Visit to the Mainland

Transcription

1 Visit to the Mainland The Society s Council, joined by the Committee and led by the president and the two vicepresidents, completed a three-day visit to the Mainland from 1 to 3 September Table 1 lists the delegates. Thanks to the Liaison Office of the Central People s Government in the HKSAR and the PRC s United Front Work Department of the CPC Central Committee, who arranged all the visits to the following organisations in Beijing: Ministry of Finance/Chinese Institute of Certified Public Accountants China Securities Regulatory Commission, and State Administration of Taxation. The Council also took the opportunity to go to Guangzhou where they called on organisations whose work the Society might be interested in. Table 2 lists the officials who received the delegation in Beijing and Guangzhou. A summary of the meetings between the delegation and the Mainland organisations in Beijing is as follows: List of participating delegates^ Mr Wong Tak Wai, Alvin Mr Edward KF Chow Mr David Tak-kei Sun Mr Roger Best Mr Michael KH Chan Dr Cho Lung Pui Lan, Stella Mr Mark C Fong Mr Wilson Fung Mr Doug Oxley Mr Patrick Cheng Mr Johnson Kong Mr Peter Wan Mr Lee Kai-fat Mr Patrick Tam Ms Cammy Ho Ms Karen Leung The Ministry of Finance (MOF) and the Chinese Institute of Certified Public Accountants (CICPA) The following issues were discussed at a meeting held with representatives of the MOF and CICPA: Development of accounting standards for business enterprises (ASBEs) in the Mainland The Society was informed that further to the 16 ASBEs issued over the years, the MOF would soon promulgate six more standards, namely Segment Reporting ( F, Foreign Currency Translation ( F, Earnings Per Share (!F, Presentation of Financial Reporting ( F, Accounting for Government Grants and Disclosure of Government Assistance (!"#$F and Discontinuing Operations (!F. The goal is to issue a total of about 30 standards. The MOF officials were briefed on the Society s progress in publishing a monograph on Comparison of PRC GAAP against IAS and HKGAAP. It was noted that Madam Feng Shu Ping, President Vice-President Vice-President Chairman, Committee Convenor, Mainland Business Interest Group Chairman, PRC Accounting & Auditing Sub-Committee Registrar and Secretary-General Director of Corporate Affairs Assistant Director (Corporate Affairs Mainland & International Affairs) Administration Officer (Corporate Affairs Mainland & International Affairs) ^ The delegation was accompanied by a representative from the Liaison Office of the Central People s government in Hong Kong SAR. Table 1 Assistant Minister, had in the previous year, expressed an interest in the project and there was some discussion on the different options available. The MOF reiterated its interest in the publication, but suggested that it should preferably include the yet to be issued statements to enhance its timeliness. The Society was asked to liaise with Mr Liu Yu Ting, director-general, Accounting Department, on the project. The Society s discussion paper The CICPA representatives commented on the following issues raised in the Society s discussion paper on The Anticipated Increase in the Opportunities of Cooperation between the Accountancy Profession in Hong Kong and the Mainland Emerging from China s Impending Entry into the WTO. (a) Provisional licence to perform auditrelated services in the Mainland (the Licence ) (The Licence is at present valid for six months. To simplify the renewal procedures, the Society has suggested, in the Paper, extending the validity of the Licence to one year or, if possible, to cause a cancellation to this measure.) the CICPA noted that the matter had been discussed on several occasions between the two bodies prior to the meeting and that the Society had expressed continuing concerns over the slow progress made. The CICPA representatives advised that pursuant to their agreement in principle to have the Licence renewed at a 12- month interval, they had initiated a study on the proposal. The CICPA took note of the Society s concerns and agreed to expedite their study. (b) Relaxing the requirements of setting up wholly foreign owned consultancy companies in the Mainland (The existing application procedures, policies, and approval criteria for setting up wholly foreignowned consultancy companies vary across the Mainland. This can cause confusion to those accountants who are keen to start up consultancy businesses in the Mainland. Also, the minimum capital requirement 38

2 Organisations and officials receiving the delegation PRC ministry/organisation Name and title Organisations in Beijing Ministry of Finance Ms Feng Shu Ping (Assistant Minister)!"#$%&'( Mr Liu Yu Ting (Director-General)!"#$%&&'( Ms Xu Da Hua (Deputy Director-General)!"#$%&'&() China Securities Regulatory Commission Mr Gao Xi Qing (Vice Chairman)!"#$%&'(!"#$%&' Mr Jesse Wang (Assistant Chairman)!"#$%&'( Mr Zhang Wei Guo (Chief Accountant)!"#$%&'() State Administration of Taxation Mr Wang Wei Yan (Director-General)!"#!"#$%&'(()* Mr Lu Yun (Deputy Director General)!"#$%&'(')* Chinese Institute of Certified Public Mr Chen Yu Gui (Secretary-General) Accountants!"#$%&'!"#$%" Mr Yang Zhi Guo (Director)!"#$%&'() Mr Zheng Jia Zhong (Deputy Director)!"#$%&'()* Organisations in Guangzhou Hong Kong Economic and Trade Office in Mr MC Tsui (Deputy Director) Guangdong, Government of the HKSAR!"#$%&'!"#$#%&'()*+ Guangdong Federation of Industry and Mr Chen Hai Yan (Vice Chairman) Commerce!"#$%&'!"#$%& Guangdong Provincial Institute of Mr Xiong Zhan Yu (President) Certified Public Accountants!"#$%&!"#$%&# Mr Huang Bing Jun (Secretary General)!"#$%&' Guangzhou Institute of Certified Mr Wen Jian Hui (Vice President) Accountants!"#$%&'!"#$%" Mr Jiang Jian Ping (Secretary General)!"#$%&' Table 2 (US$200,000) for these companies is on the high side.) The CICPA representatives advised that according to their understanding of information obtained from the Ministry of Foreign Trade and Economic Cooperation (MOFTEC), there was no such minimum capital requirement. The Society was asked to direct any complaints received from its members to MOFTEC. Review of the PRC CPA Law (the Law ) The Society was updated on the progress of the MOF s review of the Law, which commenced in It was noted that the project had slowed down recently. The MOF attributed this to the developments that had come to light after China s accession to WTO such as the need for Mainland accounting firms to converge with international practice. Translation of the fifth batch of China s Independent Auditing Standards (CIASs) (MOF has earlier promulgated the fifth batch of CIASs. As with the first four batches, the CICPA has invited the Society to produce an English version of the statements. PricewaterhouseCoopers has taken on this assignment and the Society s PRC Accounting and Auditing Sub-Committee will conduct a review of the draft.) The Society reported that the translation project had progressed according to schedule. It was expected that the final draft would be ready in mid- January China Securities Regulatory Commission (CSRC) It was explained to the CSRC that the Council had earlier decided to establish a Task Force on PRC Corporate Governance and Listing Rules under the Committee to address PRC corporate governance and listingrelated issues and, where appropriate, to formulate a working relationship with the CSRC. The decision to establish the Task Force is a response to the expanding capital market in the Mainland and the increasing involvement by HKSA members, in practice or in the commercial/financial services sector, on 40

3 The delegates with representatives of the State Administration of Taxation. matters relating to PRC listed companies. As such, the opportunity was taken by the delegation to discuss with the CSRC how the two parties could cooperate and develop a work programme of mutual interest and benefit. The CSRC officials welcomed the formation of the above-mentioned Task Force and expressed interest in formulating such a programme. It was suggested that both bodies might wish to jointly organise a seminar on Audit Committees. It would be ideal if the seminar was held at year end or the first half of The CSRC also thanked Mr Edward Chow and Professor Judy Tsui for their participation in the independent directors training course, organised by the CSRC and the two national accounting institutes. Since the five-day independent directors course was launched, between September 2001 and June 2002, the CSRC has trained 5,000 independent directors. The Society briefed the CSRC officials on the work of its Corporate Governance Committee and drew their attention, in particular, to the recently published A Guide For Effective Audit Committees. Both sides also exchanged views on the following: The Sarbanes-Oxley Act 2002, a law passed by the Bush Administration to enhance corporate governance practices in public companies, particularly their audit committees. The repercussions of the Act outside the US. (Under the Act, the new Public Company Accounting Oversight Board that regulates auditors of public companies in the US has extra-territorial power such that any foreign accounting firm that prepares or furnishes an audit report with respect to a company listed in the US must register with the Board. This would include foreign firms that perform audit work or a foreign subsidiary of a US company that the primary US auditor would require information from.) The different financial year-end dates adopted by Hong Kong companies. Lawsuits in relation to companies disclosing fraudulent statements. State Administration of Taxation (SAT) The delegation was briefed on the directions and focus of the Mainland s tax reforms. It was noted that following China s accession to the World Trade Organisation (WTO), the central tax authorities are focusing work in the following areas: (a) To enhance the Mainland tax regime by converging with international best practice and institutionalising the necessary changes. (b) To review and identify issues in the existing tax policies that may be inconsistent with the WTO principles. While making various changes to the existing laws and regulations, it was quoted that the Chinese government would embark on research regarding VAT reform. Steps would also be taken to align the income tax for domestic and foreign enterprises and to widen the tax base by making adjustment to the Mainland s consumption tax. However, a timetable is yet to be fixed. Regarding enquiries about the unification of foreign and domestic corporate income tax, the SAT officials said that they are still considering a number of proposals. Regardless of which proposal would be adopted, the standard corporate income tax was expected to be in the region of per cent. The SAT officials acknowledged the existence of different tax incentive packages offered to FIEs in different regions. In this regard, the central tax authorities would like to minimise the regional variation to zones for the coming years. It was also pointed out that the adjustment to regional incentive policy would be shifted to productionfocused activities (!"#$%& ). Mr Danny Tsui, deputy director of Hong Kong Economic and Trade Office in Guangdong, Government of the HKSAR (third from left), with the delegates. The HKSA delegation with representatives from Guangdong Provincial Institute of Certified Public Accountants and Guangzhou Institute of Certified Accountants. 42

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