A professional body of accountants may have to cede some of its regulatory powers, such as issuing practicing certificates and investigating misconduct, under a government proposal to increase oversight of private-sector auditors.

All accountants registered with the Hong Kong Institute of Certified Public Accountants, their numbers totaling about 46,500, 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 institute is now the only body authorized by law to register and grant practising certificates to certified public accountants.

It looks set to be sidelined as the government proposes renaming the existing Financial Reporting Council as the Accounting and Financial Reporting Council, a plan presented by Secretary for Financial Services and the Treasury Christopher Hui in his latest blog on Tuesday.

The new agency will handle 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.

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.

Institute president Raymond Cheng said the government should consult the industry instead of rushing ahead with the proposal, especially when small and medium accounting firms might not have enough resources to respond promptly to the new regulations. He suggested that, when launching new rules, the authorities should minimize the effects on the industry.

The institute called an urgent meeting in the afternoon. It was reading through the proposal and would come up with a response, Cheng said.

A member of the institute’s governing council, who declined to be named, told Apple Daily that the government was trying to weaken their powers, just like it did with the city’s 18 district councils, because more than half of the 21-member council supported democracy.

It was expected that the institute would take care of only examinations, continuing programs on professional development and support for members after the regulatory revamp, the person said.

The institute’s council is made up of 14 representatives directly elected by members at the annual general meeting, two ex officio members nominated by the government’s financial secretary and director of accounting services, four lay members appointed by the chief executive, and the immediate past president.

In 2019 and 2020, the institute elected 11 pro-democracy members to the governing council. They had plans to hold a “one person, one vote” election to choose the president of the institute.

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