After the Financial Secretary delivered his budget speech on 16 March, the Hong Kong Institute of CPAs was ready to react with its comments. Paul M.P. Chan, Vice President and Chairman of the Taxation Committee, held a press briefing directly after the Financial Secretary finished his speech, which was attended by nearly a dozen reporters.

On the day of the speech, Paul was interviewed by several radio stations which ran the Institute's perspective all day on their news programmes. The day after the budget, coverage was extensive, with all major media in English and Chinese carrying comments from the Institute.

The Institute's seminar on the budget, held that evening, was attended by nearly 100 members, as Paul and the accounting constituency's representative Mandy Tam outlined how the new budget would affect financial and tax planning for clients.

Calling the situation facing Hong Kong "life-threatening," the Institute is submitting to the LegCo Panel on Administration of Justice and Legal Services a paper stating its case for liability reform for all professions, but most importantly the accounting profession.

The Institute's paper is asking the government to implement three proposals:
1. introduction of proportionate liability
2. amend Section 165 of the Companies Ordinance to remove the prohibition of limiting liability with clients in respect to audit work, and
3. introduction of limited liability partnerships.

The basic premise of the Institute's argument is that while Hong Kong is a global financial centre, the professions do not play by the same rules as professions in other major capital markets where liability reforms have been introduced.

While the paper emphasizes that accountants, as professionals, should shoulder the burden of their responsibilities, it makes the case that the liability framework in Hong Kong for all the professions is no longer appropriate. Click here to see the Institute's submission to LegCo.

The Institute will continue its campaign for professional liability reform.

The Institute has issued proposed Interpretation 25 Leases – Determination of the Length of Lease Term in Respect of Hong Kong Land Leases for consultation until 22 April 2005 .

This draft Interpretation proposes to address the issue of how the length of the lease term of a Hong Kong land lease should be determined for the purpose of applying the amortisation (depreciation) requirements under HKAS 16 and HKAS 17. It proposes that the lease term of a Hong Kong land lease should be determined by reference to the legal form and status of the lease. Renewal of a lease term is assumed only when the lessee has a renewal option and it is reasonably certain at the inception of the lease that the lessee will exercise the option. Options for extending the lease term that are not at the discretion of the lessee shall not be taken into account by the lessee in determining the lease term.

The Institute has issued under Update No. 12 to the Members' Handbook Interpretation 24 Revenue – Pre-completion Contracts for the Sale of Development Properties following the expiry of the one-month exposure period.

Interpretation 24 concludes that pre-completion contracts for the sale of development properties ("pre-completion contracts") do not meet the definition of construction contracts if the contracts in question are not specifically negotiated for the construction of the properties. Accordingly, the stage of completion method shall not be used to recognise revenue arising from such contracts. Property developers shall apply HKAS 18 Revenue or SSAP 18 Revenue , as appropriate, for recognising revenue arising from pre-completion contracts. They should recognise revenue only when all of the criteria specified in those Standards for the sale of goods are met.

Interpretation 24 becomes effective for pre-completion contracts entered into on or after 1 January 2005 with earlier application encouraged. For pre-completion contracts entered into before 1 January 2005, an entity should either apply this Interpretation or continue to account for those contracts using the existing method of accounting.

The International Financial Reporting Interpretations Committee (IFRIC) has released for public comment three Draft Interpretations: D12 Service Concession Arrangements—Determining the Accounting Model; D13 Service Concession Arrangements—the Financial Asset Model; and D14 Service Concession Arrangements—the Intangible Asset Model . The Institute has issued an Invitation to Comment on these IFRIC Draft Interpretations with comments requested by 18 April 2005.

These Draft Interpretations have been developed by the IFRIC in response to requests for guidance on how International Financial Reporting Standards (IFRSs) apply to service concession arrangements. Service concession arrangements are arrangements whereby a government or other body grants contracts for the supply of public services—such as roads, energy distribution, prisons or hospitals—to private operators. These Draft Interpretations will not amend existing IFRSs. Instead, they will clarify how concession operators should apply existing IFRSs to account for the obligations they undertake and rights they receive in service concession arrangements.

The Institute has been getting excellent television coverage of two important initiatives - the establishment of the Financial Reporting Council and international convergence of accounting standards.

On March 9, Metro Radio and ATV interviewed the Institute's President, Edward Chow, on the Institute's position regarding the introduction of the Financial Reporting Council.

On March 8, TVB and ATV broadcast an interview with Raphael Ding, Deputy Chairman of the Financial Reporting Standards Committee, two times during their news programmes, with Raphael explaining how new accounting standards would affect property developers.

These have been important opportunities for the Institute and have allowed us to take our "thought leadership" to a very broad Hong Kong audience, and show how our members are shaping Hong Kong as a global financial centre.

The Hong Kong Women Professionals & Entrepreneurs Association is organizing its third Women Professionals and Entreprenueurs Award. The last two awards were given in 1999 and 2002 and were created to recognize women who have made significant contributions to the professions, Hong Kong's business environment and society.

You can download the nomination form from this website: http://www.hkwpea.org/event-award.htm . Nominations close on 31 March, and winners will be announced on 8 June.

The Hong Kong Coalition of Professional Services ( 香港專業聯盟 ) (HKCPS) will host a forum in Hong Kong on 30 March 2005 jointly with the Guangdong-Hong Kong Services Co-operation Task Force ( 粵港服務業合作專責小組 ). A delegation of the Guangdong Provincial Government officials will attend the forum to answer questions from Hong Kong professionals regarding the implementation of CEPA initiatives and members are invited. The deadline for enrolment is extended to Tuesday, 22 March 2005. Please click here for registration and details.

If you are not able to attend but have questions on the practical difficulties that you have encountered in practising, setting up a business or providing services in the Mainland under CEPA, please send us your questions by email to mia@hkicpa.org.hk or by completing the attached reply slip to the Institute on or before 22 March 2005.

The Small and Medium Practitioners Committee (SMPC) has organised a Forum for practitioners to meet with the Chief Executive & Registrar of the Institute and the Chairman of the SMPC, Paul M.P. Chan. You are cordially invited to attend the Forum to express your concerns and interests. The closing date for enrolment has been extended to 18 March 2005 .

Please click here for more details.

The five-member team from the Institute improved its time this year in the "Walk Up Jardine House" charity event held Sunday, 13 March. The team finished the 49-storey, 900-step relay race in 4 minutes 28 seconds – one second faster than its record last year.

The Institute's team competed with 29 strong teams in the Business Associates Category and came in at a respectable eighth place.

"Walk Up Jardine House" is a funding raising event run by the Jardine Ambassadors in partnership with the Hospital Authority. The Institute sponsored the event with a $20,000 contribution and our Accountant Ambassador team: Pearl Chau, Dennis Ko, Marco Kung, Yale Leung and Barry Tam.

For Your Information is a channel to provide news or activities of other organisations which may be of interest to our members. In this issue, we have:

	Conference and Workshop on "Prepare and maintain IT Compliance for SOX" (US Sarbanes Oxley Act of 2002). HKICPA members would enjoy preferential rate. Click here to enrol.
	6th Annual Corporate and Regulatory Update 2005. Click here to enrol.