Issue 4 Volume 19 October 2023 DRIVING BUSINESS SUCCESS OVERSEEING SUCCESS Tim Lui, Chairman of the Securities and Futures Commission, on how the regulator takes on market development, and accountants’ role in driving sustainability B CORPS Hong Kong B Corporations share key learnings from the certification process DIGITAL SKILLS A roundtable of experts discuss new technologies and the skills CPAs need in the digital era SECOND OPINIONS How can CFOs play a central role in accelerating digital transformation? PLUS: 50th anniversary special:
PRESIDENT’S MESSAGE APLUS October 2023 1 Loretta Fong President Dear members, “ We hope that by recognizing the broad shoulders we stand on, we will see the platform we share, of which we, and future generations of the profession, can build our own legacy upon.” As we approach the end of the year, I am excited to share several updates and important events with you in the last quarterly issue of A Plus of 2023, and also my final message in the magazine before the next Council election in December. First and foremost, I am thrilled to see the Institute’s 50th anniversary celebrations continue with the special CityBus and MTR branding campaign bringing more awareness of the Institute and its members’ achievements to the public. Public buses and a section of the Admiralty MTR station adorned with our 50th anniversary branding and messages were launched in October and will run until mid-November. These advertisements serve as a tribute to the Institute and its members’ crucial roles in making Hong Kong a bona fide international financial centre over the past 50 years, and it is important that we are able to share those messages to ensure members receive the recognition that aligns with the tremendous roles they play in society. Of course, our celebrations will come to a conclusion with the Gala Dinner to be held in December. This will be a special occasion where we intend to give recognition to the history of the Institute, and the development of our beloved profession throughout the past five decades. We hope that by recognizing the broad shoulders we stand on, we will see the platform we share, of which we, and future generations of the profession, can build our own legacy upon. I hope to see you there at the event. Traditionally, the Institute has focused on offering a public response to the each year’s Budget by the government. This year, we also made the effort to share our thoughts on the Chief Executive’s 2023 Policy Address. We welcomed the government’s commitment to reinforcing Hong Kong’s international financial centre status, particularly initiatives outlined in the policy address to promote green finance, improve stock market liquidity, the development of Hong Kong as a regional intellectual property trading centre, and talent integration across the Greater Bay Area. As we celebrate our 50th anniversary, the Institute remains committed to collaborating with stakeholders to strengthen the professional services in the accounting sector, ultimately enhancing Hong Kong’s status as an international financial centre and an attractive location for investment, and contributing to our nation’s success. Indeed, our profession has an important role to play in converging the paths to success for both our city and the nation as a whole. In September, we were proud to hold a remarkable celebration dinner to commemorate the 74th National Day of the People’s Republic of China. The event brought together the Institute, the Association of Hong Kong Accounting Advisors, Hong Kong Association of Registered Public Interest Entity Auditors Limited, Hong Kong Business Accountants Association, and The Society of Chinese Accountants and Auditors at the JWMarriott Hotel Hong Kong. With approximately 470 participants in attendance, the evening was a true testament to unity and solidarity within the accounting profession. I also had the immense honour of representing the Institute, alongside other Hong Kong delegates, at the Third Belt and Road Forum for International Cooperation held in Beijing in October. The forum provided valuable opportunities for representatives from participating countries and jurisdictions to collaborate and explore ways to achieve win-win situations. International cooperation is vital in maximizing the impact of sustainable development worldwide. In his inspiring speech, President Xi Jinping presented the eight major steps to support high-quality belt and road cooperation, one of which was to promote green development. As a mature centre for raising capital, Hong Kong has an excellent advantage in facilitating low carbon or zero carbon transition across the belt and road. The accounting profession in Hong Kong will have a critical role when this comes into play, and it will be an exciting opportunity for us to contribute to Mainland China’s “Belt and Road Initiative.” As President of the Hong Kong Institute of CPAs, it has been truly an honour to represent our esteemed Institute and I feel privileged to have had the chance to share the Institute’s developments through A Plus. By the next issue, a new president will be sharing his or her message with you, and I will continue to enjoy the content as a proud member – just like you. Together, we will continue to drive the profession forward, making significant contributions to Hong Kong’s economic growth and the development of the accounting industry. Thank you for your unwavering support, and I look forward to celebrating our remarkable 50-year legacy with you at the Gala Dinner.
CONTENTS Issue 04 Volume 19 October 2023 NEWS 01 President’s message 04 Institute news 07 Business news FEATURES 08 50th Anniversary Interview Series: Tim Lui The Chairman of the Securities and Futures Commission on adapting to emerging market trends, and why he’s a proud Institute member 14 Riding the digital wave: Takeaways for the profession A roundtable discussion on the opportunities and potential pitfalls of new technologies in the profession 20 Becoming better: Navigating Hong Kong’s B Corp movement A look at the growing B Corp movement in Hong Kong, and how companies became certified SHORT PROFILES 30 Q&A with a PAIB Carol Yu, Senior Finance Manager at Hong Kong Arts Centre 31 Q&A with a PAIP Jet Chu, Senior Director at Alvarez and Marsal Asia Limited 42 Young member of the month Arthur Lai, Senior Consultant at FTI Consulting COLUMNS 27 Thought leadership: Ada Chung The Privacy Commissioner for Personal Data on how the profession could embrace generative artificial intelligence while managing its privacy and ethical risks 28 Second opinions How can CFOs play a central role in accelerating digital transformation? The Institute hosts a roundtable discussion on the current development of new technologies, and the role of accountants in today’s digital environment 30 Q&A with a PAIB 31 Q&A with a PAIP 14Riding the digital wave: Takeaways for the profession
DRIVING BUSINESS SUCCESS About our name A Plus stands for Accounting Plus. It represents a profession that is rich in career options, stays relevant amid rapid changes, and adds value to business. This magazine strives to present the global mindset and varied expertise of Institute members – Accountants Plus. Editor Gerry Ho Email: gerry.ho@mandl.asia Managing Editor Jemelyn Yadao Contributor Jolene Otremba Registered Office 2/FWang Kee Building, 252 Hennessy Road, Wanchai, Hong Kong Advertising enquiries Advertising Director Derek Tsang Email: derektsang@mandl.asia ISSN 1815-3380 President Loretta Fong Vice Presidents Roy Leung Edward Au Chief Executive and Registrar Margaret W. S. Chan Director of Corporate Communications Rebecca Tam Publication Manager Michael Wong Editorial Coordinator Maggie Tam Office Address 37/F, Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong Tel: (852) 2287-7228 Fax: (852) 2865-6603 Member and Student Services Counter 27/F, Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong Website: www.hkicpa.org.hk Email: hkicpa@hkicpa.org.hk 44 Meet the speaker The archived webinar of the Institute’s 50th anniversary flagship event CPA Congress features a panel discussion on Hong Kong’s role in ESG and green finance SOURCE 34 A review of the impairment of financial instruments A summary of the Institute’s response to the IASB Request for Information on the impairment of IFRS 9 37 Addressing the talent shortage in accounting A n overview of the Institute’s study which identified core messages to attract talent and approaches for talent retention 38 Hong Kong’s family office regime poised to draw Asia’s wealth A look at whether Hong Kong’s family office regime makes the city a highly competitive family office location 40 Technical news 42Young member of the month A Plus is the official magazine of the Hong Kong Institute of Certified Public Accountants. The Institute retains copyright in all material published in the magazine. No part of this magazine may be reproduced without the permission of the Institute. The views expressed in the magazine are not necessarily shared by the Institute or the publisher. The Institute, the publisher and authors accept no responsibilities for loss resulting from any person acting, or refraining from acting, because of views expressed or advertisements appearing in the magazine. ©Hong Kong Institute of Certified Public Accountants October 2023. The digital version is distributed to all 47,782 members, 12,713 students of the Institute and 2,183 business stakeholders every quarterly. 20 Becoming better: Navigating Hong Kong’s B Corp movement Hong Kong companies that went through the process of becoming a B Corporation, or B Corp, share their experiences, and how accountants can play an essential part in a company’s B Corp journey
The Institute’s suite of celebratory events and activities marking its 50th anniversary is in full swing. It held the 50th Anniversary Cup horseracing event in June and the well-received CPACongress in July. The festivities will finally culminate in the 50th Anniversary Gala Dinner, which will be held on 4 December at the Hong Kong Convention and Exhibition Centre. Members are invited to join in an unforgettable evening of celebration and recognition. Book your seat or become a sponsor now to share this joyous moment with us. As part of the 50th anniversary celebrations, the Institute has also launched its special CityBus and MTR branding campaign (pictured right), establishing a positive and esteemed image of Institute members and the profession in the public domain. Celebrate the profession by posting a selfie or story on social media with the hashtag #50YearsOnTheMove when you come across the ads. A video commemorating the Institute’s golden jubilee has also been produced, highlighting key milestones in the Institute’s development over the past 50 years. A4S ABN members collaborate for thought piece Member bodies of the Accounting for Sustainability (A4S) Accounting Bodies Network (ABN), including the Institute, collaborated in celebration of the network’s 15-year anniversary to share views on how the profession may transform in the future in a thought piece, titled “Transforming the profession – the future of accountancy.” The collection of insights focuses on how systems, technology and skills will change the profession in the near future, and what accounting bodies need to do to support their members in adapting to this. It features videos from the leaders of the global accounting profession, including Institute Chief Executive and Registrar Margaret Chan, who presents her thoughts on leveraging technology for a sustainable future. Read the full content here. Renewing membership for 2024 The 2024 renewal notice was issued to all members on 3 October. To complete the renewal process, members should follow the steps below on or before 15 December: (i) submit the annual return for membership renewal, which includes your continuing professional development declaration and fit and proper declaration; and (ii) pay the annual fee online. Visit here to renew or check your renewal status. NEWS Institute news Business news 4 October 2023 A continuous celebration: The Institute’s 50th anniversary
APLUS Disciplinary findings Chan Yui Hang, CPA (practising) Complaint: Failure or neglect by Chan to observe, maintain or otherwise apply the fundamental principle of Professional Behaviour in section 500.5(e) of the Code of Ethics for Professional Accountants (code of ethics), and breach of the duties of reporting openly to those interested in the liquidation and retaining overall control of the engagement under sections 500.40 and 500.43 respectively of the code of ethics. In addition, the Disciplinary Committee found Chan was guilty of professional misconduct. Chan appealed against the committee’s decision. His appeal was dismissed by the Court of Final Appeal on 7 September 2023. Chan was the sole liquidator of a Hong Kong private company which went into voluntary liquidation in December 2012. In conducting the liquidation, Chan breached the requirements of the Companies (Winding Up and Miscellaneous Provisions) Ordinance and Companies (Winding-up) Rules by failing to convene valid annual creditors’ meetings for four consecutive years and to file his liquidator’s statements of account for six periods with the Companies Registry within the prescribed time. Chan also failed to retain overall control of the liquidation when he delegated some of the liquidation work to a third party. In addition, Chan made payments of liquidators’ fees of some HK$4.7 million to himself out of the company’s funds without obtaining proper approval from the creditors of the company. Decisions and reasons: Chan was reprimanded, and his practising certificate was ordered to be cancelled on 15 October 2020 with no issuance of practising certificate to him for 12 months. In addition, Chan was ordered to pay a penalty of HK$100,000 and costs of the Institute of HK$215,187. In making its decision, the Disciplinary Committee noted that Chan had shown blatant disregard for the legal requirements while he was the liquidator of the company and he was actually prosecuted by the Companies Registry. In the circumstances, he had no doubt damaged the reputation of the accountancy profession. The 12-month cancellation period was initially ordered to run consecutively following another disciplinary order made against him in a separate complaint. He appealed against the disciplinary order which has been remitted back to be heard by a different disciplinary committee. With this separate complaint under deliberation by the new disciplinary committee and the final disposal of Chan’s appeal by the Court of Final Appeal, the cancellation of practising certificate and the 12-month non-issuance period was commenced on 19 October 2023. Ng Kay Lam CPA (practising) Complaint: Failure or neglect, without reasonable excuse, to comply with a direction issued by the Practice Review Committee (PRC) under section 32F(2)(b) of the pre-amended Professional Accountants Ordinance. The Institute scheduled a follow-up practice review of Ng’s practice, K.L. Ng &Company, in 2017. This did not take place due to Ng’s refusal to cooperate. As a result, the PRC issued a direction requiring Ng to accommodate the practice review visit in 2018 and provide certain information for the review. Ng failed to comply with the PRC’s direction. Decisions and reasons: The Disciplinary Committee ordered the practising certificate issued to Ng be cancelled with effect from22 July 2021 and no practising certificate shall be issued to him for 24months. In addition, Ngwas ordered to pay costs of the disciplinary proceedings of HK$174,866. Whenmaking its decision, the committee noted that Ng had not shown any remorse, and that he put forward numerous irrelevant and unnecessary arguments in an attempt to prolong the proceedings. The committee took the view that any such attempt should be deterred. Ng appealed the committee’s decision. Following the Court of Appeal’s dismissal of the appeal inMay 2023 and it’s decision on costs against Ng in September 2023, the practising certificate of Ngwas cancelledwith effect from 25 October 2023. Details of the disciplinary findings are available on the Institute’s website. Call for Council and committee applications The Institute’s Nomination Committee is inviting applications for 2024. Members interested in contributing to the development of the profession in a meaningful way next year can put their names forward to join the Council as a co-opted member or committee members. Members can learn more about the committees from the Institute’s website and should submit the nomination form before 24 November. Views needed on proposed QP interim qualifications As one of the initiatives under the Strategic Plan 2023, the Institute is exploring the potential of offering Interim Qualifications (IQ) as another interim recognition point within the Qualification Programme (QP). Members are invited to complete a survey by 7 November, which will help us in assessing the feasibility and gauge the market demand for the proposed IQ. More details here. Council meeting minutes The abridged minutes from the July and September 2023 Council meetings are now available. October 2023 5
NEWS Business €1.5 billion The amount Stellantis, the world’s fourth-largest car manufacturer, said it will invest for a 21 percent stake in Chinese electric vehicle (EV) start-up Leapmotor, in a bid to gain a foothold in Mainland China, the world’s biggest car market by sales. As part of a joint venture, the European carmaker will have exclusive rights to build and sell Leapmotor products outside Greater China. The deal follows a tie-up between Volkswagen and Chinese EVmaker Xpeng, announced in July. The Hong Kong government may face a fiscal deficit of more than HK$100 billion, Financial Secretary Paul Chan said on RTHK on 27 October, citing a slower-thanexpected recovery following the COVID-19 pandemic and reduced revenue from land sales and stamp duty. Chan previously forecast a deficit of HK$54.4 billion for the 2023-24 fiscal year during his February budget. “The economic cycle has its ups and downs, and it is crucial to continue developing the economy,” Chan said. October 2023 7 US$250 billion The amount that could be raised annually through a global minimum tax on billionaires, according to the EU Tax Observatory’s 2024 Global Tax Evasion Report. The sumwould be equivalent to 2 percent of the nearly US$13 trillion in wealth owned by the 2,700 billionaires globally, said the research group. 2 years The amount of greenhouse gas emissions behind each newApple Watch, which are offset with highquality carbon credits from naturebased projects, according to the tech giant. In September, Apple introduced the newApple Watches, presenting them as carbon-neutral products, which prompted scrutiny from European environmental and consumer groups. “Carbon neutral claims are scientifically inaccurate and mislead consumers,” Monique Goyens, Director-General of BEUC, a European consumer organization, told the Financial Times. The starting validity period of new multiple-entry visas to Mainland China which foreign staff of overseas companies registered in Hong Kong may apply for. The policy, announced in Chief Executive John Lee’s 2023 policy address on 27 October, was welcomed by foreign business chambers, believing it will streamline travel within the Greater Bay Area for foreign businesspeople based in the city. The percentage of chief financial officers who see hybrid work as a top way to meet savings targets amid ongoing economic uncertainties, according to IWG, a provider of flexible workspaces. The company surveyed more than 250 United States-based CFOs for its CFO& HybridWork Survey. Of the survey respondents, 79 percent say CFOs act as a decision maker when it comes to office space decisions. 81% APLUS 7-12 kg – Bivek Sharma, Chief Operating Officer for Tax, Legal, and People at PwC U.K. PwC announced that it has teamed up with OpenAI, the creator of generative artificial intelligence (AI) technology ChatGPT, to provide its clients with AI-generated advice on tax, legal and human resources matters. The AI system, which is being rolled out in the United Kingdom, will be used for tasks such as conducting due diligence, identifying compliance issues, and recommending whether to approve business deals. “[The new AI system is already] behaving like a 25-year tenure partner.” 89% in 2021 Sustainability reporting grew from 84 percent in 2019 to 89 percent in 2021, and assurance rates grew from 37 percent in 2019 to 48 percent in 2021, for jurisdictions in Latin America, Africa, the Middle East, and Southeast Asia, as well as smaller economies within the European Economic Area and Switzerland, according to the International Federation of Accountants’ (IFAC) The State of Play: Beyond the G20. The report expands IFAC’s sustainability disclosure and assurance data to additional jurisdictions beyond the G20 previously reported on. >US$1 billion Midea, Mainland China’s largest home appliance maker, filed for a Hong Kong listing on 24 October in what could be one of the biggest initial public offerings (IPO) in recent years. The IPO could raise more than US$1 billion subject to changes in market conditions, reported the South China Morning Post, and the stock could start trading early next year.
PROFILE Tim Lui With a career in the profession almost as long as the Institute’s existence, Tim Lui, Chairman of the Securities and Futures Commission, has seen the roles of accountants change, and their responsibilities increase. He talks to Jemelyn Yadao about how Hong Kong can maintain its status as a global financial centre, the role CPAs should play in sustainable development, and his extraordinary time as Institute president It’s 1997, a historic year for both the city and the Hong Kong Society of Accountants, now the Hong Kong Institute of CPAs. With the imminent return to Chinese sovereignty, the Society sees local members taking up the positions of president and both vice-presidents. “I got Aloysius Tse on one side and P.M. Kam on my other side. It was quite a moment,” says Tim Lui, Chairman of the Securities and Futures Commission (SFC), who was a partner at Coopers & Lybrand (now PwC) when he was elected president of the Institute in a year like no other. Lui remembers a great deal of his time as president being spent on boosting ties with accounting professionals on the Mainland. “Of course, interaction with the Chinese Institute of CPAs took on a newmeaning. At that stage, their footprint was not very visible on the international stage. We worked together so that both of us could go out [to the world] together,” says Lui. The Institute’s post-1 July transition went smoothly, he recalls. “That was very satisfying. It also opened the door for a lot of interaction with our counterparts in the Mainland, and the relationship has blossomed since.” Keeping Hong Kong competitive Born in 1989, the SFC is charged with oversight of the securities and futures markets of Hong Kong. It puts up a robust regulatory framework and achieves the highest level of compliance through supervision, market surveillance and enforcement actions, says Lui, who joined the regulator as Chairman in 2018 after retiring as senior advisor at PwC. While regulatory work is a key function of the statutory body, Lui emphasizes that regulation is just one of the pillars to buttress Hong Kong’s status as an international financial centre. “Regulation is one side of the equation; development of the market is the other. You need both and a very fine balance between them. I think we can actually achieve this,” says Lui. Over the years, the SFC has supported development and technological advancement. “Market development is Photography by Jocelyn Tam CREATING THE NEXT GOLDEN ERA 50th Anniversary Interview Series: 8 October 2023
APLUS October 2023 9
PROFILE Tim Lui assuming more significance nowadays because of the competitive nature of markets across the world, and we adopt a rather multifaceted approach to this,” says Lui. For example, strengthening Hong Kong’s role as the bridge between the Mainland China and global markets remains one of the regulator’s priorities. The SFC has been working with Mainland authorities for years to expand the mutual market access programmes, particularly the Connect schemes. Lui highlights that there are over 1,400 Mainland companies listed on the Stock Exchange of Hong Kong Limited (SEHK), accounting for more than half of all listed companies here. The figures reflect the important role of Mainland companies in Hong Kong’s stock market. “Hong Kong has to maintain its status as a capital market of choice for Mainland companies. And for international investors, they would like to invest in China through a platform that they are familiar with, and Hong Kong has always instilled confidence among them. We are very mindful of this, so one of our main tasks is to engage in constant dialogue with our counterparts to see how we can mutually expand these Connect programmes. Not just stocks but also other products including those which are not currently available.” Enhancements to the GuangdongHong Kong-Macao Greater Bay Area Wealth Management Connect (WMC) Scheme and the MainlandHong Kong Mutual Recognition of Funds (MRF) scheme are currently in the works. “We’re pleased that all relevant parties have agreed on the enhancements to the WMC scheme, which include broadening the range of eligible investment products, expanding the scope of eligible investors and allowing more institutions such as securities firms to participate,” says Lui. “The SFC also maintains discussions with the China Securities Regulatory Commission (CSRC) to expand mutual market access for public funds.” An agile regulatory approach Lui believes that in a world that is constantly changing, agility and adaptability are important for keeping up with the pace of development. It is the rationale behind the SFC’s approach to market development. “The agile regulatory environment enables us to promptly adapt and move with the times, to address challenges, and also tap the opportunities in fast-changing markets, especially after a long period of COVID and its repercussions, global inflation, monetary tightening, etc.” Giving an example of how the regulator adapts to emerging market trends, Lui brings up the SFC’s licensing regime for centralized virtual asset trading platforms (VATPs). The regime, which came into effect on 1 June 2023, closes the gap in the SFC’s licensing and supervision powers over VATPs. “We went through quite a unique journey in terms of how to cope with VATPs given numerous challenges. Years back, these platforms were not within the legal ambit of the SFC. But we see the need to regulate as virtual assets are growing in popularity as an investment asset class in Hong Kong,” says Lui. Under the new regime, VATPs need to be licensed by the SFC to provide virtual asset trading services in Hong Kong. Overall, while the SFC takes a neutral approach to technology and embraces innovation, it does so without compromising investor protection. “Take the VATP regime as example. If you look at the regulations, you’ll see that we’re putting in place stringent guardrails such as governance procedures, segregation of assets, token admission and other measures while we allow retail participation, Tim Lui, Chairman of the Securities and Futures Commission, was elected president of the Hong Kong Society of Accountants, now the Hong Kong Institute of CPAs, in the year of the handover. He was also chairman of the Institute's former Taxation Committee for 12 years. 10 October 2023
APLUS learning from the FTX collapse and others,” says Lui. Driving sustainability In July, the International Organization of Securities Commissions (IOSCO) endorsed the International Sustainability Standards Board’s (ISSB) sustainability-related financial disclosures standards, prompting the SFC and other member securities regulators to adopt and apply the standards in addressing sustainability-related risks and opportunities. Lui proudly points out that the SFC has been an early contributor in the global discussion on sustainability, partly thanks to its former chief executive officer, Ashley Alder, serving as IOSCO board chair for six years. “I have to give a lot of credit to our colleagues here,” he says. “Very early on, we decided that sustainability is important and we need to be on top of it, and at the appropriate time, see what Hong Kong needs to do to be at the forefront of this.” That time is now, and the SFC is working closely with SEHK on local implementation of the standards. “In terms of how to mandate climate-related information reporting by listed companies, SEHK has launched a consultation on this, which will be concluded in due course.” An important part of the process will be to work with the CSRC, says Lui, given the number of Mainland companies listed in Hong Kong. “If we’re going to achieve anything, we need these Mainland enterprises to fall in line as well, and that’s why we need to actively engage with CSRC.” He notes that successfully implementing the ISSB standards in Hong Kong will require a lot of work, but this is important for the city’s positioning in the long term. “Climate disclosure is a very complicated subject matter. We would need to deal with pragmatic issues like the timeline and consider whether different approaches exist to achieve the same result – a proportionate approach is currently preferred. We still need to work on these, but the commitment is to be one of the earliest jurisdictions to do this, and showcase it to the world.” Another goal is to enable Hong Kong enterprises to keep carbon emission levels under control. “Achieving Hong Kong’s climate goal as well as the nation’s will be beneficial globally. But these are very tough targets so we all have to work together to get there,” adds Lui, referring to Mainland China’s “30-60” climate goals (to achieve peak carbon by 2030 and carbon neutrality by 2060). Lui sees huge potential for the accounting profession in the area of sustainability. He highlights that auditors have long been the key to the integrity of Hong Kong’s financial system, and will equally play a key role in the sustainability reporting ecosystem. “By continuing to uphold their professional values and ethics in conducting sustainability-related work, auditors can help strengthen market confidence as well as drive best practices across companies,” says Lui. Transition finance in particular presents a major opportunity for CPAs, he says. While green transition is essential, it won’t come cheap, and financing such a transition will be a major challenge. “In China, the green segment accounts for only about 10 percent of the country’s gross domestic product, which means that 90 percent of its economy would require a low carbon transition. A lot of transition finance will be needed, and accountants clearly have a role to play in terms of assessing, auditing as well as advising on green finance products.” Top of his game “It has been a tremendous journey for me,” says Lui, looking back at his career – from his 40 years at PwC to establishing himself as a tax expert, and to his return to Hong Kong during the city’s golden era. After graduating from university in the United Kingdom, Lui joined Coopers & Lybrand in London in 1978. The choice at that time was either a career in accounting or law. “Both skill sets, I think, are very essential to whatever you want to do in the future. You can stay in the profession or move into other areas,” he says. “Coopers accepted me, so I gladly joined them as an articled clerk, and never looked back.” After two years in the assurance business, an opportunity came up for Lui to try out other areas at the firm. He moved to taxation and, as he puts it, fell for it. “Tax advisory work is coming up with the most effective structuring of either a transaction or deal, and you need to be on top of your game to do that. The client is very appreciative of your work and you get immense satisfaction from that.” He adds that in those days, with the interaction between Hong Kong and the Mainland, and between the Mainland and the world, China tax specialists were keenly sought after. Lui served as chairman of the Institute’s former Taxation Committee for 12 years, and stayed involved as a member for several more. He moved to Coopers & Lybrand in Hong Kong in 1984, a time when the city was quickly emerging as a preferred destination for global investment. “I was very fortunate because those were the golden days of Hong Kong as business was In July, the International Organization of Securities Commissions endorsed the International Sustainability Standards Board’s sustainabilityrelated financial disclosures standard, signalling to the Securities and Futures Commission to adopt, apply or make reference to the standards in addressing sustainabilityrelated risks and opportunities. “ By continuing to uphold their professional values and ethics in conducting sustainability-related work, auditors can help strengthen market confidence as well as drive best practices across companies.” October 2023 11
PROFILE Tim Lui Lui joined Coopers & Lybrand (now PwC) in 1978, and stayed with the firm for 40 years. There, he developed into a tax specialist, and served as lead director of the board of partners and a member of the global board. 12 October 2023
APLUS booming. You saw tremendous growth in the firm, tremendous opportunities for everybody, including myself,” says Lui. Coopers & Lybrand merged with Price Waterhouse in 1998 to create PwC. He says that, until his retirement from the firm in 2018, he never once thought of leaving it for other pursuits. “Different things opened up for me in those 40 years at the firm. I had the privilege of joining the global board of the largest accounting firm in the world. This sort of experience doesn’t come around very often, right?” Honesty and professionalism After his time as Institute president came the start of his public service, mainly in educational affairs. “It just so happens that I’ve engaged myself in a lot of aspects of education,” Lui says. He had been chairman of the Education Commission, which advises the government on the overall development of education, from 2015 until the start of this year. He was previously chairman of the Committee on Self-financing Post-secondary Education, the Joint Committee on Student Finance, and the Standing Commission on Directorate Salaries and Conditions of Service. He currently chairs the University Grants Committee. “The experience has been very valuable because you understand more about how things work in Hong Kong, your circle of contacts becomes larger, and you get to apply your professional expertise and experience to helping Hong Kong move forward,” says Lui. In his fulfilling journey in public service, his skills and experience as an accountant played a key role. “Quite a number of those in public service are accountants because they’re trained to have integrity and sound judgement. These are attributes that I think the government is looking for when they appoint committee members,” he says. Lui likes to speak his mind, and believes this is valued in a committee setting. “I sometimes tell government bureaus that I disagree with them, so I will speak up. I think this is why professionals are well sought after,” he says. “If you don’t see eye to eye, it doesn’t matter. Just lay things out on the table and sort it out.” In his role, steering the strategic directions of an institution like the SFC, those fundamental attributes of a CPA have time and again been proven to be important. “My predecessor is an accountant, his predecessor is also an accountant, so we have a family tree here. And it’s because of the training,” says Lui, referencing Eddy Fong and Carlson Tong, both former chairmen of the SFC who are also Institute members. “The other thing is, as chairman, there’s also a lot of governance aspects that you need to be involved in, and my experience as the lead director of the board of partners at PwC has helped.” The next generation Lui’s advice for young and future accountants is to focus on honing their communication and language skills. “Both English and Chinese. If you also speak Spanish, then you’ve covered 98 percent of the world, so that’s even better,” he says. “You also need to be knowledgeable about what’s happening around you, both globally and particularly in China. If you can excel in a particular area, there’s a lot of value,” he adds. Indeed, Lui has witnessed the shift to advisory work driving the profession’s evolution over the years. “Firms have had to adapt and consulting now has so many dimensions. Advisory roles are where accountants are able to flourish because of the value they can bring to clients,” he says. Lui also urges young members to avoid complacency. Nowadays, with the fixation on technology products and work-life balance, people seem to be getting too comfortable in their jobs, he notes. “Working hard is not a bad thing. It can have real benefits and will hone you into a much better person. If work needs to be done, try and do it to the best of your ability,” he says. The most important thing is to still enjoy what you do, Lui adds. “Because life is short. Find what you’re good at and interested in, and go for it.” As a former president of the Institute, Lui has kept a keen eye on its developments. He urges the Institute to continue to innovate when it comes to creating value for members. For him, one thing must remain constant: “The Institute must keep up with its international standing, and continue to take a leading role on the global stage.” To Lui, it all comes down to a reputation that has stood the test of time and continues to make him a proud member as the Institute celebrates its semicentennial. “Over many years, the reputation of the Hong Kong Society of Accountants and now the HKICPA, and the recognition of our members, have been very high. As a member, you’re proud of that because your qualification means something,” he says. On a personal level, he’s even more proud of the memories made. “I became president in a very historic year, and that is an experience that you cannot repeat. It will be a fond memory of mine forever.” “ The reputation of the Hong Kong Society of Accountants and now the HKICPA, and the recognition of our members, have been very high. As a member, you’re proud of that because your qualification means something.” October 2023 13
TECHNOLOGY Roundtable In an era of rapid technological advancements, few industries have been left untouched by the transformative power of innovation. From automation and artificial intelligence (AI) to cloud computing and data analytics, these technologies have disrupted the accounting profession and are reshaping the way accountants operate, unlocking new efficiencies, insights and opportunities. At a roundtable discussion hosted by the Information, Communications and Technology Interest Group (ICTIG) of the Hong Kong Institute of CPAs, a group of experts came together to discuss these opportunities and the potential pitfalls of new technologies on the profession, offering their insights and exploring the benefits, challenges and future implications for professionals in a fast-evolving field. Fred Sheu, National Technology Officer for Microsoft Hong Kong, kicked off the RIDING THE DIGITAL WAVE: TAKEAWAYS FOR THE PROFESSION The Institute hosts a roundtable discussion on the current development of new technologies, how they are being applied, and the skills accountants need to work effectively and seize opportunities in the digital economy. Jolene Otremba reports. 14 October 2023
APLUS conversation by talking about the inevitability of technological evolution in the accounting profession. “Every industry around the world is leveraging technology to help them do their work and be more productive,” Sheu said. “They are using tools and workplace technology for enterprise types of application for meetings, word processing, calculations. The evolution is very fast and the industry itself must keep up to pace while employees must keep up with the new skills that are required to leverage those technologies.” Each of the speakers then shared what excites them in terms of the impact of technologies on their respective fields. Anthony Chiu, Chief Systems Manager (Data Analytics) from the Office of the Government Chief Information Officer (OGCIO), spoke of the numerous initiatives that the Hong Kong government is rolling out that capitalizes on technologies to help move society forward. In particular, the application of AI and blockchain. “I think what is really exciting is undoubtedly the use of AI and the use of blockchain. For example, (From left) Vincent Chan, Co-Convenor of the Information, Communications and Technology Interest Group Organizing Committee and Institute member; Anthony Chiu, Chief Systems Manager (Data Analytics) from the Office of the Government Chief Information Officer; Harry Lin, Partner and Technology Head for Hong Kong at Russell Reynolds Associates; and Fred Sheu, National Technology Officer for Microsoft Hong Kong October 2023 15
TECHNOLOGY Roundtable blockchain can be used in an area like e-licensing or certificates. This is one area that some government departments are pursuing as an alternative to paper certificates,” he said. Vincent Chan, Co-Convenor of the ICTIG Organizing Committee and Institute member, who is also a Partner in Consulting at EY, said that he doesn’t see technology as a threat. “What really excites me is that there are a lot of things that accountants want to do. They want to be more effective, more efficient, and in the last decade we started using things like human robotics and process automation. That was really the start and the taste of what AI can do today. And now technology is at a stage of maturity and is becoming accessible even to small and medium practitioners, so it’s quite an exciting landscape.” For Harry Lin, Partner and Technology Head for Hong Kong at recruitment company Russell Reynolds Associates, technology and the advent of AI has created a significant impact on executive recruitment. He said that it has transformed the way the company is able to identify and access senior and high-level executives, making sourcing and screening much more efficient, and making it easier for the company to identify potential candidates. “Now, we have a much bigger pool and are able to identify and source our candidates with more accuracy. We have both AI and advanced analytics to analyse large volumes of data and market trends to facilitate data-driven decision making, technologies to enhance candidate assessment like psychometric testing, and so on. Those are really helping us to evaluate our executives,” Lin said. Application of digital technology Throughout the discussion, efficiency and effectiveness emerged as the key words and were consistently brought up, underscoring their paramount “ And now technology (AI) is at a stage of maturity and is becoming accessible even to small and medium practitioners, so it’s quite an exciting landscape.” 16 October 2023
APLUS importance in the context of technological disruption within the profession. The speakers discussed how advanced technology such as AI are enabling accountants to streamline processes, automate repetitive tasks and extract valuable insights from vast amounts of data, revolutionizing the way accountants operate and deliver value to their clients. “AI and blockchain are really revolutionary,” Sheu said. “AI can do many things that humans cannot do, and we are seeing it like never before.” As an example, Sheu talked about the power of generative AI, which refers to technology that uses deep learning algorithms to generate new data and content, explaining how it is transforming the accounting function and bringing real value to businesses. “With generative AI, you can quickly mine data and identify trends. You can quickly identify why a business is growing, why there is a spike in sales and even identify what’s happening in the business,” he said. Sheu encouraged organizations to adopt technologies such as AI and to view it through a co-pilot lens. Such technologies, he noted, should be seen as something that helps to raise efficiency and effectiveness, and not something that should replace the deduction process. On this note, Chiu said the government is now more focused on data-driven decisions. Whether it is in policy making or daily operational decision making for the city, big data has become an important part of all decision making. He noted that another change he has noticed is that data used to be siloed within each individual department, yet today, interdepartmental sharing has become critical. Citing new projects, such as the traffic data analytics system, Chiu explained that this project requires information and data from the Transport Department as well as the Hong Kong Observatory. The government has been taking additional steps to create new insights into prediction data and making it open to the public so that industries can develop their own prediction modeling systems themselves. Ethics and risks The conversation turned to the issues around the darker side of technologies. In terms of privacy, security and the ethical use of technologies, accountants today must proceed with caution. One challenging issue is the nontransparency of AI systems and their inner workings. “AI is a black box. When it comes to transparency, my take is whatever tool you use you must know the subject matter, use it smartly, and like what we just launched at EY, we use it in a closed environment. Professionals can use secure versions of these new technologies,” Chan said. EY launched its “EY.ai” platform in September which it says combines the firm’s vast experience in strategy, transactions, transformation, risk, assurance and tax alongside EY’s technology platforms and AI capabilities. The platform is believed to create value by harnessing the power of AI through a safe and secured environment. The speakers also advised caution in the use of cloud computing. Chiu noted that within the government, cloud technology has become a huge area that it is investing heavily into. However, “ With generative AI, you can quickly mine data and identify trends. You can quickly identify why a business is growing, why there is a spike in sales.” October 2023 17
TECHNOLOGY Roundtable privacy and security remain a priority in its adoption and development, and organizations and accountants would be prudent to follow suit. “We must always have security in mind and when we put the data and systems into a cloud environment, in particular a public cloud environment, proper security protection and the appropriate contract terms must be adopted,” Chiu said. While many big organizations have adopted a hybrid cloud scenario, Sheu says that it is important to identify and understand what data can sit inside and outside of the cloud to prevent any data breaches or leaking of personal information. He also mentioned how organizations can use other technologies to help with compliance to reduce any margins of error and improve accuracies. “It’s really about setting out the policy and procedures, getting legal, governance and particularly security involved, creating a balance between convenience and safety, having accountants involved in setting and monitoring the rules to use these tools securely and safely, and adhering to all the different regulations,” Chan said. The speakers also agreed that organizations and leaders must lead by example and advocate the ethical use of technologies and constantly communicate what this means. This is why technology needs a seat at the table, they said. When it comes to cloud computing, big data, machine learning and the advent of other technologies, businesses need to build models that take into consideration the business objective, its project, vision and whether it has the right people and skillsets to navigate these changes. “Do you have the right people who are able to understand and use these technologies, to ethically implement the right technologies or tell a story to get stakeholders’ buy-in or drive transformation?” Lin asked. Digital skills It was agreed that accountants and businesses will have to change the way they approach the accounting function’s role. But it starts with recognizing that while technology is powerful, the human in the loop remains paramount and businesses can only rely on it for what it is – a function. “It’s there to help us make more informed decisions. It’s helping with efficiency, but does it mean robots will replace us? No. At the end of the day, we are in the people business that is built on trust, personal assessment and soft referencing. AI is absorbing data and learning and that is something that supports us, but it can’t replace us,” said Lin. With that, the speakers explored how the role of accountants has changed, given today’s digital environment. For starters, the speakers noted that technologies such as cloud computing and AI, while powerful, remain limited and can produce incorrect results. For this reason, an accountant’s aptitude remains critical. Skills such as critical thinking and factfinding will become even more important, and the profession must be prepared for the changes to the skillset requirements on accountants, noted the speakers. “Accounting used to be perceived as mundane and tedious, but now with the advancement in technology and AI, it can be more interesting. The human interaction will be about asking questions and framing questions, rather than number crunching,” Chan said. “So aside from predictions, unusual transactions, you have now got to learn what you can do with AI.” Lin, who has been involved in searches for numerous technology leadership positions, said that there is a noticeable shift in the requirements for chief financial officer roles today. “Clients are looking for a range of digital competences in CFOs and accounting professionals – they are looking for proficiency in data analytics, being able to extract and identify patterns, and being able to use certain tools,” he said. Lin also noted that companies are looking for people with the ability to work with automation and are knowledgeable in robotic process automation software which “ We must always have security in mind and when we put the data and systems into a cloud environment... proper security protection and the appropriate contract terms must be adopted.” 18 October 2023
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