The Second Session of the Tenth National Committee of the Chinese
Proposal: Regarding public practice of and mutual recognition of accreditation for certified public accountants on the Mainland and Hong Kong
Primary Proposer: Eric Li Ka-cheung, CPPCC member
Discussion Group: 49 (Hong Kong)
Contact Number: (852)28274336 For Public Release: Yes
Government department(s) expected to take follow-up action (for reference): Ministry of Finance
Submission Date: March 3, 2004
public practice of and mutual recognition of accreditation for
Mutual Recognition of Professional Qualifications
The signing of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) in September last year made it clear that mutual recognition of professional qualifications between both sides is encouraged, and professional exchange should be facilitated in terms of professional skills and talents. Government bureaux and professional organizations of both sides will investigate, negotiate and identify specific modes for mutual recognition of professional qualifications.
Furthermore, with China’s accession to the World Trade Organization, provincial and municipal government bureaux and organizations such as those in Shanghai, Shenzhen, Tienjin, Shandong, Jilin, etc., have expressed their interest in collaborating with the accounting profession in Hong Kong. They believe that this collaboration will enable both parties to play a complementary role and to explore business opportunities together.
Partial Exemption from Examination
However, the differences in economic and legal systems in both places have led to consequential variation in the modes of examination, the training of accountants and the requirements of practical experience of both sides. In view of this, it may not be feasible to call for immediate full mutual recognition for the time being.
In accordance with the principles of CEPA and the existing situations in Hong Kong and the mainland, this proposal suggests that, as an initial step in the mutual recognition of certified public accountants (CPAs) qualifications across the border, consideration should first be given to granting partial exemption for CPAs from examinations held by respective statutory licensing bodies of accountants of both sides.
For example, the Chinese Institute of Certified Public Accountants (CICPA) can consider exempting Hong Kong Society of Accountants (HKSA) members who have completed the professional qualifications programme offered by HKSA from the three papers on Accounting, Financial and Cost Management, and Auditing of the CICPA unified national examination for certified public accountants. HKSA, on the other hand, can consider granting exemption for CICPA members who have passed the CICPA unified national examination from taking the examination of the three modules on Financial Reporting, Financial Management, and Auditing and Information Management. This mutual examination exemption proposal would help speed up the process of mutual recognition of professional qualifications of both sides.
Set up Joint Working Committee to Investigate Implementation Details
On the basis of an agreement reached among HKSA, the Ministry of Finance and CICPA in principle, a joint working committee should be set up as soon as possible to investigate the implementation details of the mutual examination exemption. The investigation should be completed within 6 months in view of the restricted time frame of CEPA.
Tutoring and Bridging Programme Arrangements
To encourage more people who wish to purse a career in professional accounting services to participate in the examination and to raise the pass rates, professional organizations of both sides could even study the possibility of appointing specific academic organizations to co-ordinate and arrange for tutoring programmes in places including Beijing, Shanghai, Guangzhou, Shenzhen and Hong Kong.
In addition, it is suggested that a bridging programme be put in place for members of the statutory licensing bodies of accountants of both sides whose memberships are obtained by ways other than taking the required examinations so that they can enjoy the benefits of mutual examination exemption on completion of the programme.
As regards the examination frequency and dates, it is suggested that two rounds of examination could be held annually. Candidates can sit for the examination in Beijing, Shanghai, Guangzhou, Shenzhen or Hong Kong. They can choose to answer in the language they prefer. Hong Kong candidates can answer in either simplified/traditional Chinese or English.
Professional organizations of both sides can establish an office in the cities mentioned above to coordinate the professional examinations.
Suggestions for Public Practice across the Border
According to the principle of CEPA, the arrangement for the setting up of CPA firms to conduct public practice across the border can be made with reference to “The Measures for the Management of Associations Formed by Law Firms of the Hong Kong Special Administrative Region or the Macao Special Administrative Region and Mainland Law Firms” to authorize CPA firms of both sides to set up similar joint venture practices across the border.
This kind of joint venture does not possess the status of an independent legal person. Rather, it is a joint business between the CPA firms in Hong Kong and on the mainland which operates in accordance with the rights and duties set out and agreed by both parties. The joint venture can provide professional accounting services to their clients, but Hong Kong CPA firms and the CPAs of these joint ventures are not authorized to offer audit and assurance services provided by their counterparts on the mainland.
The implementation of the mutual recognition of accreditation for CPAs and public practice on the mainland and in Hong Kong involves the collaborative discussion and approval of the Ministry of Finance of the State Council and the Financial Services and the Treasury Bureau of the HKSAR. Such a guarantee of the quality and quantity of CPAs will certainly enhance the improvement of the accounting profession in both markets.