March 2011 Lindy Yau Practising Director C K Yau & Partners CPA Ltd

March 2011

Lindy YauPractising Director

C K Yau & Partners CPA Ltd

AGENDA

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1.1 ETHICS

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What is ethics?

BehaviourBehaviour

What is accounting ethics?

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1.2 ACCOUNTING ETHICS

BehaviourBehaviour

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Source: ICAEW, Accountancy, January 2011

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Source: HKICPA, APLUS, February 2011

Importance of high ethical standard of professional accountant and its impacts

Public confidence on professional accounting servicesThe reputation of the professional accountantsAffect the decision made by accounting information users

e.g. management and investors

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Ethical issues in accounting

(Practising and non-practising) Offering audit and non-audit services to clients Clients prefer accounting firms which give favourable financial

reports Pressure from clients or senior on financial manipulation and tax

evasion Conflict of interest Use of confidential information for personal financial gains or

insider dealing Temptation from clients 10


Fundamental Principles

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International Federation of Accountants (IFAC) as an organization that promotes accounting ethicsInternational Ethics Standards Board for Accountant (IESBA)

Code of Ethics for Professional Accountants Develops ethical standards and guidance for use by

professional accountants. Encourages member bodies to adopt high standards of

ethics for their members and promotes good ethical practices globally

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HKICPA as an organization that promotes accounting ethics Code of Ethics for Professional Accountants

Adopting IFAC Code of Ethics for Professional Accountants Additional ethical requirements developed by HKICPA

Disciplinary actions may be taken to members of the institute for non-compliance

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HKICPA as an organization that promotes accounting ethics Latest development

HKICPA - Code of Ethics for Professional Accountants

Committees and working groupsStatutory boards and committeesNon-statutory boards and committeesAdvisory working groups

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Revised Code of Ethics Announced on June 2010 Effective from 1 January 2011 Main principles-based approach Covers guidance on accepting payment in an agent-principal

relationship under the Prevention of Bribery Ordinance

ICAC approach Best Defence Against Corruption

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Case Sharing16

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CASE SHARING

明報 : 2011 年 3 月 10日

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CASE SHARING

中信泰富事件

頭條日報 2011 年 3 月 10日

中信泰富遲報虧損警指「撲水」涉欺詐

明報 2011 年 3 月 10日

警指涉欺詐拒還中信泰富文件外匯累計期權蝕155 億遲公布

星島日報 2011 年 3 月 10日

炒外匯損手 155 億警促交出文件中信泰富「撲水」 17 億應急

東方日報 2011 年 3 月 11日

中信泰富文件法官查閱

星島日報 2011 年 3 月 11日

貸款合約有榮智健簽名

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CASE SHARING

明報 : 2010 年 12 月 23日

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Definition Involves a set of relationships between an organisation’s

management, its board, its shareholders and other stakeholders.

Provides the structure through which the objectives of the organisation are set, and the means of attaining those objectives and monitoring performance are determined.

The Organisation for Economic

Co-operation and Development

(OECD) – Principles of Corporate Governance 21

2. CORPORATE GOVERNANCE

Principles Ensuring the basis for an effective corporate governance

framework Protecting and facilitating the exercise of shareholders’

rights Ensuring the equitable treatment of all shareholders Recognising the rights of different shareholders Ensuring timely and accurate disclosure of all material

matters of the corporation

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Conflict of interest

Company’s interest

Information Asymmetry


Objective

• Principal and agent have different interests and goals

• Corporate governance can help in converging their goals

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Stakeholders

Example:

School Management

Committee (SMC)

學校管理委員會( 官立學校 )

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Corporate Governance in Hong Kong

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Companies Ordinance 公司條例 Cap 32

Banking Ordinance 銀行業條例 Cap 155

Securities (Insider Dealing) Ordinance

證券 ( 內幕交易 ) 條例 Cap 395

Securities (Disclosure of interests) Ordinance

證券 ( 披露權益 ) 條例 Cap 396

Securities and Futures Ordinance 證券及期貨條例 Cap 571

Main Board Listing Rules 主板上市規則 -

GEM Listing Rules 創業板上市規則 -

Corporate Governance in Hong KongHong Kong Exchanges and Clearing Ltd 香港交易及結算所有限公司 ( 香港交易所 )

Mission: “HKEx works closely with the Securities and Futures Commission (SFC) to regulate listed issuers; administers listing, trading and clearing rules”

「香港交易所須與證券及期貨事務監察委員會（證監會）緊密配合，以監管上市發行人；執行上市、交易及結算的規則」

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Corporate Governance in Hong KongHong Kong Exchanges and Clearing Ltd Listing Rules

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Main board listing rule (主板上市規則 )

GEM listing rule (創業板上市規則 )

Code on Corporate Governance Practices 《企業管治常規守則》

Appendix 14 Appendix 15

Corporate Governance Report 《企業管治報告》

Appendix 23 Appendix 16


Hong Kong Exchanges and Clearing Ltd Analysis of Corporate Governance Practices Disclosure in Annual Reports Consultation paper – Review of the Code on Corporate Governance

Practices and Associated Listing Rules (Dec 2010) The most significant proposals:

The selection, appointment or dismissal of the company secretary is a matter for the board as a whole to decide, and that a physical board meeting should be held to discuss the dismissal of the company secretary

The company secretary should report to the board chairman and / or the chief executive officer

Issuers are required to set up a remuneration committee chaired by an independent director and comprised of a majority of independent directors.

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Hong Kong Exchanges and Clearing Ltd Consultation paper – Review of the Code on Corporate

Governance Practices and Associated Listing Rules (Dec 2010) INEDs to form one-third of the board Directors to undertake 8 hours of training per year Companies to review directors’ time commitments Companies to report on any non-compliance with chairman’s duties Boards to be subject to evaluation Companies to set up a corporate governance committee “Attendance” at board meetings to be more strictly defined Companies to provide adequate and general director’ insurance 30


Source: Chartered Secretaries, CSJ, February 2011


Hong Kong Exchanges and Clearing Ltd Consultation paper – Review of the Code on Corporate

Governance Practices and Associated Listing Rules (Dec 2010)

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Securities and Futures Commission證券及期貨事務監察委員會 ( 證監會 ) Non-governmental statutory body Regulates the securities and futures markets in Hong Kong

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HKICPA香港會計師公會 Corporate Governance for Public Bodies – A Basic Framework Best Corporate Governance Disclosure Awards 2010

最佳企業管治資料披露大奬 2010

Judging criteria and considerations Overall presentation Promptness of reporting Quality of disclosure in relation to, for example:

Corporate governance statement and practice Internal control and risk management Other voluntary disclosures

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2010 BEST CORPORATE GOVERNANCE DISCLOSURES AWARDS

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2010 BEST CORPORATE GOVERNANCE DISCLOSURES AWARDS


HKICPA Strategic aims: Specialist qualification (SQ) and specialist

designation (SD). Audit Insolvency (* SQ in insolvency, SD in insolvency)Corporate financeTaxation Information technologyBusiness valuation

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Others

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ORGANISATIONS THAT PROMOTE CORPORATE GOVERNANCE IN HONG KONG

Case Sharing38

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星島日報 : 2011 年 2 月 22日

CASE SHARING

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CASE SHARING

阿里巴巴事件

星島日報 2011 年 2 月 22日

阿里巴巴高層大換血供應商涉詐騙買家衛哲李旭暉請辭

蘋果日報 2011 年 2 月 22日

阿里巴巴爆詐騙醜聞求揾快錢縱容騙徒 CEO 及 COO 下台

REFERENCE Companies Ordinance (Cap 32) 公司條例 Banking Ordinance (Cap 155) 銀行業條例 Securities (Insider Dealing) Ordinance (Cap 395) 證券 ( 內幕交易 ) 條例 Securities (Disclosure of interests) Ordinance (Cap 396) 證券 ( 披露權益 ) 條例 Securities and Futures Ordinance (Cap 571) 證券及期貨條例

http://www.legislation.gov.hk

Main Board Listing Rules GEM Listing Rules

http://www.hkex.com.hk/eng/rulesreg/regulatory.htm

Analysis of Corporate Governance Practices Disclosure in Annual Reports (September 2010) http://www.hkexnews.hk/reports/corpgovpract/CG_Practices_2009_E.pdf

Review of the Code on Coporate Governance Practices and Associated Listing Rule http://www.hkgem.com/eng/newsconsul/mktconsul/documents/cp2010124.pdf 41

REFERENCE HKICPA

Ethics in Management – A Practical Guide for Professional Accountants

http://www.hkicpa.org.hk/en/standards-and-regulations/standards/code-of-ethics/references/ Corporate Governance for Public Bodies – A Basic Framework

http://app1.hkicpa.org.hk/publications/corporategovernanceguides/eframework_guide.pdf Best Corporate Governance Disclosure Awards 10th Anniversary, Judges’ report

http://www.hkicpa.org.hk/file/media/section5_membership/Professional%20Representation/pdf-file/judgesreport2010.pdf

Fifth Long Range Plan (2007-2012)

http://www.hkicpa.org.hk/file/media/section1_about_us/status/Fifth_Long_Range_Plan.pdf New Specialist Accreditations for Insolvency Professionals

http://www.hkicpa.org.hk/file/media/section4_cpd/Specialist%20Qualifications/insolvency-specialist/specialist-designation/forms/sqsd-brochure.pdf

A plus magazine

http://app1.hkicpa.org.hk/APLUS/past_issues.php

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REFERENCE IFAC

Code of Ethics for Professional Accountants

http://web.ifac.org/media/publications/5/2010-handbook-of-the-code-o/2010-handbook-of-the-code-o.pdf

OECD The Organisation for Economic Co-operation and Development– Principles of Corporate

Governance

http://www.oecd.org/document/49/0,3746,en_2649_34813_31530865_1_1_1_1,00.html 匯治出版有限公司

企業管治：上市公司問題分析 ( 何順文、高衍璋 ) 中國公司管治與制度 ( 何順文、李元莎 ) 營商有道：企業管治新思維 ( 鄭治洪、司徒永富 ) 企業管治：原則與商德（鄭治洪、司徒永富）

CLP CLP Code on Corporate Governance 2009

https://www.clpgroup.com/ourcompany/corporategovernance/framework/codespoliciesandguidelines/Pages/codespoliciesandguidelines.aspx

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Documents

March 2011 Lindy Yau Practising Director C K Yau & Partners CPA Ltd