What happens when listed companies changes auditors and why?

A new Exposure Draft issued by the Hong Kong Institute of CPAs today proposes that the circumstances surrounding a change in auditors should be set out for both sides – the listed company and the auditor – to see.

Developed in conjunction with the Stock Exchange of Hong Kong Limited and the Securities and Futures Commission, the Exposure Draft is aimed at creating a Professional Ethics Statement to improve the information made available in audit resignation letters.

The Institute's Chief Executive and Registrar Winnie Cheung held a press briefing to explain the Exposure Draft to a select group of reporters and nearly a dozen news media reported on it on 24 March. To see the press release issued by the Institute, please click here.

The Exposure Draft will circulate for comments until 22 April. To see the Exposure Draft, click here.

The Council has approved the final interpretation of Statement 24 Revenue – Pre-completion Contracts for the Sale of Development Properties, which will become effective for pre-completion contracts entered into on or after 1 January 2005.

In creating the final interpretation, the Financial Reporting Standards Committee consulted with member practices, preparers, and the Real Estate Developers Association, whose comments were included in the final Interpretation.

The Committee also decided that retroactive application of this interpretation to pre-completion contracts entered into before 1 January 2005 should be permitted but not required. If an entity decides not to apply this Interpretation to pre-completion contracts entered into before 1 January 2005 (or the date of initial application of this Interpretation if earlier), it shall continue to account for those contracts using the method of accounting used prior to the application of this Interpretation. To see the Interpretation, please click here.

The Draft Interpretation called Leases – Determination of the Length of Lease Term in Respect of Hong Kong Land Leases has been issued for a consultation of one month, or until 22 April. 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.

The Interpretation suggests that the lease term 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 reasonably certain at the beginning of the lease that the option will be exercised. 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. For more information on this Draft Interpretation, please click here.

The Hong Kong Institute of CPAs is hosting the International Federation of Accountants (IFAC) Professional Accountants in Business Committee (PAIB) meeting and is organizing a special CFO Forum featuring Mr. Bill Connell, Chairman of IFAC PAIB. His topic will be Enterprise Governance and the Strategic Scorecard.

Mr. Connell will highlight best practice tools and techniques, and how linking good corporate governance with performance management can drive business success.

We look forward to seeing you there. Seats are limited, so please enrol now.

The Hong Kong Institute of CPAs' IFAC Board Member, Eric Li, attended the Board meeting of the International Federation of Accountants in South Africa last week, where the chief decision was to support developing nations in creating excellence in the accounting profession.

The IFAC Board agreed that IFAC member bodies, professional and accounting associations, and development and funding agencies need to focus on an international response to meeting the needs of professionals in developing nations, especially small and medium size practices and the enterprises they serve.

The Board's decision builds on a report submitted by Hong Kong Institute of CPAs' former IFAC Board member Peter Wong. Mr. Wong was commissioned by IFAC to investigate barriers to implementing international standards in developing nations and his report was published by IFAC in September 2004.

The main topics were practice review, standards convergence, SME Financial Reporting Framework, liability reform, the new practical experience framework for training future accountants and the relationship of PAIBs and PAIPs with the Institute.

During the question and answer period, members had many useful suggestions about implementing these initiatives, giving their views back to the Institute.

The Institute would like to hear from you on your views regarding our training. You can participate by visiting the Institute's homepage or click mini-survey to reply before 22 April 2005.

This course is registered under the Continuing Education Fund and eligible applicants will be reimbursed 80 percent of their fees, up to a maximum of HK$10,000. Register now to secure a seat!

The Institute will start accepting enrolments to the 2005 PRC CPA Uniform Examination commencing 1 April 2005 and closing on 30 April 2005. Please click here for enrolment details.