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Aug. 31 – The Hong Kong Stock Exchange has proposed allowing mainland companies listed in Hong Kong to submit their accounts using mainland China’s accounting standards and auditors.
Currently, Hong Kong uses a different set of accounting standards from the mainland. If the proposal pushes through, it may be possible that Hong Kong companies listing in China will also be able to submit Hong Kong audited accounts to the mainland authorities.
There are now 57 mainland Chinese companies listed in both Hong Kong and Shanghai. Businesses based in both territories have been submitting two separate sets of audited accounts: one to fulfill mainland standards and another for Hong Kong’s Generally Accepted Accounting Principles.
So far, no Hong Kong companies are listed in the mainland although this may change soon since HSBC, Bank of East Asia and China Mobile are looking to listing their businesses in the mainland.
Should the proposal be approved, changes could take effect as early as January next year although there are hesitations on the the quality of mainland audit standards.
Only mainland auditors endorsed by the Ministry of Finance and the China Securities Regulatory Commission may audit companies in China, while in Hong Kong the Hong Kong Institute of Certified Public Accountants is the regulatory body.
Correction: September 4, 2009
An earlier version of this story incorrectly identified the Hong Kong Institute of Certified Public Accountants as the Hong Kong Institute of Chartered Public Accountants.
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Objection !
Those companies raised fund in HK, of course, they should follow HK standard accounting.
China auditor ethic still have a distance from HK.
Now you accept mainland auditor report, will you accept unaudited report in future ???
I have been an auditor for companies registered in China and I have experience that the accounting standards, accounting concepts and professional ethics are not strong enough to let me have a total comfort to rely solely on their financial statements without any GAAP adjustments, I do believe BIg CPAs should try to set up their China bases for training more professionals in China and this should be the trend anticipated. CPAs in HK should form as a supportive foundation for this development in the long run. with ethic issue and corporate governance should be emphasied and educated and applied throughout in companies and CPA firms registered in China.