Hong Kong accountants sound the retreat

Author: | Published: 1 Dec 2005

As the debate continues to rage in the US over auditors' increasingly limited participation in the due diligence process, Hong Kong accountants have set the stage for their own retreat starting in 2006. Bankers and lawyers have raised concerns about a new standard issued by the Hong Kong Institute of Certified Public Accountants (HKICPA). If this new standard is widely followed, it will significantly reduce the role played by accountants in share listings on the Hong Kong Stock Exchange.

In October 2005, the HKICPA issued Hong Kong Standard on Investment Circular Reporting Engagements 400, "Comfort Letters and Due Diligence Meetings on Financial and Non-financial Information" (HKSIR 400). This new standard, which comes into effect from January 1 2006, applies to accountants providing comfort letters and attending due diligence meetings (two crucial areas of the listing process) and effectively places limits on the involvement of accountants in the due diligence...