' notice so that the HKICPA may implement its new admission standards is something which was contemplated by the MRAs themselves when they were signed in May 2000. Clause 2.10.1 of the MRA between HKICPA and ACCA, for example, states that "The bodies are considering significant changes to their respective professional examinations and /or membership structure which may precipitate the need to review the relationships with bodies recognised". The Clause contemplates the possibility of a review in 2005.

We are pleased that we have started discussions with five of the six bodies on this review process.

Status of MRA with ACCA

We regret that the ACCA has not responded to our invitation to begin the evaluation process for a future MRA nor has it made any proposal to us on transitional arrangements. Instead, it is asserting that we are in breach of our obligations under the MRA and the General Agreement on Trade in Services (GATS) by virtue of their view that our transitional provision is not long enough to cater for the ACCA's over 13,000 registered students, who on average take almost 5 years to qualify, and that our newly introduced evaluation process is seen as restricting entry to the profession. 

In this regard, I would like to re-emphasise to you that we will continue to recognise overseas qualifications.  All we are doing now is to set a proper benchmark for this recognition to ensure uniformity and consistency of standards and quality of entry to the profession. Most countries throughout the world use an evaluation process similar to the one HKICPA has introduced.  In insisting on this evaluation process, we are following international best practice. Therefore, we assure you that any assertion that we have acted in breach of Hong Kong 's international obligations under GATS is without basis.

I would also like you to note that in deciding to review the current MRA with ACCA, we have ensured the interests of both ACCA members and students are protected:

The full transitional arrangements for students were published in my letter to members issued by email on 25 August < /file/media/section1_about_us/e-circulars/2004-08-25/transitional_arr.pdf >.

The HKICPA is working hard to move the profession forward on many fronts at once and we are very pleased with our recent success in negotiating an extension of our RMA with the ICAEW to allow the majority of our members the ability to enjoy reciprocal recognition by ICAEW for membership admission.  The agreement was welcomed by members. 75% of members covered in a recent survey considered the agreement as having a positive effect on the standing of the profession in Hong Kong .  We have also secured a landmark agreement with the Mainland on Mutual Examination Paper Exemptions (MPE) for our QP graduates; we hope we will be able to achieve similar success on behalf of our non-QP members in due course.

Therefore, we are expanding rather than narrowing access to the profession, but the Council is determined that this must be done with complete assurance of standards and quality.  Otherwise, we would not be discharging the responsibility entrusted to us under the PAO.

The Institute has received feedback and comments from members on recent negative publicity about the strained relationship between ACCA and HKICPA on the above issues.  First, let me say that no one regrets more than I do the unfair press coverage.  I hope this letter clarifies our intent and assuages any anxiety caused by this adverse publicity. Please rest assured that I have every respect for the ACCA qualification and regret very much the mis-quote in Ming Pao.

We are trying to persuade ACCA that it is in our mutual interest that they stop misrepresenting the issues and discontinue writing slanderous letters to our mutual members, as it is detrimental to the whole profession.  We have already initiated a dialogue with the ACCA President and Chief Executive, who will meet us next week in Hong Kong. We will do all we can to resolve these matters amicably.  The HKICPA works for our members and has the interest of Hong Kong at heart.  We trust that you will provide us with your support on the way forward.

I thank all members who have communicated with us on this issue.  This is an important issue and your thoughts and opinions on the matter are valuable to the Institute.  Please feel free to send your comments to < enquiryaccarecognition@hkicpa.org.hk >.

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