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Institute news

Accounting profession celebratesNational Day with dinner More than 700 CPAs and guests from the Mainland, Macau and Hong Kong joined the accounting profession’s 66th National Day celebration last month. Among the officiating guests were K.C. Chan, Secretary for Financial Services and the Treasury, and Yin Xiaojing, Deputy Director of the Liaison Office of the Central People’s Government in the Hong Kong SAR.

Young members achieve career breakthroughs The Young Members Committee of the Institute is hosting its annual career forum on 7 November to aid and inspire young professional accountants in their career development. This year’s conference has the theme “Career Breakthrough,” and aims to help young members reach new heights as a CPA.

Speakers include exemplary young members who will share their career paths, the challenges they faced and how they overcame them. Consultants from two reputable recruitment companies will talk about the latest trends and opportunities in

the job market, as well as offer tips on career growth. This year, a newly added panel session will provide advice to budding young entrepreneurial CPAs on how to start their own business.

Enrolment information is available on the Institute’s website.

2015 SMP SymposiumThe Institute’s annual symposium for small- and medium-sized practitioners will be held on 27 November. The event will feature topics that are top-of-mind for SMPs, such as taxation and implementation of the Companies Ordinance, updates to major accounting and auditing standards, and prac-tice review findings. Another talking points will be practice management, providing advice on data privacy, electronic risk and professional indemnity insurance. There will also be a session for attendees to meet the accounting profession’s LegCo representative.

Details on how to enrol are available on the Institute's website.

4 October 2015

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Disciplinary findingIp Wing Lun, Allan, CPA (practising), Chang Kin Man, CPA (practising) and Wong Po Ling, Pauline, CPA

Complaint: Failure or neglect to observe, maintain or otherwise apply namely sections 100.4(e) and 150 of the Code of Ethics for Professional Accountants.

The respondents were directors of a Hong Kong listed company. They failed to obtain the shareholders’ prior approval for making a deposit payment for a proposed acquisition. Under the listing rules, the deposit was regarded as a major transaction, which requires shareholders’ approval. The Listing Committee of the Stock Exchange of Hong Kong found that the respondents were in breach of their director’s undertakings for failing to use their best

endeavours to procure the company to comply with the listing rules. The Listing Committee imposed a public censure on the company and the respondents and required the respondents to undergo 24 hours of relevant training.

Decision and reasons: The respondents were reprimanded and ordered to pay a penalty of HK$1,000 each to the Institute. In addition, they were ordered to jointly pay the costs of the disciplinary proceedings of HK$79,000. When making its decision, the Disciplinary Committee took into consideration the particulars in support of the complaint, the respondent's personal circumstances, the parties’ submissions and their conduct throughout the proceedings.

Details of the disciplinary finding are available at the Institute's website: www.hkicpa.org.hk.

The Institute in numbers

72%

Approximately one-third of respondents play a major role in Hong Kong’s capital market as

employees of the city’s listed entities

Value in leadership and professional life

say they are required to work seasonal overtime

56%

of them say the busiest quarter is January to March41%

Work-life balance: fact or fiction

A profession on the move

of respondents manage staff as part of their job function

40%of respondents report spending a portion of their working hours

beyond their home base

52%of this demographic identify the Guangdong/Pearl River Delta region as a work destination

Current state of professional development

of respondents have attended CPD courses

organized by the Institute

66%

of them have been satisfied with their learning experience74%

A snapshot of members’ views on matters including the Institute’s services according to annual membership survey

October 2015 5

Internet giant Yahoo said last month that it will move forward with plans to spin off US$23 billion worth of shares in Alibaba Holding Group even if the Internal Revenue Service doesn’t provide a “favourable rul-ing” on the tax-free transaction.

The news comes weeks after the United States’ tax regulator denied Yahoo’s request for a letter ruling that the company’s spin-off of its shares in Alibaba would be tax-free.

On 28 September, Yahoo’s shares rose as much as 6 percent in after-hours trad-ing following the company’s decision to proceed with the plan. The deal, which is

expected to be completed before the end of the year, could save the company billions of dollars in taxes.

“Neither this ongoing guidance project nor the IRS’s decision not to rule with respect to the Aabaco spin-off transaction changes the current law applicable to the proposed spin-off,” Yahoo said in a filing, referring to the name of the corpo-rate entity that will hold the shares after the spin-off.

Yahoo also said that the transaction will still be subject to “a legal opinion with respect to the tax-free treatment of the

transaction under U.S. federal tax laws and regulations.” However, it did not clarify how that would work if the IRS were to rule against its tax-free treatment.

In January, the California-based company announced its scheme to spin off its 384 million shares, or 15 percent stake, in the Chinese e-commerce giant into a separate company in a transaction that will ultimately give back much of the value to Yahoo’s shareholders. The plan hit a roadblock in May when the IRS said it was considering changes to how it treats tax-free spinoffs.

Yahoo to stick to Alibaba spinoff plan without IRS backing

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NewsAccounting

6 October 2015

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FRC consults on EU’s accounting shake-upBritain’s Financial Reporting Council kicked off a public consultation last month to apply European Union reform of company accounting from next June in the United Kingdom. The EU rules will mean that 50 accounting companies will come under the supervision of the watchdog, and will require companies to change their auditor at least once every 20 years to avoid “cosy” relationships, reported Reuters. “The most instant change is that things we have developed as best practice will be a matter of legal requirement, such as re-tendering of auditors,” FRC Executive Director of Codes and Standards, Melanie McLaren, told the newswire.

Brazil’s audit court finds government broke finance lawBrazil’s federal audit court said earlier this month that President Dilma Rousseff’s government violated accounting practices last year and broke the country’s finance law by using money from state banks to hide a budget deficit. The decision from the Federal Court of Accounts of Brazil (also known as TCU) paves the way for Rousseff’s opponents to begin impeachment proceedings against her in congress amid widespread anger among Brazilians over the country’s economic troubles, media reported. Rousseff’s legal team denies the charges. The court’s finding is not judicially binding, but may help congress decide whether Rousseff violated fiscal rules.

A world of numbers

PwC leads the Big Four PwC is now the world’s largest professional ser-vices firm, topping Deloitte, the Financial Times reported last month. Driven by the rapid expan-sion of its consulting business, the firm recorded a 10 percent increase in gross revenues to US$35.4 billion, helping PwC leapfrog Deloitte. PwC’s consulting arm now accounts for more than 30 percent of its total revenue after growing 18 percent to US$11.2 billion during the fiscal year. Much of the rapid expansion is a result of PwC’s acquisition in 2014 of the consulting firm Strategy& (formally Booz & Company).

Divorce brings the rich and forensics togetherA burgeoning need by the wealthy to hire forensic accountants is driven by them divorc-ing, according to James DiGabriele, Professor of Accounting at Montclair State University, reported Forbes. “High-net-worth couples gen-erally have a number of types of assets such as investment portfolios, businesses, collectables, partnerships, and the list goes on,” DiGabriele told the publication. “Divorce lawyers are not the professionals that are going to be able to determine the value of all the different assets. That’s the job of the forensic accountant.”

The total amount in additional federal taxes 57 Fortune 500 companies

would owe if they were not to book offshore, according to a report on the use of tax havens by United States-based multinational corporations in

2014, released by non-profit research and advocacy group Citizens for Tax

Justice this month.

US$184billion

How many data scientists EY’s French firm approximately now

has on its staff following the acquisition of analytics and big data consultancy Bluestone, announced earlier this month. The deal, which is the third the firm has done over the last two years to build up its

data analytics capabilities, comes as today’s organizations are becoming

increasingly data-driven.

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AFP Dilma Rousseff

How much Grant Thornton LLP, the United States-based member firm of the accounting network, earned in revenues for the 2015 fiscal year. It represents a 6.9

percent increase over the previous fiscal year under new Chief

Executive Officer Mike McGuire.

US$1.45billion

October 2015 7

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Forensic accountant TV show debuts soonAn upcoming American thriller television series puts accountants under the spotlight as it follows a fraud investigator, played by Mireille Enos, who discovers she is about to get conned by her fiancé and is determined to turn the tables on him, according to AccountingToday. The series, called The Catch, is scheduled to premiere on ABC TV later this year. The show is said to potentially be the CPA version of Grey’s Anatomy, as it is made by the same producer.

Apple tops list of tax-avoiding U.S. companies Apple holds the no.1 spot in a list of top 30 United States-based multinational corporations exploiting global tax havens, Quartz reported last month, citing the results of a study by lobbying group Citizens for Tax Justice, which examined Fortune 500 companies in 2014. The analysis found that Apple booked US$181.1 billion offshore, more than any other company, and would owe US$59.2 billion in U.S. taxes if it didn’t. General Electric and Microsoft came in second and third place respectively.

Deloitte to hide university of job applicantsDeloitte has decided not to know the names of job applicants’ schools and universities next year in the United Kingdom as it aims to tap a more diverse “talent pool,” BBC News reported last month. Using the Contextual Recruitment System, a technology that gathers background data, the firm will take into account dis-advantages such as attending a less prestigious school or coming from a deprived area.

Three Gorges Dam issues uncoveredAccounting problems related to projects linked to the Three Gorges Dam, the world’s largest hydropower project that spans the Yangtze River, were uncovered by China’s National Audit Office last month. An investigation by the state audit office found almost 2 billion yuan worth of accounting problems in the final accounts for a 7.1 billion yuan underground hydroelectric plant, including 1.54 billion yuan from improper bidding and 337 million yuan in duplicate calculations, it said.

NewsAccounting

AFP

October 2015 9