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Speech by SFST at Hong Kong Institute of Certified Public Accountants Award and Graduation Ceremony 2006 (English only)

    Following is a speech by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, at Hong Kong Institute of Certified Public Accountants Award and Graduation Ceremony 2006 today (September 12)(English only):

Distinguished guests, ladies and gentlemen,

     Good evening.  Attending an occasion of accomplishment such as this is always a source of great pride and pleasure.  On this very special day which marks your entrance into the accountancy profession, I would like to begin by congratulating you on your successful completion of the HKICPA's Qualification Programme.  You are going to hold a globally recognized and respected qualification that opens doors to the business and financial markets worldwide, launching you on the path towards a fulfilling career in the accountancy profession.  

     When Paul, your Institute's President, asked me to give some words of encouragement this evening, I had no hesitation in accepting his kind invitation.  Although I am not a CPA myself - I am not privileged enough to become one - I have always enjoyed my every encounter with accountants, both within the Government and outside.  

     As Secretary for Financial Services and the Treasury, I work closely, and indeed count on, the professional work of many highly qualified treasury and tax accountants in the Government in managing the public finance.  Besides, I meet many senior members of your profession from time to time and benefit from their wise counsel as they serve in many public appointments in important regulatory bodies in the financial services sector.  I therefore appreciate the chance this evening to meet aspiring future CPAs.  I can confidently assure you that you have joined a profession which has an excellent reputation built up by many people with good conscience who have gone before you.  

     So while the successful completion of your Qualification Programme brings you great joy and promise, before you launch into this honourable profession, it is opportune to think again on what has made the accountancy profession a well-respected "profession".    

     As CPAs, you must already know a great deal about financial reporting standards, taxation principles, companies and securities laws and so on.  This is clearly important but such knowledge alone is not what distinguishes you as a true accounting professional.  CPAs are accorded professional standing because of their unwavering commitment to the values of ethics, integrity and accountability.  Accounting standards may change over time, but the core values of the profession themselves have not.  They have remained constant, serving as the foundation for everything else.  A CPA is regarded as a true "professional" only when he embodies those core values of integrity and accountability in addition to the requisite technical knowledge.  

     Remember that duty and honour always go hand in hand.  The "CPA" title is not only a badge of honour but also a mark of duty.  The public trust commanded by the accountancy profession is not a windfall, but rather arises from the genuine public expectation that accountants and auditors will serve diligently as gatekeepers in the financial reporting system and act dutifully in the public interest.  The HKICPA's Standards of Professional Ethics begins with a catchy sentence - "A member of the profession owes a duty to the public".  I cannot agree more.  Accountants must, and must be seen to, conduct themselves from the perspective of what is best in the public interest.  

     While Enron and Worldcom are still quite fresh in our minds, recent alleged governance problems uncovered locally in a few listed companies and securities firms highlight yet again the challenges facing the accountancy profession.  Justified or not, those events have somewhat tainted the reputation of the profession.  As you embark on your careers, regardless of the different roles you play, you must constantly stay vigilant.  Company accountants are charged with preparing accounts in a fair and honest manner, while auditors should take a more risk-based approach to detect indications for fraud beyond the mere line items of a balance sheet.  Always remember what the former Premier Zhu Rongji said when he visited Hong Kong in 2002: "Never produce false accounting statements!(不造假帳)"  Only by guarding against irregularities in every aspect of the accounting operations can we safeguard the integrity of our financial reporting regime.

     As the practice of accountancy is getting increasingly commercialised, senior members of your profession may rightly warn you that, in the careers before you, you will no doubt be faced with ethical dilemmas.  When you find yourself in such situation, my advice to you is this: Stay alert and hold steadfast to your professional values and duties.  You must not, in order to win a short-term client, sacrifice your professional and personal integrity.

     Every profession needs stringent oversight and quality control.  Accountants are no exception.  For many years, HKICPA has operated a self-regulatory framework with statutory functions to conduct investigations, disciplinary actions and practice reviews.  However, following the tightened regulation of accountants in other major financial centres in the post-Enron era, there is increasing public expectation for greater independence and effectiveness in the regulation of CPAs in Hong Kong.  

     With the Financial Reporting Council Ordinance enacted by the legislature in July 2006, the Government is setting up the independent Financial Reporting Council (FRC) to investigate auditing and reporting irregularities associated with listed companies and collective investment schemes.  The FRC will conduct investigations, then refer cases to the HKICPA for disciplinary procedures.  The HKICPA will remain responsible for conducting practice reviews.  We expect the FRC to begin operation formally in early 2007.  The enhanced regulatory regime will be a significant step towards further reinforcing the confidence of the investing public.  

     Regulation itself, however, will not ensure ethical accountancy practice because, at the heart, we rely on each one of you to uphold the highest degree of honesty and integrity at your work place every single day.  Continuous professional education, practice reviews and oversight by the HKICPA and FRC are prudent and necessary measures in helping you become a successful and responsible accountant, but, in the end, the ethical standards guiding your professional pursuit will be the guarantor of an honourable and rewarding career.

     Before closing, I would like to share with you the insights from a Chinese saying that "a journey of a thousand miles begins with the first step" (千里之行,始於足下).  You have today taken the wise first step of joining this reputable profession, a profession which is an integral part of Hong Kong's success as an international commercial and financial centre.  Always let ethics and integrity be your compass, so that as you progress in this distinguished career, the enduring values and ideals will never allow you to veer away from the proper path.    

     Finally, I thank you again for allowing me to share your special day, and I wish you all distinguished careers that will carry the profession, Hong Kong and China to greater heights.  Thank you.

Ends/Tuesday, September 12, 2006
Issued at HKT 19:28