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Following is the Speech by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, at the Spring Cocktail Reception of the Hong Kong Society of Accountants today (February 27):

David, Ladies and Gentlemen,

Let me first wish all of you a happy and prosperous year of the Ram! I am delighted to be here this evening, to be with friends and colleagues at the Spring Cocktail Reception of the Hong Kong Society of Accountants. 2003 is a special year for the HKSA, for it marks the Society's 30th anniversary and I extend my warmest congratulations to the Society and its members. Over the years the accountancy profession has made a significant contribution to Hong Kong's development as an international business and financial centre.

Financial data are the life-blood of the business world, and you are the guardians of its purity. In an increasingly global financial community, your task has become both more vital and more complex. Financial data must be accurate, comprehensive, reliable and timely. Yet you face both increasingly sophisticated financial data and more demanding users. Indeed accountants have come to be regarded as the guardians of corporate governance and the public have ever higher expectations of the profession's integrity, accountability and professionalism.

No surprise then, that the public's reaction to last year's corporate failures in the United States was so severe. These unhappy sagas illustrate just how important public confidence in the profession, and the regulation of the profession, are to public confidence in the market. The need for reforming the profession quickly became a topical issue worldwide. I am sure you will recall this subject coming under sharp focus at the World Congress of Accountants held in Hong Kong late last year. There are diverse views on what needs to be done, ranging from scrapping the whole self-regulatory regime at one extreme to complacent contemplation of no change at the other.

Let me say this: I do not for one moment doubt the contribution of the self-regulatory regime over the years. It has facilitated the development of the accountancy profession in Hong Kong. The Society has also successfully advanced its standing in the international accountancy community. The organization of the World Congress last year illustrates the point.

Nevertheless, no change is not an option. Here in Hong Kong, as elsewhere in the world the investing public expects an effective, transparent and accountable regulatory regime that is in line with international developments. Conscious of this, following the World Congress, I met with members of the profession late last year to discuss ways of improving our existing regime.

I am pleased to say that the Society, under David's able leadership, has quickly and positively responded to my request for recommendations. The Society's proposals are a move in the right direction. We intend to develop and take forward the proposals to enhance the independence and transparency of the Society's Council and, the Disciplinary and Investigation Committees. Implementing such proposals would require amendments to the Professional Accountants Ordinance and we will move ahead together on these as quickly as possible. The proposal for an Independent Investigation Board, however, warrants further careful and detailed examination, in the light of international developments on the oversight of the auditing profession. We will continue our dialogue with the Society in this regard.

In considering the development of the regulatory regime of the accounting profession in Hong Kong, my mission is to ensure that the relevant regulatory regime is effective and transparent, inspires confidence in investors, serves the needs of Hong Kong and is in line with international trends. The form of the regulatory regime is not my primary concern. My concern is with the substance. I am sure the Society and its members share the same vision.

Ladies and gentlemen, the beginning of the year is traditionally a time for reflection and new resolution. I must thank you once again for giving me the opportunity to be in your company and share my thoughts with you this evening. I am sure when we look back, the year of the Ram will prove to be particularly memorable for the Society and its members, with both celebrations on the achievements of the past 30 years, and new landmarks in the development of the profession.

Thank you.

End/Thursday, February 27, 2003

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