A simple layman's introduction to corporate governance may be to describe the concept as 'the harmonious relationship between a corporation's major participants (i.e. the management team, the board of directors and the shareholders) and the outsides players such as the auditors, employees, customers, regulators, stockbrokers, suppliers, lenders, company secretaries and investing public. If the company applies for an IOP, the relationship will have to stretch to include the sponsors, investment bankers, legal advisers and professional valuers.

This concept of corporate governance also assumes a division of ownership and management. In other words, general investors will not play a hands-on role in managing the corporation, although they will rely on the corporate governance structure to ensure that those in control regularly distribute fair rewards. A good structure will also minimise conflicts between organisation's directors, management team and shareholders, and the 'outside' players.

But, how does this concept of corporate governance apply to professional intermediaries such as accountants, and what predicaments do they face?

In theory, responsibilities, risks and remuneration should be proportionally balanced for everybody in an organisation. In other words, those who bear more responsibility and accept greater risks should be better rewarded than those who don't. In really, those who call the shots often seize the lion's share of the rewards, while taking on minimum risks and passing to others as much responsibility as possible.

In some corporate cultures, the regulators tend to pick on easy targets within the regulatory framework - those who have the least say are often the most vulnerable. It is apparent that in many countries, professional intermediaries are often lumbered with huge responsibilities and, not withstanding, increasing risks of civil and even criminal liability. In the most extreme cases, when a serious problem strikes, these intermediaries are intentionally picked on by the organisation's management team and the regulators. Consequently, many have become scapegoats even though they are neither the decision makers nor the surplus.

According to press reports, Hong Kong's Administration has only applied its legal power nine under s29A of the SFC Ordinance times since 1994 to investigate mismanagement and fraud in listed companies. But, during the same time period, countless complaints have been launched against professional intermediaries which has caused substantial, negative media pressure, as well as occasional astronomical civil claims and the threats of criminal charges.

This environment cannot be described as fair for the many professional intermediaries, i.e. accountants, who are helping to create Hong Kong's wealth.

In the case of accountants, we have already been extremely proactive in taking on more responsibility in the eyes of the public, raising our own awareness to help prevent the wrong-doings of others, e.g. fraud, and constantly making constructive recommendations to improve Hong Kong's regulatory framework and our peers' professional standards.

But despite all this, the Government and the public are still asking more of accounting professionals. In fact, such is the case that the increasing responsibility and practice risks imposed on Hong Kong's auditors are gradually eroding the attractiveness of the profession for new accountants entering the auditing arena. I'm sure that many would agree that our modest remuneration now seems even more modest still.

The short-term implication may be to increase our auditing fees as compensation. This would eventually be passed on in the form of increased operating costs, reducing Hong Kong's overall competitiveness.

In the long run, the accountancy profession is hopeful that the Government will, as announced by the Financial Secretary in his recent Budget, conduct a proper review of the corporate governance practices used for monitoring IT shares. This will most probably result in accountants having to take on additional responsibilities. But if we take on more responsibility, we should also be given a greater say in the decision-making process.

I have called for the establishment by the SFC of a Professional Intermediaries Advisory Council, which would allow the profession to select its own representative to play an active role in the whole process.

Another timely and worthwhile review should be the introduction of a system of 'proportional responsibility'. This system for allocating responsibility has been piloted overseas and has proved useful for setting a reasonable responsibility limit for professional accountants.

Such system would enable us to gauge our risks and costs more accurately and would eventually help us reduce charges, enhancing Hong Kong's overall business competitiveness as a result.

I believe this system would also benefit others responsible for implementing corporate governance measures as it would allow them to assess their own responsibility and risks in a more open and fair manner.

As Hong Kong is fast restructuring its economy, it is unavoidable that the newly emerging economy will entail a certain element of risk and speculation. An ideal corporate governance structure must not stifle innovation or inhibit the high-growth potential of new businesses which deserve the chance to succeed.

However, some of them will also undoubtedly be eliminated as a result of high competition. We need to make the space to ensure that these economic 'bubbles' are burst in a controlled fashion.

To succeed in the new economy, we must aim to attract the best talent from as wide a circle as possible to work in our high-growth industries. We also need to provide a fair playing field so that all, including accountants, will find their responsibilities, risks and remuneration correctly balanced. This will give everybody the confidence to invest their money, time, energy and skills unreservedly.