The head of Hong Kong’s regulator for auditors has defended the government’s move to give the body more supervisory powers over the registration of accounting firms, saying that the move is in line with international trends.

The government has proposed renaming the existing Financial Reporting Council as the Accounting and Financial Reporting Council, with the new council handling registrations of auditing bodies and auditors of listed companies. It will also hear complaints and misconduct cases involving auditors who work for private and listed companies.

The Hong Kong Institute of Certified Public Accountants expressed shock when the government announced the reform earlier this month, saying it had not been consulted before the announcement.

Speaking on a TV program on Saturday, Financial Reporting Council chairman Kelvin Wong said that the international trend was to have an independent auditory supervisory body to ensure public confidence in the financial statements of listed companies. Wong said that Hong Kong had been slow in this regard, so there was a need to increase the independence of the city’s supervisory body.

He said that when supervising the auditors of non-listed companies in the future, the council would refer to the operating situation of small and medium-sized accounting firms and continue to use the current methods employed by the Hong Kong Institute of Certified Public Accountants for supervising and administering penalties.

Wong said the council currently employed about 50 people, which was not enough to cope with the new workload. He said that the council would draw up a new manpower budget and submit it to the government for consideration.

The 46,500 accountants registered with the Hong Kong Institute of Certified Public Accountants will be affected by the reform, which the government says is backed by the institute and four other major accountants’ groups in the city.

The Secretary for Financial Services and the Treasury Christopher Hui said that the plan would help the industry comply with requirements and improve supervision. The institute would focus on the training, qualification and licensing of accountants, and set standards of conduct and professional development, to lift the overall quality of the profession.

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