Bill Seeks to Establish Financial Reporting Council (15

Press release

Bill seeks to establish Financial Reporting Council (15.6.2005)

Wednesday, June 15, 2005

A Bill that seeks to establish a Financial Reporting Council will be published in the Government Gazette this Friday (June 17).

A Government spokesman said it was of paramount importance that the regulatory regime of the accounting profession be strengthened to maintain investor confidence and uphold Hong Kong's standard of corporate governance.

"Building on the strong support from the accounting profession and the public, the Government proposes setting up a Financial Reporting Council to investigate auditors' irregularities concerning listed corporations or collective investment schemes, and to enquire into non-compliance concerning financial reports of such listed entities. The proposal is of public interest and in line with international trends of upgrading the regulatory oversight of the accounting profession," he said.

"The Bill aims to provide the Financial Reporting Council with sufficient powers to conduct investigations and enquiries effectively. It also puts in place a number of checks and balances to ensure that the council will perform its functions independently and fairly," the spokesman added.

The Government consulted the public on the legislative proposals to establish a Financial Reporting Council in February this year and received overwhelming support. The proposals were also drawn up in consultation with the Hong Kong Exchanges and Clearing Limited, Hong Kong Institute of Certified Public Accountants and the Securities and Futures Commission (SFC). The main proposals set out in the Bill are:

* To establish the Financial Reporting Council as an independent statutory body comprising, with a lay majority, not more than 11 members including an ex-officio member from the Administration and other members to be appointed by the Chief Executive;

* To empower the council, through the Audit Investigation Board, to carry out investigations into suspected irregularities concerning auditors of corporations and collective investment schemes listed in Hong Kong, with reference to the powers presently afforded to the SFC under the relevant sections of the Securities and Futures Ordinance;

* To empower the council, through the financial reporting review committees, to enquire into suspected non-compliance with relevant legal and accounting requirements of the accounts and financial reports of listed corporations and collective investment schemes;

* To empower the council to refer cases and evidence obtained in investigations and enquiries to relevant enforcement agencies, professional accountancy bodies, and the court, if appropriate, for necessary legal and/or disciplinary action; and

* To put in place checks and balances corresponding to the powers to be vested in the council.

The Bill will be introduced into the Legislative Council on June 29.

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