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Following is the speech by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, at the XVI World Congress of Accountants Closing Ceremony today (November 21):

President Ricol, (IFAC President), Peter, Alvin, Ladies and Gentlemen,

I am very honoured to be invited here this afternoon to be in the company of such a distinguished audience of accounting professionals, standard setters and accounting educators.

I would like to take this opportunity to congratulate all of you on the remarkable achievements of the past three days. It has been said that the value of knowledge and information is in the sharing. Having participated in the various plenaries, forum and workshops of the World Congress, you would no doubt fully subscribe to this view. The subjects covered by this Congress are broad, and the discussions and debates, I am told, have been in-depth as well as lively. In keeping with the forward looking theme of the World Congress, I would like to share with you my views of the community's expectations on the accounting profession.

Financial data, the backbone of all business transactions, have been around for ages. The first accounting principles date back to the age of our ancient forefathers and the procedures they adopted in order to verify their property. We have come a long way since then. Globalization and technological advancement have transformed the landscape within which accountants operate. The role of accountants has evolved from keeping quantitative information for internal reference to providing reliable and timely financial information to meet the needs of a wide spectrum of external users. Today, accountants are the lynch-pin of the business world.

Such changes however have not affected the cardinal principle of the profession, namely, the overriding objective of safeguarding the accuracy and integrity of financial reporting. Public expectations on accountants have remained high. Never more so than ever, in the light of recent corporate failures. The public expects accountants to have the highest ethical and professional standards. Equally important, they expect that a system is in place to ensure such standards are maintained.

How can the public expectations be met? I can see we need to work on three areas.

First, given the globalized economy, accounting standards would only be meaningful if we think in terms of a globally harmonized accounting framework. This would ensure that financial information is readily comparable across national boundaries. In this regard, the International Accounting Standards Committee Foundation, the International Accounting Standards Board (IASB), and the International Federation of Accountants (IFAC) have taken the lead and have firmly established themselves as the international standard setters for the accounting and auditing profession. I must congratulate the IASC Foundation, IASB and IFAC on their achievements.

Secondly, to meet public expectations, we need domestic infrastructure that converges with international standards. By convergence, I mean both in terms of professional standards and regulatory approach. We are already seeing harmonization taking good shape. In Hong Kong for example, good progress has been made by the Hong Kong Society of Accountants in harmonizing Hong Kong Statements of Standard Accounting Practice with the International Accounting Standards (IASs). The auditing and ethical standards are also in the process of being aligned with those set out by IFAC. All publicly listed companies in the European Union will prepare financial accounts for consolidated statements according to IASs from 2005. In the United States, the US Financial Accounting Standards Board and IASB will work together toward greater convergence between IASs and the US Generally Accepted Accounting Principles. From experience, harmonization cannot be achieved overnight, and the process is by no means straight forward. We need to adopt a pragmatic approach, provide for sufficient consultation and, where necessary, allow latitude to take into account domestic circumstances.

Thirdly, hardware and standards are only as good as the people seeking to apply and enforce them. Hence, it is important that the profession is in a position to retain the best practitioners, attract high calibre candidates to join the trade, and provide them with adequate training. Not only will such candidates need to be competent numerically, but they will also need to master the skills of communication and, above all, they should be people of integrity. This will ensure a profession that is in a position to impose on itself the highest professional and ethical standards and contributes to the better good of society. As Premier Zhu said in his Opening Address to the World Congress, 'make no false account'. In this connection, we look to IFAC to continue to set benchmarks on accounting education and professional ethics. Our accounting educators also have a vital role to play in this regard.

Ladies and gentlemen, we have come a long way, in all respects, since the first World Congress of Accountants held in St. Louis (US) in 1904. While progress has brought with it a world of growth and opportunities, it has also heightened community expectations of the accounting profession. This is a critical time for the profession: time to reflect on its past achievements, and to consider and take action on areas for improvement. I am sure that under your able leadership, the profession will rise to the challenges ahead and continue to inspire confidence in the community.

In closing, I would like to thank all of you for visiting the Hong Kong Special Administrative Region. In between your very full programme and busy schedule in the past three days, I hope you have found some time to enjoy what Hong Kong, the City of Life in Asia, has to offer. For those who could stay on for an extra day or two, I hope you will do some shopping and thus contribute towards our economic welfare; and for those who have planes to catch later today, I wish you a safe journey home. I am sure all of you will bring home with you both fond memories of Hong Kong and refreshing and stimulating ideas from the World Congress.

Thank you.

End/Thursday, November 21, 2002

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