launderers hung out to dry - Hong Kong Institute of Certified Public ...

ISSUE 10 VOLUME 8 OCTOBER 2012 

PLUS 

• Kenneth Leung, LegCo rep 

• Making sustainability work 

• CPAs and their furry friends 

LAUNDERERS 

HUNG OUT TO DRY 

Hong Kong introduces tougher rules 

to curb flows of dirty money 

HK$70.00

“ Our mandate 

extends beyond 

Hong Kong as we 

keep exerting 

influence overseas 

on issues affecting 

the profession.” 

President’s message 

New names and 

new ideas 

Dear members, 

Last month saw Kenneth Leung elected 

as our new representative to the Legislative 

Council and an increased turnout 

rate of members voting, reaching 

70 percent, compared with 62 percent in the last 

election in 2008. We have interviewed Kenneth 

in this issue so you can get to know more about 

his views on some of the most pressing issues 

facing the profession. We will work closely with 

him on the many challenging tasks ahead. 

Later this month, we will hold a conference at 

the JW Marriott Hotel to discuss the challenges 

and opportunities that Hong Kong faces as a global 

capital market. Accountants are paramount to 

Hong Kong’s status as a global hub for commerce 

and finance. Therefore, we have chosen two areas 

of interest that directly affect us – sustainability 

and the future of the profession – as combined 

themes for the conference. 

In the first part of the conference, authoritative 

speakers from Hong Kong and around the world 

will talk about why sustainability is important 

and how to communicate about it and report on 

it. With Hong Kong Exchanges and Clearing publishing 

its newest environmental, social and governance 

reporting guide, the discussion on how 

to embrace sustainability is increasing in both the 

practising and business sector. (See our feature 

on page 18.) In the second part, seasoned panellists 

will share their thoughts on the new directions 

and influences for business and our profession, 

as well as the skills and attributes you need 

to acquire in order to succeed going forward. 

Another important event this year will be our 

annual trip to Beijing, which will take place early 

next month. We are planning to visit government 

authorities with which we have strategic working 

relationships, such as Ministry of Finance, China 

Securities Regulatory Commission, Chinese Institute 

of CPAs, Ministry of Commerce, United Front 

Work Department of the Central Committee of 

the Communist Party of China, Hong Kong and 

Macau Affairs Office of the State Council and National 

Audit Office. 

Fostering ever closer ties with the accounting 

profession and the government over the border 

will continue to be our priority as we aim to create 

new opportunities for our members and resolve 

some of the regulatory issues arising from 

the increasingly intertwined commercial activities 

between Hong Kong and the mainland. 

Back in Hong Kong, we have just filled three 

director level vacancies in the standards and regulation 

division: Simon Riley as director of standard 

setting, Linda Biek as director of compliance 

and Elsa Ho as director of quality assurance. 

This will ensure the Institute continues to provide 

excellent technical support to you through 

training and publications on the latest standards, 

as well as upholding the appropriate standards 

through reviews of practices and financial statements. 

We are particularly glad that we have 

found suitable people to fill these posts to lead 

our compliance and quality assurance arms. 

These appointments will help strengthen our efforts 

to protect the public interest and give them 

the confidence that the work of Hong Kong CPAs 

always maintains the highest standards. 

Our mandate extends beyond Hong Kong as 

we keep exerting influence overseas on issues 

affecting the profession. This was recognized 

recently, when both our representatives on the 

International Federation of Accountants were 

reappointed: our past president, Albert Au, as 

member of the small and medium practices committee, 

and one of our vice presidents, Susanna 

Chiu, as member of the professional accountants 

in business committee. 

We wish all the best to those mentioned above 

as they carry out their duties on behalf of the Institute 

to help us achieve our goals, both tactical 

and strategic. 

Keith Pogson 

President 

October 2012 1 

COLIN BEERE

REGULARS 

01 President’s message 

04 Institute news 

06 International news 

10 Greater China news 

FEATURES 

14 Clocking in at LegCo 

Kenneth Leung, the accountants’ new representative at the 

Legislative Council, tells George W. Russell about his priorities 

18 Valuing responsibility 

Craig Stephen asks how the stock exchange's new guide on 

environmental, social and governance reporting affects companies 

24 Success ingredient 

NH Tang, the CFO of IBM Hong Kong and China, tells George W. 

Russell about his 27 years at the computing giant 

30 Coming clean 

Hong Kong has toughened its anti-money laundering legislation. 

George W. Russell asks the experts about the changes 

36 Creature comforts 

CPAs are finding companionship from their furry – and sometimes 

exoskeletal – friends, as Jemelyn Yadao reports 

SOURCE 

42 IFRS 8 

William Lim and Candy Fong look at IFRS 8/HKFRS 8 Operating 

Segments as the IASB starts its post-implementation review 

46 TechWatch 119 

The latest standards and technical developments 

49 Tech Q&A 

Your questions about standards answered 

50 People on the move 

The latest professional appointments from around the region 

51 Events 

A guide to forthcoming courses, workshops and member activities 

LIFESTYLE 

56 Business travel 

Honnus Cheung revels in romantic Rome 

58 After hours 

George W. Russell on wine; Akua Achampong on watches 

60 Let’s get fiscal 

Nury Vittachi knows when you've been in the job too long 

2 October 2012 

CONTENTS 

ISSUE 10 VOLUME 8 OCTOBER 2012 

PHOTO: SAMANTHA SIN

14 

Your chop Your Logo 

About our name: A PLUS stands for excellence, a 

reference to our top-notch accountant members who 

are success ingredients in business and in society. It 

is also the quality that we strive for in this magazine — 

going an extra mile to reach beyond grade A. 

President: Keith Pogson 

Email: president@hkicpa.org.hk 

Vice Presidents: Susanna Chiu, Clement Chan 

Chief Executive and Registrar: Raphael Ding 

Email: ce@hkicpa.org.hk 

Deputy Director of Communications: Stella To 

Editorial Advisers: Daniel Lin, Clement Chan, K.M. Wong 

Editorial Manager: John So 

Editorial Coordinator: Maggie Tam 

OFFICE ADDRESS: 

37/F, Wu Chung House, 

213 Queen’s Road East, Wanchai, Hong Kong 

Tel: +852-2287-7228 Fax: +852-2865-6603 

MEMBER AND STUDENT SERVICES COUNTER: 

27/F, Wu Chung House, 213 Queen’s Road East, 

Wanchai, Hong Kong 

WEBSITE: www.hkicpa.org.hk 

EMAIL: hkicpa@hkicpa.org.hk 

M&L 

Editor: George W. Russell 

Managing Editor: Gerry Ho 

Email: gerry.ho@mandl.asia 

Copy Editors: Akua Achampong, Jemelyn Yadao 

Production Manager: Jasmine Hu 

Design Manager: Jennifer Chung 

Contributor: Craig Stephen 

Editorial Assistant: Lucid Wong 

EDITORIAL OFFICE: 

2/F, Wang Kee Building, 

252 Hennessy Road, Wanchai, Hong Kong 

ADVERTISING ENQUIRIES: 

Advertising Director: Derek Tsang 

Email: derek.tsang@mandl.asia 

Tel: +852-2656-2676 

A PLUS is the official magazine of the Hong Kong Institute of 

Certified Public Accountants. The Institute retains copyright in 

all material published in the magazine. No part of this magazine 

may be reproduced without the permission of the Institute. The 

views expressed in the magazine are not necessarily shared 

by the Institute or the publisher. The Institute, the publisher 

and authors accept no responsibilities for loss resulting from 

any person acting, or refraining from acting, because of views 

expressed or advertisements appearing in the magazine. 

© Hong Kong Institute of Certified Public Accountants 

October 2012. Print run: 51,910 copies 

Subscription: HK$760 for 12 issues per year. 

See www.hkicpa.org.hk/aplus for details.

Mobile revolution to be 

focus of IT conference 

This year’s Information Technology Conference 

held by the Institute will cover the mobile 

revolution in the workplace and take place on 

17 November at the Kowloon Shangri-La Hotel. 

Speakers at the event include Victor Lam, 

deputy government chief information officer, 

Gan kok-tin, senior manager at PricewaterhouseCoopers, 

and David Mushinskie, group 

IT director at Avery Dennison, a labelling and 

packaging company. Members are urged to 

enrol for the event by 18 October to benefit 

from the early-bird discount. 

Dragon boat team 

excels in Sai Kung 

The Institute’s dragon boat team came second 

place in the mixed open golden bowl 

final and fourth place in the women’s open 

silver cup final in the Sai Kung Vigor Dragon 

Boat Race 2012 last month. The team also 

came third in the mixed category of the Hong 

Kong Sea School Charity Dragon Boat Championship 

2012. They competed against 15 

other teams at this year's CPA cup during the 

National Day celebration dragon boat invitation 

race on 1 October at Shaukeiwan. 

KPMG Polar Bears chill out 

in basketball competition 

KPMG’s Polar Bears team won the CPA basketball 

championship last month, beating 

21 other teams. KPMG’s Grizzlies and PwC 2 

came second and third respectively, while 

FTI Consulting were placed fourth. Jeffrey Ho 

Chun-hei, who plays for PwC 2, won the threepoint 

shootout game. 

Hong Kong Marathon 

set for 24 February 

The next Standard Chartered Marathon will 

be held on 24 February. The Institute has been 

given a pre-open application quota for 1,000 

Institute members. Members who wish to 

take part must register by 12 October. 

Annual dinner 

The Institute’s annual dinner, with the theme 

of "Guys and Dolls," has been set for 3 December 

and will be held at the Hong Kong 

Convention and Exhibition Centre. 


NEWS 

THE INSTITUTE 

Sustainability heads agenda 

at Institute conference 

Financial official, IIRC CEO to share views 

The Institute will hold a conference on 27 October to discuss the challenges 

and opportunities faced by Hong Kong as a global capital market. The event 

will focus on the role of sustainability in successful businesses and the future 

of the accounting profession. 

The one-day conference will feature a panel of speakers from leading 

companies and authorities. They include K.C. Chan, secretary for financial 

services and the treasury, Julia Leung, under-secretary for financial services 

and the treasury, Christine Loh, under-secretary for the environment, and 

Paul Druckman, chief executive officer of the International Integrated Reporting 

Council. 

The event, which is open to CPAs, regulators and academics, will be divided 

into two sections. The first, “Sustainability – business strategy, governance 

and reporting,” will cover the importance of sustainability from a business 

point of view and how to report it to investors and the public. 

The second, “Expanding horizons – the profession of the future,” will involve 

speakers sharing their views on the skills accountants and businessmen 

will need to succeed going forward. Representatives from the Big Four, as well 

as companies such as COSCO Pacific and Hutchison Whampoa, will talk about 

how we should adapt to a changing business environment. 

The conference will take place at the JW Marriott Hotel, and the enrolment 

deadline is 15 October. 

Obituary 

Con Conway, IT pioneer 

and business executive 

Anthony Francis Martin “Con” Conway, chairman of I.Tel Holdings – an investment 

shareholding company for IT-related activities – died last month at the age 

of 72 after a long battle with cancer. Although not an accountant, Conway was a 

longtime supporter of the Institute. In particular, he was instrumental in spearheading 

many initiatives in innovation and technology education and awareness 

for the profession. He was also a member of the editorial board, which was 

tasked to oversee the Institute’s magazine. 

Conway had served as chairman of I.Tel Holdings since 1998. Before joining 

the company, he was director of New World Telephone for two years and director 

of Hong Kong Telecom for 11 years. 

The city’s media nicknamed him the “father of the IT industry in Hong Kong” 

after he worked as part of the team that installed the first computer in the territory 

in 1963. 

He was also chairman of the Hong Kong Management Association Information 

Technology Committee and a past president of both the Hong Kong Information 

Technology Federation and the Hong Kong Computer Society. 

A funeral mass was held at St. Joseph’s Church on 4 October.

NEWS 

INTERNATIONAL 

U.S. hopes more quantitative easing 

will stimulate economy, boost jobs 

Fed to buy extra US$40 billion of securities a month 

The United States’ Federal Reserve 

Board plans to buy an extra 

US$40 billion in mortgage-backed 

securities each month to boost the 

economy. 

The board, known as the Fed, 

already buys about US$45 billion a 

month in long-term treasuries and 

is hoping a third round of quantitative 

easing will further stimulate 

the economy and help relieve 

unemployment, now at about 8 

percent. 

Unlike the previous two instances 

of bond buying, where the 

Fed imposed a limit on the amount 

of bonds it would purchase, the 

board this time will continue to 

buy the securities until the job 

market shows significant improvement, 

Reuters reported. 

“We’re looking for ongoing, 

sustained improvement in the 

labour market,” Ben Bernanke, 

In a bid to boost its slowing 

economy, India’s government 

has announced reforms of the 

country’s retail and aviation sectors 

by opening them to foreign 

investors. 

India’s cabinet last month 

agreed to allow 51 percent foreign 

direct investment in multibrand 

retail stores. Wal-Mart of 

the United States, Tesco of the 

United Kingdom and Carrefour 

of France are expected to make 

investments. 

India’s individual states and 

territories will be given the 


mortgage rates, 

Eric Rosengren, 

the president of the 

Federal Reserve 

Bank of Boston said 

on 20 September, 


“The actions taken 

by the [Fed] provide 

Ben Bernanke significant additional 

support to the 

the Fed chairman, said at a press economic recovery,” Rosengren 

conference last month. “There is said in a speech. 

not a specific number we have in Some governments opposed a 

mind [but what] we’ve seen in the new round of quantitative easing. 

last six months isn’t it,” he said. Guido Mantega, Brazil’s finance 

The Fed also announced that it minister, warned that the move 

would continue Operation Twist, would affect the rest of the world. 

which involves selling short-term Two years ago, the second 

bonds and using the proceeds to round of quantitative easing by 

buy longer-term bonds in order to the Fed pushed billions of dollars 

keep interest rates lower. 

abroad, leading to the apprecia- 

The decision is already having tion of many emerging-market 

a positive effect on wholesale currencies. 

AFP 

India opens retail, aviation to foreign investors 

final say on whether to allow 

multi-brand retail stores in their 

respective jurisdictions. 

So far, nine states, including 

Andhra Pradesh, Haryana, Maharashtra, 

Rajasthan and the 

National Capital Region around 

Delhi, have agreed to the new 

arrangement, according to The 

Times of India. 

The policy prohibits multibrand 

retailers with foreign 

direct investment from trading 

through e-commerce, preventing 

Amazon and others from entering 

India. 

“We’re glad about the 

progress that has been made in 

India, but there are conditions,” 

Lucy Neville-Rolfe, a director of 

Tesco, Britain’s biggest retailer, 

told the Economic Times. “We 

have to study the impact of the 

conditions.” 

India will also permit foreign 

airlines to buy minority stakes of 

up to 49 percent in Indian domestic 

carriers. 

However, analysts were sceptical 

that foreign airlines would 

rush to invest in the ailing Indian 

aviation sector. 

Germany pegs 

cost of bailout 

at €190 billion 

Germany is expected to contribute 

27 percent, or €190 billion, of the 

euro zone rescue fund, after the 

Constitutional Court, the country’s 

highest judicial body, ruled 

that the European Stability Mechanism 

and the European Union’s 

Fiscal Compact are compatible 

with the country’s basic law. 

The court decision, announced 

last month, removed 

the last obstacle preventing the 

deployment of €500 billion. 

“Germany is fulfilling its full 

responsibilities as the biggest 

economy and a trusted partner 

in Europe,” Chancellor Angela 

Merkel said after the decision. 

“This is a good day for Germany 

and a good day for Europe.” 

The court ruled that Germany 

could proceed with its contribution 

to the mechanism, but 

required parliamentary approval 

of any increase in the agreedupon 

€190 billion. 

Jean-Claude Juncker, who 

chairs the Eurogroup, a panel of 

euro zone finance ministers, said 

he would call the first meeting of 

the mechanism’s board on 8 October, 

the German news agency 

DPA reported. 

Some experts saw the ruling 

as a step toward the common 

sharing of debt among members 

of the euro zone. “This may 

stabilize the currency union, but 

it will change its character,” Jörg 

Krämer, chief economist at Commerzbank 

in Frankfurt, told The 

New York Times. “This will be the 

starting point of what I call the 

union of mutualized debt.”

European Central Bank may gain 

powers to oversee euro area lenders 

Germany concerned about European Commission proposals 

The European Commission 

last month 

announced a plan to 

allow the European 

Central Bank to supervise 

all euro zone 

financial institutions 

as a first step toward 

a so-called “banking 

union.” 

The commission 

said it intends to give 

the central bank new powers to 

monitor euro zone banks under a 

single supervisory mechanism. 

Germany immediately raised 

objections that the proposals 

risked overstretching the bank. 

Chancellor Angela Merkel’s 

coalition government wants the 

bank’s new powers to apply only 

to systemically relevant or crossborder 

institutions. 

This coincides with the 

AFP 

U.S. pays whistle-blower US$104 million reward 

Tax authorities in the United 

States paid out a US$104 million 

reward to a former UBS banker 

after information he provided 

helped recover US$800 million 

in fines. 

Bradley Birkenfeld, 47, 

received the cash reward after 

divulging schemes that Swissbased 

UBS used to encourage 

American citizens to dodge their 

taxes. The bank subsequently 

paid a US$790 million fine to 

avoid criminal prosecution. 

Birkenfeld was also impli- 

commission’s plans to give new 

powers to the European Banking 

Authority, which currently regulates 

the euro zone’s banks. 

Current rules mean that 

decisions made by the authority’s 

panel need to receive 

support from a majority of all 

27 European Union countries. 

The new proposal would see this 

procedure reversed: the panel’s 

decisions will be implemented 

AFP 

cated and charged with fraud for 

withholding crucial information 

from federal investigators. He 

pleaded guilty in 2008 to one 

count of conspiracy to defraud 

and was given a 40-month 

sentence. 

The US$104 million payout is 

said to be the largest ever paid by 

the U.S. Internal Revenue Service 

under its whistle-blower programme, 

which offers informants 

rewards of up to 30 percent of any 

fines and unpaid taxes recovered 

by the government. 

Angela Merkel 

automatically unless 

there is a majority vote 

against it. 

In addition, a 

proposed independent 

panel of officials would 

have powers to impose 

European Union laws 

and arbitrate disagreements 

between euro 

zone and non-euro countries, 

such as Britain. 

Germany remains the major 

obstacle to a European banking 

union. Michael Grosse-Broemer, 

the chief whip of Merkel’s 

conservatives, told Reuters that 

Germany’s current deposit 

guarantees would not become 

part of any EU-wide deposit 

guarantee scheme. “We need a 

clear-cut separation of national 

and European deposit guarantees,” 

he said. 

Since the law was strengthened 

in 2006 it has generated 

hundreds of claims alleging tens 

of billions of dollars in tax evasion, 

reports Bloomberg. 

Senator Charles Grassley, who 

sponsored the law, defended the 

payout, telling The Wall Street 

Journal, “An award of US$104 

million is obviously a great deal 

of money, but billions of dollars 

in taxes owed will be collected 

that otherwise would not have 

been paid as a result of the 

whistle-blower information.” 

Nomura plans 

cuts after 

failed takeover 

Nomura Holdings plans to slash 

jobs in the Europe and North 

America to save US$1 billion after 

the financial institution’s chief 

executive admitted that the acquisition 

of Lehman Brothers assets 

was not a successful manoeuvre. 

The brokerage firm is taking 

measures to become an Asiacentred 

business, undoing ambitious 

groundwork laid out by the 

previous management team after 

the company bought a large part 

of Lehman Brothers in 2008. 

The Tokyo-based broker has 

barely turned a profit since the 

Lehman acquisition due to tough 

business conditions amid the 

European debt crisis. Nomura 

has chalked up nine consecutive 

quarterly losses at its overseas 

operations. 

Its new chief, Koji Nagai, said of 

the Lehman deal: “People ask me 

whether the Lehman acquisition 

failed… and with this performance, 

we can’t say it’s been a 

success.” 

Nagai replaced former chief 

Kenichi Watanabe in August as 

part of a management reshuffle. 

According to Bloomberg, Nomura 

has about 12,800 overseas 

employees, compared with a work 

force of 22,000 in Japan. About 30 

percent of Nomura’s current staff 

were with Lehman prior to the 

takeover. 

Nomura says it will complete 

the latest round of restructuring 

by March 2014. It is aiming for 

pre-tax profits of 250 billion yen, 


October 2012 7

PCAOB reports high level 

of U.S. audit deficiencies 

Regulators in the United States are still finding a 

high level of deficiencies in the work of the Big 

Four. Most of the Public Company Accounting 

Oversight Board’s 2011 inspection reports of the 

firms have yet to be issued, but they will show a 

continued “spike” in audits found to have serious 

problems, PCAOB member Jeanette Franzel 

said in a speech in Chicago last month. Last year 

the board found deficiencies in almost a third of 

audits they examined at Deloitte, Ernst & Young, 

KPMG and PricewaterhouseCoopers. 

H&M sales miss estimates 

due to August heatwave 

Clothing retailer Hennes & Mauritz announced 

third-quarter sales that missed analyst estimates 

due to a heatwave across parts of Europe in August 

discouraging shoppers. Revenue, excluding 

value-added tax, rose to 28.8 billion kronor (about 

HK$34 billion) in the quarter to 31 August, missing 

the 29.8 billion kronor average estimate of 19 

analysts surveyed by Bloomberg. Germany, Spain 

and France all recorded above-average temperatures 

in August. 

Groupon names KPMG 

veteran to senior position 

The Chicago-based discount coupon website 

Groupon has appointed Brian Stevens, a former 

KPMG audit partner, as its new chief accounting 

officer. In a regulatory filing in the United States, 

associated with a disclosure in March that stated 

the company’s fourth-quarter results in 2011 were 

worse than previously reported, Groupon admitted 

that “there is a material weakness in the design 

and operating effectiveness of... [its] internal 

control over financial reporting.” 

IFRS Foundation appoints 

Asia-Oceania office director 

The Trustees of the IFRS Foundation have appointed 

Mitsuhiro Takemura as director of its 

Asia-Oceania liaison office. Takemura, a partner 

at Deloitte, was previously a technical fellow at 

the International Accounting Standards Board 

and a former member of the technical staff of the 

Accounting Standards Board in Japan. He will be 

inaugurated this month. 


NEWS 

INTERNATIONAL 

European Parliament report 

urges audit reform dilution 

EC proposals on rotation, share caps rejected 

A draft report by the European Parliament’s legal affairs committee has suggested 

watering down the proposed European Commission reforms of the 

auditing profession. 

The commission tabled proposals that would require companies to change 

their auditor every six years. It also proposed introducing caps on market share 

that would force the Big Four to split the provision of audit and non-audit services. 

However, the parliamentary report recommended that auditor rotation 

should only have to take place every 25 years and that share caps should not be 

introduced, Accountancy Age reported. 

The report, published last month, was drafted by Sajjad Karim, a British conservative 

member of the European Parliament. Socialist and green parties in 

the parliament favour wholesale reforms while centrist and right-wing parties 

are more committed to the status quo, the Financial Times reported. 

The Karim report is at odds with submissions the commission has received 

from shareholders of audited companies, the FT reported. Shareholders say 

significant adjustments need to be made for auditors to be more independent 

from the companies they oversee. 

Investors are also critical of the concentrated nature of the audit market, 

which is dominated by the Big Four. 

A paper calling for action has been signed by more than a dozen institutional 

investors and investor associations that collectively manage €732 billion of 

funds, the newspaper reported. 

IASB proposes new standard 

to improve hedge accounting 

The International Accounting Standards Board has released a new hedge accounting 

standard to replace IAS 39. 

The proposed new accounting standard, IFRS 9, has been designed to 

encourage improved risk management and was developed by the IFRS 

Foundation. 

It has been released with the hopes that it will make it easier for chief financial 

officers to navigate transactional risks. 

IFRS 9 will undergo a 90 day review period and the IASB will make any 

necessary ratifications. Usually the IASB releases proposed new standards in 

the form of an exposure draft, which allows for questions to be raised formally 

and calls for feedback from stakeholders. IFRS 9 has been released as a review 

draft and does not call for further consultation but is available for reference so 

that people can become familiar with its content. 

Initial plans to adjust and rework IAS 39 were closed in late 2010 and have 

only now been released. 

The new rules will take effect from 1 January 2015. However, companies 

can adopt them sooner if they wish.

NEWS 

GREATER CHINA 

Wen stands by monetary easing, 

pledges to meet economic goals 

Outgoing premier cites achievements at Tianjin summit 

Premier Wen Jiabao insisted that 

the government is stabilizing 

the economy, pledging that the 

country would meet its target of 

7.5 percent growth this year. 

Wen was speaking at the 

World Economic Forum in Tianjin 

last month in what is expected to 

be his final high-profile international 

appearance before he 

is scheduled to step down as 

premier by March 2013 after 10 

years in office. 

In his speech, he defended 

his government’s response to 

the 2008 financial crisis, which 

included some of the most extensive 

fiscal and monetary easing in 

history. 

“I want to make it clear here today 

that it was exactly due to our 

resolute decision and scientific 


response that China was able to 

avoid factory closures, job losses 

and return of migrant workers to 

their home villages,” the Financial 

Times quoted Wen as saying. 

“Thanks to our efforts, China 

was among the first to achieve an 

economic upturn and what we did 

was also vital in promoting world 

economic recovery,” he added. 

Wen pointed to the government’s 

surplus, which he said 

stood at ¥100 trillion by the end 

of July despite slowing revenues, 

as proof that the measures were 

successful. 

He added that the government 

had set aside about ¥100 billion 

as a stability and adjustment fund 

that it would not hesitate to use. 

The premier went on to detail 

the country’s other economic 

achievements during his time 

in office, including increasing 

GDP per capita from more than 

US$1,000 to US$5,432, creating 

100 million new jobs and raising 

China’s urbanization rate from 

39.1 percent to 51.3 percent. 

China’s economy has grown 

an average of 10.7 percent a year 

during Wen’s premiership. 

Boots kicks in 

to buy stake in 

drug company 

Alliance Boots, one of Europe’s 

largest pharmacy chains, 

announced last month that it 

will buy 12 percent of Nanjing 

Pharmaceutical Company for 

¥560 million. 

The Swiss company, better 

known by its trading name Boots 

after its British retail chain, 

outlined its ambitions in China, 

saying it was aiming for a share of 

up to 30 percent of China’s pharmaceutical 

distribution market. 

When finalized, the deal will 

make Boots the second biggest 

shareholder in Nanjing Pharmaceutical, 

the fifth biggest pharmaceutical 

distributor in China. 

Boots first entered China 

through a joint venture, Guangzhou 

Pharmaceuticals Corporation, 

in 2008. 

European Commission investigates solar panel dumping claims 

The European Commission has 

launched an anti-dumping investigation 

against Chinese solar 

panel manufacturers, examining 

whether the companies violated 

trade rules by selling their products 

below cost in Europe. 

According to the commission, 

this is the biggest anti-dumping 

complaint filed in terms of import 

value. “China exported solar 

panels and their key components 

worth around US$26.5 billion to 

the EU,” the commission said in a 

statement. 

The investigation came after 

EU Pro Sun, a group of more than 

Wen Jiabao 

20 European solar panel makers, 

filed a complaint. 

China’s Ministry of Commence 

said in a statement in 

response that China regretted 

the decision. “The European 

Commission went ahead to initiate 

the anti-dumping investigation 

despite repeated calls by 

China to solve the trade dispute 

on photovoltaic products via 

consultations and cooperation,” 

the statement said. 

Chinese solar companies 

expressed concern over tariffs 

that might result from the investigation. 

“The solar industry is 

AFP 

based on a global and complex 

value chain, and will be therefore 

substantially and negatively 

affected by trade protectionism,” 

Darren Thompson, managing 

director of the European arm of 

Yingli Green Energy, a Chinese 

solar panel manufacturer, said in 

a company statement. 

“There would be no winners 

but rather immeasurable 

damage and regression from our 

fundamental goal of making solar 

a cost-effective energy source 

available to everyone,” Thompson’s 

statement added. 

The EU said in its official 

journal, that if Chinese firms 

were found to be dumping, it will 

decide whether penalties should 

be imposed. 

In a separate trade complaint, 

the United States alleged that 

China has been unfairly subsidizing 

vehicle and automotive parts 

exports. 

The Chinese government rejected 

the accusations, saying the 

case was prompted by the U.S. 

presidential election campaign. 

China also filed a WTO complaint 

against the U.S., alleging 

that illegal duties were levied on 

many Chinese exports.

China Construction Bank plans 

US$15 billion Europe acquisition 

Chairman says continent remains attractive destination 

China Construction Bank plans 

to spend as much as US$15 

billion on a European bank 

acquisition in what would be the 

biggest-ever overseas deal by a 

mainland bank. 

“Some of the banks in Europe 

have been put up for sale [and] 

now we are looking for the right 

choice,” Wang Hongzhang, the 

bank’s chairman, told the Financial 

Times. 

Wang said CCB had set aside 

up to ¥100 billion to acquire a 

whole bank or a stake of 30 to 50 

percent in a larger entity. 

He added that policymakers 

have brought the financial crisis 

in Europe under control and that 

the region is still an attractive 

place to invest. 

“Opportunities in Europe are 

critical for the development of 

the bank ... We believe the European 

economy is still very strong. 

As the Chinese proverb says: ‘A 

starved camel is still bigger than 

a horse,’ ” Wang told the FT. 

He said that an investment in 

the United Kingdom, Germany 

or France is especially attractive 

because those economies have 

been less affected by the financial 

crisis and will help the wider 

region recover. 

Wang added that CCB wants 

to double the number of subsidiaries 

and branches around the 

world to 30 by 2015. 

Analysts have suggested 

that China’s banks could take 

advantage of the financial crisis 

to purchase assets in the United 

States and Europe. 

In July, Industrial and Commercial 

Bank of China completed 

a US$140 million purchase of the 

U.S. assets of Bank of East Asia. 

ICBC made the largest foreign 

deal by a Chinese bank to date 

when it paid US$5.5 billion in 

2007 for 20 percent of South 

Africa’s Standard Bank. 

Telecom companies deny espionage allegations 

Executives from Huawei and 

ZTE Technologies, China’s two 

largest telecom equipment 

makers, stood before legislators 

in the United States last month to 

deny allegations that they were 

helping the Chinese government 

to spy. 

The companies have 

been accused of deliberately 

leaving “back doors” open in 

their products to assist in the 

espionage of U.S. government 

and commercial secrets on 

behalf of Beijing. 

The U.S. House of 

Representatives intelligence 

Wang Hongzhang 

committee convened a hearing 

to discuss the allegations. “Our 

sources overseas have told us 

that there is a reason to question 

whether the companies are tied 

to the Chinese government or 

whether their equipment is as 

what it appears,” committee 

chairman Mike Rogers said. 

Charles Ding, Huawei’s 

chief U.S. representative, and 

Zhu Jinyun, a ZTE senior vicepresident 

for North America 

and Europe, disputed the 

accusations. “What they have 

been calling back doors are 

actually software bugs,” Ding 

AFP 

said in the hearing, noting that 

such bugs are common. 

The two executives also said 

their firms were independent 

of the Chinese government. 

“Huawei has not and will 

not jeopardize our global 

commercial success nor the 

integrity of our customers’ 

networks for any third party or 

government,” Ding added. 

Rogers said that he was 

disappointed by the responses. 

“I was hoping for more transparency, 

more directness in some 

of the answers,” he said at the 

close of the hearing. 

Home Depot 

takes charge 

over closures 

Home Depot, the American 

hardware retailer, said it 

would take a US$160 million 

after-tax charge in the third 

quarter as a result of closing 

its last seven stores in China. 

The charge includes the 

impairment of goodwill and 

other assets, terminations 

of leases and severance 

payments. 

The store closures reflect 

China’s preference for cheap 

labour, reducing demand 

for the chain’s do-it-yourself 

home improvement products. 

Home Depot is now focusing 

on online and speciality stores 

in the Chinese market. 

Home Depot and other 

retailers have struggled to 

expand in China, where 

the economic growth is at 

its slowest pace in three 

years. Retail sales in August 

increased by just more than 

13 percent from a year earlier, 

down from a 17 percent yearon-year 

increase in 2010-11. 

“We’ve learned a great 

deal over the past six years in 

China, and our new approach 

leverages that experience 

and reflects our continuing 

interest in providing value 

to Chinese customers as well 

as our shareholders,” Frank 

Blake, Home Depot’s chief 

executive, said in a statement. 

The U.S. retailer entered 

China in 2006 by acquiring 12 

stores, a number of which are 

among the seven to be closed. 


Entrepreneurs in pledge 

to strengthen Arab ties 

Chinese and Arab entrepreneurs agreed they 

should increase cooperation between their 

companies during a five-day China-Arab 

States Economic and Trade Forum in Yinchuan, 

Ningxia last month. He Ping, president of 

Shanghai-based Langsheng Investment, said 

cooperation between companies in China and 

Arab states is now limited to commodity purchases, 

sales in the manufacturing sector and 

labour for the service sector. “Such low-level 

cooperation is not good for the internationalization 

of Chinese or Arab companies,” he said. 

Investors need protection, 

Morgan Stanley boss urges 

Wei Sun Christianson, co-chief executive of 

Morgan Stanley’s Asia operations and head 

of its China business, said Chinese regulators 

should do more to protect investors. During a 

panel discussion at the World Economic Forum 

in Tianjin last month, Christianson said 

regulators need to look deeper when examining 

initial public offerings. “Instead of looking 

at the profitability – the business model of the 

company – they should focus more on things 

such as protection of the interests of the investors,” 

she said. 

Liberian auditors pursue 

Nanjing master’s degrees 

Ten staff members of the General Auditing 

Commission of Liberia have headed to the 

mainland to pursue two-year master’s degrees 

in auditing at Nanjing Audit University. They 

are expected to combine their studies with 

professional certification programmes. 

Shanghai police detain 35 

over forged textbooks 

Police in Shanghai have detained 35 people 

suspected of forging thousands of accounting 

and financial analysis textbooks. More than 

20,000 books purporting to be published by 

the Association of Chartered Certified Accountants 

and the Chartered Financial Analysts 

Institute were confiscated, according to the 

Yangpu district police department. The books’ 

retail value was estimated at ¥200 million. 


NEWS 

GREATER CHINA 

E&Y told to offer evidence 

behind “state secrets” claim 

Court tells Big Four firm to provide explanation 

The Court of First Instance in Hong Kong has ordered Ernst & Young to file evidence 

on or before 15 October to explain why the accounting firm cited China’s 

laws on state secrets as the reason for refusing to hand over records related to the 

audit of a Chinese company. 

In August, E&Y declined a request from the Securities and Futures Commission 

to produce audit papers and accounting documents relating to the listing 

application of Standard Water, one of the accounting firm’s clients. 

E&Y claimed that the records were held by its mainland joint venture partner, 

EY Hua Ming, and fell under China’s state secrecy laws. The SFC launched legal 

proceedings against E&Y for failing to comply. 

The court can order E&Y to comply with the SFC’s request if it judges that the 

accounting firm does not have a reasonable excuse for not complying, Accounting 

Today reported. 

E&Y resigned as auditor of Standard Water in 2010 due to “certain inconsistencies 

in documentation,” and the company withdrew its listing application shortly 

afterwards, according to the SFC. 

This is the second SFC action related to China secrecy laws. On 22 August, the 

commission suspended trading in shares of Hong Kong-listed China High Precision, 

a maker of automation equipment, after the company declined to provide 

sufficient information to its former auditor, KPMG, saying its business involved 

Chinese state secrets. 

PCAOB slaps fourth ban related 

to mainland issuers in a year 

The Public Company Accounting Oversight Board in the United States has banned 

Michael Studer, the president of the Studer Group accounting firm, from preparing 

an audit report for a securities issuer for three years. The PCAOB’s action 

against Studer is its fourth China-related enforcement this year. 

The regulator said that the accountant failed to comply with the PCAOB’s auditing 

standards for two Chinese companies: China Clean Energy, a biodiesel and 

specialty chemical producer, and China Kangtai Cactus, a biotechnology company. 

The PCAOB also cited the accounting firm’s failures in the audit of Biocoral, an 

international company specializing in the research and development of biomedical 

technologies and biotechnologies. Studer, whose firm has offices in Freeport, 

New York, and Vancouver, did not respond to requests for comment from Barron’s, 

the publication reported. 

A few months earlier, the PCAOB fined the Buffalo, New York, accounting 

firm of Brock, Schechter & Polakoff US$20,000 for improper work undertaken for 

companies in China. James Waggoner, one of the firm’s principals, was fired over 

the work and banned from public accounting for three years.

LegCo representative 

CLOCKING 

IN AT 

LEGCO 

After his election victory in the accountancy functional 

constituency, Kenneth Leung tells George W. Russell about 

audit liability reform and other important debates in which he 

will be representing accountants at the Legislative Council 

Photography by Samantha Sin 

Kenneth Leung 

might be keeping 

a sharper eye 

on his collection 

of clocks on 3 

October. That’s 

when the tax 

partner at the Clifford Chance law firm and 

Hong Kong Institute of CPAs fellow takes office 

as a member of the Legislative Council. 

Time is not something Leung has had to 

spare recently. He has barely had an opportunity 

to celebrate his win after the 9 September 

election. By the close of ballots at 10:30 

p.m. the outcome was anyone’s guess. Leung 

waited all night with his campaign team until 

about noon the next day, when the result 

was announced. 

“That afternoon I had a quiet lunch with 

my wife, and then she went to work,” says 

Leung. “I took my eight-year-old son to his 

piano class in Wanchai – just doing things as 

normal as possible.” Leung spent the rest of 

the afternoon responding to congratulatory 

emails and text messages. “I make it a point 


to reply to emails myself.” 

The election was sparked by the retirement 

of Paul Chan as the LegCo representative 

of the accounting profession. Leung won 

a four-way battle with 7,701 votes – around 

46 percent of the total cast. “If Paul had been 

the opponent, really, my chances would have 

been slimmer,” says Leung. 

Leung says he is ready to put his platform 

into practice. He soon returns to the theme 

of time, specifically the working hours of 

accountants. “Their work-life balance is not 

good,” he says. “In general all professional 

people in Hong Kong are working terribly 

long hours.” 

However, Leung is wary of setting standard 

working hours, a proposal periodically 

raised at LegCo over the past decade or so. 

“There is also an outcry from various political 

parties that we want standard working 

hours, we want maximum working hours 

legislation,” notes Leung. 

“I think this type of legislation should be 

kept flexible so as to enable our profession 

to function. You can’t just say you don’t work 

more than nine hours a day or the profession 

will be dead.” 

Leung suggests that exemptions could be 

applied to workers beyond a certain earning 

threshold. “So standard working hours 

wouldn’t apply to people earning more 

than, say, HK$40,000 a month. Or in addition 

to that the standard working hours legislation 

could use something on a yearly or 

monthly basis rather than saying no-one can 

work more than a certain number of hours 

a day.” 

Platform priorities 

Staff at LegCo’s new complex in Tamar wave 

to and greet Leung as he sips tea in the lobby 

canteen. He is no stranger to politics. In 

2005, he was voted onto the Hong Kong Chief 

Executive election committee by the accountancy 

sub-sector. 

Leung was a co-founder of The Professional 

Commons, a political think tank 

aligned with the pan-democratic movement 

established in 2007. Today he serves as a 

member of a number of statutory bodies, in-


??????????? 

LegCo representative 

“Out of the four regulators in Hong Kong, 

we are the only one that has a statutory 

remit or obligation to educate investors 

but our jurisdiction covers only the 

securities and futures market.” 

cluding the Hong Kong Housing Authority, 

the Independent Police Complaints Council 

and the Estate Agents Authority. 

Leung says he has been involved in public 

service since he was a form three student. “I 

was writing articles for a newspaper for the 

aged, visiting aged people’s homes and giving 

free tutorials to underprivileged children,” 

he recalls. 

With accountants as his constituents, 

Leung believes the issue of audit liability 

should be his top priority. “First and foremost... 

[is deciding whether to deal with] 

criminal liability, which has just been embedded 

in the Companies Amendment Bill, 

or civil liability, which we have been discussing 

for a long time,” he says. “I think dealing 

with the criminal aspect could be the more 

imminent task that I should aim to tackle. 

“I was not happy with the original draft 

and that’s why I want to... work with the gov- 


ernment to revise the draft to one that is less 

damaging to the profession. We can tell the 

public that their interests are protected but 

we are not trying to penalize innocent [audit] 

managers.” 

Leung notes that civil liability reform has 

been discussed for almost 10 years. “I have a 

lot of friends in the profession who want the 

liability to be capped... [but] I think this society 

is more pluralistic and really you have to 

do it step by step. You can’t just say we have to 

have a cap. 

“One way moving forward is to introduce 

a limited liability partnership concept – although 

there are accountancy firms (smaller 

ones, medium-sized ones) which have already 

incorporated – [in which] individual directors 

can be shielded from the wrongdoing of other 

directors in the same firm. But for larger practices, 

which still maintain a partnership structure, 

liability is joint and several.” 

Audit reform 

Liability is just one of a range of contentious 

issues that Leung will have to deal with. 

Another heated topic is audit reform. “The 

global trend is that auditors should be seen as 

independent and they should not be engaged 

as advisers to a company they are auditing,” 

he says. 

But many accounting firms rely on both 

audit and consulting for revenue, and Leung 

notes that any reform will have to be pragmatic. 

“I understand their concern,” he says. 

“I know that a lot of the smaller firms do not 

like the idea as they do the whole package. 

Maybe there... [could be] a possible exemption 

for the auditing of private companies.” 

Another thorny matter, he says, is the 

evolving role of the Financial Reporting 

Council, and the question of whether it 

should take up more regulatory functions 

from the Hong Kong Institute of CPAs.

“Should their role be expanded? Should they 

oversee practice review as well? It’s a difficult 

issue and we need to have some consensus 

and we need to look at it very soon – we 

can’t just duck our head and hope the problem 

will go away.” 

Meanwhile, Leung supports continued 

engagement with China’s accounting profession. 

“I think in general [China has] a group 

of very good, well-trained accountants and 

the numbers have been growing dramatically,” 

he says, adding that the Institute can 

help with quality control through more 

training. 

“It is I think vital to have more opportunities 

to cooperate with our Chinese counterparts 

to give them more international 

exposure and gear them towards the international 

way of doing business. Our role is to get 

them to the global village of compliance.” 

Recent controversies have highlighted 

A PLUS 

“ Time management is really important. In 

fact I have a clock in every room at home: 

the toilet, the kitchen, the sitting room. 

Everywhere I can see a clock... I want to 

reassure myself I’m not missing anything.” 

what Leung sees as the most pressing issue 

between Hong Kong and the rest of China: 

enforcement. “There is a case where the reporting 

accountants are being asked by the 

Securities and Futures Commission to disclose 

certain audit working papers, but due 

to confidentiality they claim there is a national 

security issue at stake.” 

Leung believes the SFC will have to work 

with regulators in China to find a way for 

the information to be disclosed. “We need to 

have a common concept of what is – and what 

is not – confidential information so all these 

listed companies will not be forced into seeing 

this as a kind of safe haven whenever they 

don’t want to disclose something.” 

Working with lawyers 

Leung’s role as a lawyer means he is at ease 

dealing with regulation and legislation. “I 

did my accountancy qualification first, then 

I thought it was a good idea to do a conversion 

course and become a lawyer,” he says. 

“When I was in England doing tax work 

for a Big Eight firm – Price Waterhouse as it 

was back then – it was very legalistic,” he recalls. 

“Apart from computation, you had to 

do a lot of advisory work. It did involve a lot of 

reading of cases and European Commission 

decisions, and I thought it was a good idea to 

combine it with the law.” 

Leung supports amending Hong Kong 

legislation to allow accountants and lawyers 

to work together. “In Germany in fact, in my 

firm, we have a team of lawyers and a team of 

accountants both housed under the one roof. 

We do complement each other. It works.” 

As a tax specialist, Leung has spent a lot 

of time looking at how Hong Kong’s revenue 

system could be improved. He is concerned 

by Hong Kong’s reliance on real estate transactions: 

property taxes, stamp duty and profits 

tax from big property investment compa- 

nies and developers. 

“If we are less dependent on property-related 

income, the crazy property values will 

come down,” he says. “I don’t want property 

prices to plummet in a few months, but it will 

gradually ease to a plateau level and that’s 

what I want to see.” 

One option is a goods and services tax. 

“Of course this is a controversial topic,” says 

Leung, who concedes that he doesn’t view 

value added tax as a definitive answer. “I 

can’t say whether it is an absolutely good 

idea for Hong Kong. From the experience of 

various jurisdictions, it sounds like it’s one 

of the most feasible ways of broadening the 

tax base.” 

Leung pauses to look at his watch and 

remind himself that he has another appointment 

straight after the interview. “Time 

management is really important,” he says. 

“In fact I have a clock in every room at home: 

the toilet, the kitchen, the sitting room. Everywhere 

I can see a clock. I have cuckoo 

clocks, digital clocks, different shapes and 

styles. I want to reassure myself I’m not 

missing anything.” 

However, with four years ahead as a legislative 

councillor, Leung will have to sacrifice 

some roles. “I’m also serving on statutory 

and advisory boards for the government, 

and I will not renew my membership of these 

boards.” 

Even Clifford Chance will see less of him. 

“I plan to retain about 40 percent of the level 

of my practice work,” he says. “The other 60 

percent will be my LegCo work and that is a 

promise.” 

However, Leung has progressive ideas 

about work-life balance. “I want to keep my 

weekends completely free,” he says. “Worklife 

balance is the hottest topic among accountants,” 

he notes. “Apart from salaries, of 

course.” 


Sustainability 

pple’s launch last month 

of its iPhone 5 drew a 

mostly positive reaction. 

The latest incarnation 

of the iconic 

device is bigger, 

faster, thinner 

and better connected, 

the critics 

responded. But, as some asked, is it more 

socially responsible? 

Sustainability, and corporate social governance 

as a whole, came to the fore last year 

with reports that iPhones, as well as other 

Apple products and those of Amazon, Dell 

and HP, were made in substandard conditions 

by overworked and underpaid Chinese 

labourers who, in some cases, apparently 

only escaped ill-treatment through suicide. 

In the case of Apple, the outcry resulted in 

damaging protests from New York to London 

to Sydney that called for better protection for 

workers. They snowballed into broader criticism 

of Apple’s social record: poorly managed 

use of toxic chemicals, an absence of emissions 

and other environmental targets and 

generally lax sustainability-related reporting. 


Companies are facing ever higher expectations 

when it comes to disclosing their sustainability 

plans following the Hong Kong stock exchange’s 

new reporting guide on environmental, social and 

governance issues. Craig Stephen reports 

Illustrations by Jammie Wu 

Apple defended its supply chain record, 

with Tim Cook, its chief executive, saying 

Apple caps work weeks at 60 hours, bans 

child labour, conducts safety inspections and 

sponsors educational programmes. Cook 

added that the Fair Labour Association, a 

non-profit monitoring organization, would 

start audits of Apple’s suppliers, including 

Foxconn factories in Shenzhen and Chengdu. 

Shareholders, 

employees, 

consumers and 

regulators are 

increasingly letting 

companies know 

the standards of 

corporate behaviour 

they expect. 

Over the years, sustainability has been 

pushed up the agenda of policymakers and 

corporations around the world. Sharehold- 

ers, employees, consumers and regulators are 

increasingly letting companies know the standards 

of corporate behaviour they expect. 

“The key [environmental, social and governance] 

issues that investors in Asia face 

are tightening environmental standards 

and labour unrest,” Amar Gill, head of Asia 

research at CLSA, and his team wrote in CG 

Watch, a corporate governance report issued 

last month. 

CLSA, a brokerage that says it strives to 

provide visibility on sustainable and ethical 

investing, notes that in Asia there are three 

drivers for better enforcement of environmental, 

social and governance issues: rightful 

resistance (by employees, activists and 

other stakeholders), supply-chain naming 

and shaming, and shareholder activism. 

“International companies take [sustainability] 

very seriously because they are 

scared of the liability,” says Peter Wong, 

chairman of The General Fiduciary Co., an 

investment and trustee company based in 

Hong Kong, and a member of the Hong Kong 

Institute of CPAs. “It is also increasingly necessary 

to show outwardly that a company is 

fit for purpose.”


Sustainability 

Workplace quality 

This area covers working conditions; health and 

safety; development and training; and labour 

standards policies. It can include information 

related to compensation and benefits; recruitment, 

promotion and dismissal policies; working hours 

and rest periods; diversity and welfare information. 


The meaning of environmenTal, 

social and governance issues 

Environmental protection 

The broad category of environment could include 

the use of resources, waste and emissions such 

as greenhouse gases (carbon dioxide, methane); 

generation and disposal of hazardous materials, 

water strategy and conservation; minimizing 

impact on community and surrounding areas. 

Operating practices 

This category includes supply chain 

management; product quality standards and 

monitoring; consumer protection, complaint 

and redress systems; advertising, packaging 

and labelling practices; data privacy issues, 

anti-corruption efforts and intellectual 

property policies. 

Community involvement 

Important community issues include direct 

involvement such as local investment; 

contributions of cash, time, space or labour 

to community projects covering education, 

health, culture, sport or other fields; general 

community engagement; visibility, accessibility 

and responsiveness to stakeholder concern. 

Key performance indicators 

affecting these four areas could 

include (1) employee demography 

and turnover; (2) emissions 

quantities and mitigation strategies; 

(3) supply-chain evaluation 

techniques and customer feedback; 

(4) community contributions 

measured by money, time or other 

involvement. 

Source: Hong Kong Exchanges and Clearing

Making a start 

Here in Hong Kong, companies generally 

have a mixed record on sustainability reporting. 

But Hong Kong Exchanges and 

Clearing hopes to change this after publishing 

its environmental, social and governance 

reporting guide this year. The guide 

covers four areas – workplace quality, environmental 

protection, operating practices 

and community involvement – as well as 

general disclosure and key performance indicator 

recommendations. 

“Our guidelines are for the ‘everyman 

company,’ ” says Mark Dickens, head of listings 

at HKEx. “It’s a recommended practice, 

not best practice,” he adds, saying that the 

aim is to encourage beginners to make a 

start, while other companies can apply the 

higher standards. HKEx encourages issuers 

with a financial year ending after 31 December 

to implement the rules. 

The rationale behind this is to accommodate 

the wide divergence in existing behaviour. 

Some larger companies have been 

undertaking increasingly sophisticated sustainability 

reporting for over a decade and 

even dabbling with integrated reporting, yet 

there are many – indeed the majority – who 

have still to get off the starting blocks. 

One of the most widely used sets of sustainability 

standards is from the Global 

Reporting Initiative, an Amsterdam-based 

non-profit organization that promotes economic, 

environmental and social sustainability. 

The organization offers several 

guidelines, including a comprehensive reporting 

framework for various industries. 

Another set of standards is issued by the 

United Nations Global Compact, headquartered 

in New York, which held its China-Japan-Korea 

roundtable in Seoul last month to 

discuss value chain management in the context 

of sustainable development. 

The Asia Pacific tends to be behind the 

curve in sustainability reporting, though requirements 

in Hong Kong are expected to be 

stiffer within a few years. For example, the 

HKEx guide is only a recommended practice 

now, but by 2015 the intent is to develop 

it into “comply or explain” requirements. 

“This means you have to say why you are not 

doing it,” says Dickens. “Peer group pressure 

can be very powerful in relation to the corporate 

governance code.” 

Hugh Gozzard, an enterprise risk services 

principal at Deloitte Touche Tohmatsu and 

an Institute member, agrees with Dickens 

that peer pressure is important. “If you do 

not take up environmental, social and governance 

reporting, then you are going to 

look progressively worse as more of your 

peers adopt it.” 

Some Institute members question whether 

HKEx could do more to get locally listed 

companies to change their reporting practices. 

“It is very mild,” Wong at The General 

Fiduciary Co. says of the exchange’s requirements. 

“[They are saying] we encourage you 

to do it, meaning… you can if you want to.” 

The Institute supports the HKEx efforts. 

“Hong Kong needs to step up to prove it has 

the same commitment to sustainability as its 

Some larger 

companies have 

been undertaking 

increasingly 

sophisticated 

sustainability 

reporting for over a 

decade... yet there 

are many who have 

still to get off the 

starting blocks. 

competitors,” says Chris Joy, the Institute’s 

executive director. “We are very pleased the 

exchange took this initiative.” 

Joy points out that many areas come 

under the sustainability umbrella such as 

environmental, social and governance; corporate 

social responsibility; and integrated 

reporting. Whatever the terminology used, 

he adds, the starting point is to get management 

to understand the business benefits. “It 

is not an easy first step. You need to structure 

your business models around sustainability.” 

Arguably, local companies are only taking 

their lead – or lack of – from the Hong 

Kong government, which has a history of 

dragging its feet when it comes to legislating 

good corporate behaviour. For instance, 

Hong Kong has for years remained one of 

the few international jurisdictions without 

a competition law, although one is due to be 

effective from next year. 

“There is very little appreciation of sustainability 

and generally less public pressure 

to act, even though it’s happening all over 

the world,” says Wong. “When it comes to 

pollution most people just hold their noses,” 

he adds. “People are more worried about 

paying more for the buses.” 

Potential confusion 

One hurdle to moving ahead is the considerable 

knowledge gap over what to measure 

and report. Experts say there is often confusion 

over what should be included. 

A distinguishing feature of sustainability 

is it must be an activity that is directly related 

to reducing risk. “It has to be seen as part 

of the strategy of the business where you 

identify value and not just public relations,” 

says Gozzard. “If it isn’t, the danger is it can 

be seen as green-washing or propaganda.” 

Jeanne Ng, director of environmental affairs 

at CLP, says there has to be a business 

case for acts of sustainability. “It is not just 

to make us feel good.” She distinguishes 

sustainability acts from corporate philanthropy, 

which is an act of doing good where 

nothing is expected in return. “If we are, say, 

building hospitals, it is because we are looking 

at managing our commercial and social 

risks.” To CLP, building a hospital counts as 

sustainability rather than philanthropy because 

it reduces social risks by developing a 

strong link with the community. 

Sustainability is still an area of considerable 

experimentation, competing standards 

and varying degrees of sophistication. 

Yet the advice is that getting started 

is important. “HKEx recognizes that small 

companies have limited resources and are 

usually stretched at senior management levels, 

which is why we have given them three 

years,” says Dickens. “They can also pick and 

mix on indicators, while at the same time we 

are providing seminars and training to get 

them up the learning curve.” 

The implementation of environmental, 

social and governance reporting should not 

daunt companies, experts say. According to 

Gozzard, the key is to get buy-in from management, 

who need to see the long-term value. 

Benefits include not just risk reduction, 

but also attracting better talent, a better image, 

better funding and a more favourable 

relationship with suppliers. 

In the decade since CLP began working 

on sustainability it has become much more 


systematic, says Ng. “We have built up a system 

for reporting environmental, social and 

governance data in a more systematic way.” 

This, she says, prepared CLP for the next 

step of integrated reporting, which combines 

a sustainability report and annual report, 

leading to new challenges. 

“You have to find key performance indicators 

that are not only material but robust 

enough to go in the annual report. For sustainability 

data to be included in the annual 

report, [it] will need to go through the audit 

committee before ultimately being signed off 

by senior management.” 

The worry for many, however, is that environmental, 

social and governance reporting 

sounds as if it adds another burden to timepressed 

companies. In the profession, there 

is also a wider debate about whether improving 

the quality of general financial reporting 

is a more pressing need. 

A further complaint is that companies 

are too busy focusing on survival, or simply 

keeping up with recently introduced accelerated 

reporting schedules required by the 

exchange, to worry about environmental, 

social and governance reporting. 

This is a misunderstanding, says Paul 

Druckman, chief executive officer of the International 

Integrated Reporting Council, 

a global body that encourages companies 

to integrate strategy, governance, environmental 

and economic context into financial 

reports. 

Druckman says the aim is that rather than 

being primarily an exercise in compliance, 

an integrated report should be the real company 

story, including not just sustainability 

but also other factors such as intellectual assets 

and human capital. 

“While environmental, social and governance 

reporting is additional disclosure, 

The aim is that 

rather than being 

primarily an exercise 

in compliance, an 

integrated report 

should be the real 

company story. 

integrated reporting is an evolution not an 

addition,” says Druckman, who will be a 

keynote speaker at the Institute’s conference 

on 27 October, which will focus on both sustainability 

and the future of the profession. 

One encouraging sign is that more companies 

see the value of obtaining a high rank 

on indices that measure environmental, 

social and governance reporting. These include 

the HSI sustainability index in Hong 

Kong, which is provided by RepuTex, an advisory 

firm that specializes in sustainability 

risk analysis and rates 636 Hong Kong and 

mainland-listed companies. 

The biggest question, perhaps, is whether 

companies will get rewarded for their extra 

reporting efforts. Dickens says this type of 

reporting is becoming more important to investors. 

“It is not of course as important as a 

profit warning but it will affect confidence in 

companies and in the market.” 


Success ingredient 

Tang Nai Hoi, chief financial officer 

IBM China and Hong Kong 

For Tang Nai 

Hoi, a career 

at IBM has 

involved a 

lot of adaptation. 

Just as 

the hardware 

technology pioneer 

evolved 

into a software and services company, Tang 

has seen his role change with the times. 

“IBM is a company with a lot of reflections,” 

says Tang, chief financial officer of 

IBM China and Hong Kong Limited and a 

member of the Hong Kong Institute of CPAs. 

“It always goes through self-diagnostics to 

find out what and how it can do better.” 

Tang, known widely as NH, has helped 

to guide some of the transformations at IBM 

during his 27 years at the company. He views 

his role as much a troubleshooter as an accountant. 

“I think an accountant is just like a detective,” 

he muses. “You find out what’s going 

on, how it happened, why it happened and 

whether there is any way to resolve it.” 

When Tang joined IBM in 1985, it was at 

the forefront of computing. The IBM Personal 

Computer was just four years old and was 

the company’s first significant collaboration 

with a growing chipmaker called Intel and 

an emerging operating system programming 

company named Microsoft. 

Fast forward to less than a decade later, 

however, and IBM – nicknamed Big Blue – 

was confronting strategic challenges. It had 

grown vast but slow and was seeing its nimbler 

competitors grab market share. From 

1993, the company shed tens of thousands of 

employees and consolidated its structure, a 

project that involved Tang’s expertise. 

“[In the] 1990s, we underwent transformation 

across many different areas,” Tang 

recalls. He remembers when each of the 

IBM business locations – there are about 

150 now – had its own data centre. By 1994, 

there were just two locations across the Asia 

Pacific – Australia and Japan – chosen for 

their political and social stability. “We made 

major savings from that,” says Tang. In 1999, 

when Tang was working in Tokyo, the Japanese 

data centre was merged into the one in 

Australia; this time for geological stability. 

Tang also helped oversee a consolidation 

of accounting processes in the Asia Pacific. 


“[Ledger] accounting moved from Hong 

Kong to Australia, while employee accounting 

moved to our Beijing centre,” he recalls. 

Another centre in the United States handles 

inter-company and tax-related matters, 

and there’s a fixed asset accounting centre 

in Eastern Europe. “I work with our people 

from a lot of different places,” he says. “I 

know their emails and we talk but I never see 

them,” he adds, referring to his colleagues 

around the globe. “I often just know their 

Facebook pictures.” 

Big Blue reborn 

Throughout the 1990s, 

when the hardware sector 

became increasingly competitive 

and less lucrative, 

IBM changed its business 

model to focus on growth 

businesses such as services 

and software. “IBM very actively 

transformed itself to 

make sure we are more efficient, 

more productive and 

can respond much faster,” 

says Tang. 

In 2002, IBM purchased 

PricewaterhouseCoopers’ 

management consulting 

and technology services 

arm for roughly US$3.5 

billion in cash and stock to 

expand the scope of its offerings. 

Large accounting 

firms were pressured to spin 

off their consulting businesses 

following the collapse 

of Enron and Arthur 

Andersen and the enactment 

of the Sarbanes-Oxley 

Act in the United States. 

Two years later, IBM sold 

its PC hardware division to 

Lenovo, the China-based 

computer firm. 

“Both moves were part 

of our strategy to move to 

the high value segment of 

the market,” recalls Tang. 

“The acquisition of PwC Consulting 

strengthened our consulting practice and 

ability to offer high value integrated solutions 

to our clients. With the divestiture of 

our PC business to Lenovo, we also formed 

a partnership with Lenovo and we’ve been 

benefitting from services and financing 

business through the relationship.” 

At the turn of the millennium, high profile 

corporate scandals such as Enron put 

internal control in the spotlight. True to a 

computer company’s ethos, IBM reviewed 

theirs in a systematic way. “We started a 

new process called ‘control closing’ after 

Sarbanes-Oxley was passed in the U.S.,” remembers 

Tang. “We review all the financial 

and operational processes, track samples of 

everything we do and see how many defects 

we have. When we have a defect we have to 

understand why and how it happened and 

how to fix it.”

Tang Nai Hoi, CFO of IBM China and Hong Kong, tells George W. Russell 

how he used his accounting and business skills to help his company 

keep up with three decades of blistering change in the IT world 

TRUE BLUE 

Photography by Samantha Sin 


??????????? 

Success ingredient 

The result, he says, is that process defects 

– that is, defects caused by the inherent 

design of the process – are minimized to 

maybe one each year. “We see more human 

defects,” he acknowledges. “We have to keep 

repeating training and communication.” 

More recently, the 2008 financial crisis 

has forced IBM to implement better due diligence 

after a significant client was toppled. 

“Since Lehman Brothers, we don’t assume 

all our clients are okay by default,” Tang 

says. “We go through all the necessary credit 

checks. Everyone has to start from zero.” 

Having sold off much of its hardware 


business and with the focus now very much 

on cloud computing, IBM’s presence has become 

harder to fathom. Tang does seem to 

miss some of the gadgetry of the old IBM he 

knew when he joined. “It’s more difficult to 

show you our products, because a lot of our 

products are not hardware,” he concedes. 

Nevertheless, after a quick rummage 

through drawers, Tang shows how IBM is 

still very much involved in developing much 

of the IT we use today. Placing a 2002 Fujitsu 

Lifebook tablet computer next to the latest 

smartphones, he says, “It doesn’t matter 

what the front end is; the back end is still our 

services and products,” pressing a few buttons 

to launch IBM software. 

Logical choice 

Fortunately for Tang, the prospect of change 

was why he joined the company. The Hong 

Kong Baptist University graduate was completing 

a master’s degree in business administration 

at the University of Texas at Austin 

– an institution proud of a long history 

of collaboration with IBM – when recruiters 

told him the company’s Hong Kong office 

was looking for staff. 

Tang, a keen mathematics student and

chess aficionado, signed up. “The interesting 

thing was that there were a lot of job roles 

and job rotation for six months or even up to 

two years,” he recalls. “I rotated between 

employee accounting, ledger accounting, 

tax accounting… I think I held nearly every 

accounting position. 

“Then I transferred to what we call our 

pricing unit,” he adds. The pricing unit is 

responsible for handling all the company’s 

pricing programmes with its customers. 

Later on, Tang worked in business planning, 

financial planning and consolidation. After 

two years in Tokyo at IBM’s Asia Pacific 

A PLUS 

“China, the growth engine of the 

global economy, has huge market 

potential. In addition, China 

offers a huge pool of talent for 

our delivery as well as for driving 

innovation. We currently have four 

global delivery centres in China, 

and we plan to make China our 

global innovation hub.” 

headquarters, Tang was assigned to head the 

China group in Beijing. 

IBM entered the Hong Kong market in 

1957. It opened its first China office in the 

1930s but was absent from the mainland between 

1949 and 1979 as China went through 

political and economic upheaval. 

Today, IBM’s China strategy is going full 

steam ahead. “Both China and Hong Kong 

are very interesting parts [of the world] for 

us,” says Tang. 

“China, the growth engine of the global 

economy, has huge market potential. In addition, 

China offers a huge pool of talent for 

our delivery as well as for driving innovation. 

We currently have four global delivery 

centres in China, and we plan to make China 

our global innovation hub. 

“In terms of talent, Hong Kong also has a 

special role to play,” adds Tang. “With Hong 

Kong being an international financial and 

business centre and a gateway to China, professionals 

from Hong Kong have... the capabilities 

to facilitate China enterprises growing 

globally and multinational corporations 

expanding into China. We set up one unit 

of IBM’s China development laboratory in 

Hong Kong about three years ago.” 


In 2000, Tang was appointed CFO of IBM 

China and Hong Kong. “I don’t think I’m 

a traditional CFO anymore… my current 

role involves many areas,” he says. “My role 

overlaps operations and how technology affects 

the process controls and efficiencies 

and costs. I focus on delivering business performance.” 

With Tang’s involvement, IBM’s China 

business is going strong, with revenue up 

21.6 percent last year from 2010. The company 

is expanding deeper into the country’s 

smaller cities such as Zhenjiang in Jiangsu 

province, where IBM is using hardware, 

software, services and technologies to monitor 

traffic and bus schedules and create a 

consolidated view of the city’s transport 

network. 

The project uses business analytics – the 

practice of methodically exploring an organization’s 

data to help optimize business 

processes – for which Tang has high hopes. 

“One of our [other] clients, a logistics company, 

feeds information from handheld [global 

positioning systems] back to their communications 

centre, which uses this information 

to adjust their delivery route on a real-time 

basis to maximize their efficiency.” 

The challenge for IBM, he says, is how to 

help clients put data to good use. “Our job 

depends on how creative and how innovative 

we are in using data,” he says. “The more 

we can think how to use data, the more we 

can make the tools to use it.” 

Basic road rules 

Tang says he couldn’t have reached his position 

without his core CPA training and 

refreshing his knowledge via continuing 

professional development – skills he likens 

to having a driving licence. “If you don’t have 

the basic skills you can’t drive the car,” he 

says. “I don’t expect everyone to be a racecar 

driver, but if you don’t have basic training 

it will not be safe for the driver or anyone 

else on the road.” 

Tang’s respect for a solid foundation is 

one of the reasons behind his involvement 

in IBM citizenship initiatives, which include 

funding social programmes and having employees 

active in the community. “I joined 

our volunteers in community service to visit 

the Junior Achievement leadership conference 

programme and met with 20 form four 

students. Two or three are taking accounting 

and they are afraid.” 

Accounting, Tang explains, is not a subject 

to be feared by young children. “Even in 

primary schools, students should be taught 

how to manage their own cash flow through 

their pocket money or through their lai see,” 

he says. 

Tang says that corporate accounting is not 

what it was. “Sometimes I think that working 

as a finance professional nowadays is a lot 

more complicated than 25 years ago. [Back] 

then it was straightforward: You booked the 

entries, and you didn’t need to know much 

about the outside environment.” 

That’s changed, says Tang. But that spells 

exciting opportunities for prospective accountants 

like the fourth form students. 

“Now you have to know what’s happening 

in China, what’s happening in Europe, 

and how it’s going to affect your clients, 

how it affects IBM and how it affects what 

I’m doing here.” 


Anti-money laundering 

COMING 

CLEAN 

Hong Kong has toughened its anti-money laundering 

legislation. George W. Russell finds out how financial 

institutions and accountants have reacted to the reforms 

Illustrations by Harry Harrison 

At first glance, 

HSBC and Standard 

Chartered 

appear to have 

little in common 

with Boma 

Amaso, an illegal 

immigrant 

languishing in a Hong Kong prison. But the 

banking giants and the 35-year-old Nigerian 

man have all been embroiled in the same 

crime: money laundering. 

In July, HSBC was forced to apologize to a 

Senate panel in the United States for inadequate 

compliance with anti-money laundering 

rules. The panel alleged that the bank 

allowed about US$15 billion to be laundered 

by drug gangs, terrorists and rogue nations. 

The bank set aside US$700 million in anticipation 

of fines. 

A month later, Standard Chartered 

agreed to pay US$340 million to a New York 

state regulator to settle allegations that the 

bank laundered US$250 billion for Iranian 


banks in violation of U.S. sanctions. 

In February, Amaso’s appeal against his 

40-month prison sentence was denied. He 

had earlier been found guilty of laundering 

“ Hong Kong has 

relatively free 

money flow and 

no remittance 

restriction, thus 

is a convenient 

place for money 

laundering 

activities.” 

more than HK$2.8 million through Hong 

Kong bank accounts. Prosecutors said he 

used forged Ghana and Lesotho passports to 

open multiple accounts at Public Bank, Citic 

Ka Wah Bank and Bank of China. 

Although the amounts laundered were 

worlds apart, they highlight the same question: 

Are anti-money laundering regulations 

stringent enough and are financial institutions 

doing enough to comply? 

Indeed, accountants say Hong Kong is 

vulnerable to money launderers. “Hong 

Kong is an international financial centre 

with a central geographical location in Asia 

that is attractive to criminals when they are 

looking to place, layer and integrate illegal 

funds,” says Gabriel Wong, specialist advisory 

services principal at BDO in Hong Kong 

and a member of the Hong Kong Institute of 

CPAs. 

“The problem with Hong Kong basically 

is that it’s a large cash society,” adds Jim 

Wardell, executive chairman of Baker Tilly 

Hong Kong Restructuring and Recovery and 

an Institute member. “There’s always the 

possibility of that being utilized for money 

laundering purposes.” 

“Hong Kong has relatively free money 

flow and no remittance restriction, thus is

a convenient place for money laundering 

activities,” says Patrick Lo, a partner at RSM 

Nelson Wheeler and an Institute member. 

In the Basel Institute on Governance’s 

country risk ranking released earlier this 

year, Hong Kong ranks 86th of 144 countries 

and territories with a score of 5.51 out 

of a scale of 10 – a rating of medium risk. (10 

being highest risk and the country with the 

higest risk being ranked number one.) Only 

two countries are rated low risk: Norway 

and Estonia. Most developed nations, such 

as the U.S., are deemed medium risk. 

Plugging the loopholes 

In Hong Kong, recent scrutiny by the Financial 

Action Task Force, a Paris-based intergovernmental 

body established in 1989 that 

has emerged as the international anti-money 

laundering standard-setter, has prompted 

recent legislative changes. 

The task force identified deficiencies 

in Hong Kong including the lack of several 

important factors conducive to tackling 

money laundering: customer due diligence, 

statutory backing for record keeping requirements, 

supervisory and enforcement 

powers for regulatory authorities, supervisory 

sanctions for non-compliance and 

a regulatory regime for remittance agents 

and moneychangers. 

Hong Kong ranks 

86th of 144 

countries and 

territories – a rating 

of medium risk. 

As a result, Hong Kong’s Legislative 

Council passed the Anti-Money Laundering 

and Counter-Terrorist Financing (Financial 

Institutions) Ordinance, which came into effect 

on 1 April. 

The new legislation codifies customer 

due diligence and record keeping require- 

ments; includes supervisory and criminal 

sanctions for contravention of the ordinance; 

empowers the Hong Kong Monetary 

Authority, Securities and Futures Commission, 

Office of the Commissioner of Insurance 

and the Customs and Excise Department 

to supervise compliance with the 

ordinance; and puts in place a licensing regime 

requiring remittance agents to be registered 

and overseen for the first time. 

It also establishes an independent tribunal 

to review decisions related to money 

service operator licensing and decisions 

made by authorities to impose supervisory 

sanctions. 

Rob Morris, the managing director of 

the Hong Kong office of global business consultancy 

AlixPartners and an Institute member, 

says the impact of the ordinance will be 

threefold. 

First, he says, “Prior to its enactment, 

the front line for anti-money laundering 

controls largely rested with banks. The ordinance 

moves this front line slightly by forc- 


Anti-money laundering 

ing moneychangers and remittance agents 

to be licensed entities.” 

Second, Morris says the ordinance provides 

some teeth to existing regulations enabling 

criminal sanctions to be imposed on 

top of administrative penalties. 

Third, it provides some additional clarification 

on steps regulated entities can take to 

ensure an adequate compliance programme. 

“This could include the use of a risk-based approach 

to determine the level of due diligence 

needed around a customer,” Morris explains. 

The Hong Kong ordinance is now closer 

to international anti-money laundering 

standards. “Although U.S. and [the previous] 

Hong Kong legislation were both enacted to 

combat terrorist financing, the U.S. legislation 

was more comprehensive and far reaching,” 

says Sara Nelson, a Miami lawyer who 

has compared the two regimes. “This moves 

Hong Kong closer to global standards.” 

Another significant change is terminology. 

“The amendment redefines terms 


so that the law now relates to ‘property’ instead 

of ‘funds,’ which was an unnecessarily 

restrictive term,” says Nigel Morris-Cotterill, 

a Kuala Lumpur lawyer who heads the 

“ The amended 

ordinance brings 

Hong Kong into line 

with the United 

Nations standard of 

phraseology.” 

Anti-Money Laundering Network, a nonprofit 

consultancy that provides training to 

the financial sector. 

“That increases the scope of property 

that can be frozen, seized and confiscated 

and the persons whom orders can be made,” 

he adds. “Basically, the amended ordinance 

brings Hong Kong into line with the United 

Nations standard of phraseology.” 

Morris-Cotterill adds that the effect of 

the changes go beyond mere wording. “Underneath, 

it has an impact on the financial 

institutions…and puts lending on exactly 

the same risk management footing as deposit 

taking. It’s not just simple lending: it’s 

leasing, trade finance and all other business 

areas that might have previously appeared 

relatively low risk in relation to money 

laundering.” 

Burden of compliance 

One significant issue for Hong Kong financial 

institutions looking to beef up controls 

is the costs involved. “We see banks having 

to spend more on anti-money laundering 

sanctions compliance,” says Paul McSheaffrey, 

a partner at KPMG and an Institute 

member, who added that compliance with 

the U.S. Foreign Account Tax Compliance Act 

and the Wall Street Reform and Consumer 

Protection (Dodd-Frank) Act were already

affecting bottom lines. 

A recent KPMG survey noted that Hong 

Kong financial institutions have already 

seen their margins squeezed due to global 

economic malaise, a cautious investment 

market and lower trade flows. 

“The new legislation imposes a heavy 

compliance burden on financial institutions,” 

says Barry Tong, a partner at Grant 

Thornton and an Institute member. “Financial 

institutions have to ensure that they 

have enough manpower, resources and 

systems to meet the anti-money laundering 

requirements of the relevant 

legislation.” 

With their financial acumen, accountants 

have an important role 

to play. “We have already seen an 

increase in requests from companies 

for us to submit proposals to 

conduct independent reviews of 

their existing anti-money laundering 

programmes,” says Wong at 

BDO. 

“Professional firms can 

assist in helping clients understand 

the requirements 

under the legislations and 

the impact to their businesses, 

advising them on 

the adequacy of their compliance 

functions and pro- 

The China connection 

One of the reasons why the anti-money laundering 

spotlight sheds on Hong Kong is the large cross 

boundary currency flows to and from the mainland. 

In 2007, the Financial Action Task Force examined the 

People’s Bank of China’s anti-money laundering programmes 

and considered China fully or largely compliant with almost all its 

recommendations. 

However, Institute members say the realities of the mainland 

financial system tell a different story. “Given exchange controls 

in the mainland, the amount of funds coming out of China into 

the Hong Kong economy should be readily identifiable,” says 

Rob Morris, managing director of AlixPartners and an Institute 

member. “Practically, however, this is not the case.” 

Morris worked as an expert witness on a case in 2008 in 

which a jury in Las Vegas convicted Xu Chaofan and Xu Guojun 

of defrauding the Bank of China of US$485 million over 10 years. 

The two men were sentenced to more than 20 years in prison for 

laundering the proceeds of their fraud through the United States, 

Macau, Australia and other countries. 

Much of the cash flow between China and Hong Kong occurs 

viding training to the relevant staff,” says 

Lo at RSM. “As part of our induction training 

for new staff, we have the Independent 

Commission Against Corruption to talk 

about matters including identifying and 

reporting on money 

laundering cases.” 

Institute members say it is important for 

the senior management within companies to 

understand the latest legislation and regulatory 

requirements and make these systematically 

work for them. “They can do so by 

setting up formal policies and procedures,” 

says Annie Chan, 

managing director of 

corporate recovery 

and 

forensics at 

through remittance agents that will now come under greater 

scrutiny since the Anti-Money Laundering and Counter-Terrorist 

Financing (Financial Institutions) Ordinance came into effect on 

1 April. 

“There are probably more than 1,000 agents now who 

are actually registered and quite a few of them are quite large 

organizations,” says Jim Wardell, executive chairman of Baker 

Tilly Hong Kong Restructuring and Recovery and an Institute 

member. 

But the largest hole in the fence is Macau, given its status as a 

popular destination for Hong Kong and mainland visitors. “If you 

look at Europe, if you go into a casino you have to be a member, 

which means they have details about you, your identity, your 

photograph,” says Wardell. “In Macau you take your cash and 

walk in and gamble. There is no effective monitoring.” 

The Financial Action Task Force is keen that Macau controls 

this in a more effective way. Wardell says political will is the main 

obstacle. “The Macau population is happy with the status quo,” 

he says. “There’s hardly any unemployment, there’s hardly any 

taxation. They can build what they need.” 


Mazars and an Institute member. 

Chan says several authorities – the Securities 

and Futures Commission, the Hong 

Kong Monetary Authority and the Office of 

the Commissioner of Insurance – are eager to 

help companies conform to statutory requirements 

and have all issued guidelines. 

Wardell at Baker Tilly advises clients to 

establish strict know-your-customer policies. 

“We are able to employ the experience gained 

in carrying out such work to assess the effectiveness 

of businesses’ anti-money laundering 

controls,” he says, adding that his company 

has been involved in the investigation 

of financial institutions where anti-money 

laundering controls were lax. 

He says particular scrutiny is applied to 

parties involved in selling high value items, 

including financial institutions, jewellers, 

real estate agents and lawyers handling conveyancing. 

For their part, criminal organizations will 

continue to find weaknesses in the system. 

“ Without stricter 

border controls, 

there is the channel 

that allows the 

mainland currency 

[to flow] into the 

Hong Kong banking 

system.” 

One emerging trend is the use of Hong Kong 

bank accounts for collecting and disbursing 

the proceeds of lottery, advance-fee and other 

financial fraud, notes Chan. 

Cross border transactions remain a vul- 

nerability to territories seeking to control 

money laundering and Hong Kong is no exception. 

“Without stricter border controls, 

there is the channel that allows the mainland 

currency [to flow] into the Hong Kong banking 

system,” Wardell says, citing it as a significant 

inflow of laundered money into the city. 

In the Amaso case, it remains unclear who 

ultimately received the funds sent through the 

illegal accounts, but international anti-terrorism 

agencies were concerned that the transactions 

involved Algeria and Mauritania, two 

countries in which Islamic militants operate. 

Frank Stock, vice president of the Court 

of Appeal, who presided over Boma Amaso’s 

unsuccessful bid to reduce his sentence, remarked 

that the defendant could consider 

himself fortunate not to have received a 

stiffer penalty in his original trial. HSBC and 

Standard Chartered might well be thinking 

along similar lines. 


Work-life balance 

Creature 

comforts 

After a stressful day at the 

office, many Institute members 

go home to spend time with 

their pets. Jemelyn Yadao 

examines the allure of animal 

companions 

Photography by Assaf de Courcy Arbiser 


house that came with a 

complimentary Rottweiler 

was never Rob Morris’ 

idea of the perfect family 

abode. 

“Next to the house we were renting was 

a paddock and inside it was the landlord’s 

Rottweiler,” says Morris, managing director 

of the Hong Kong office of global business 

consultancy AlixPartners and a member of 

the Hong Kong Institute of CPAs. “We had 

two young children so we were a bit uneasy 

about this.” 

After the Morris family moved into their 

new home in the United Kingdom the Rottweiler 

– a breed of dog usually known for its 

aggressive behaviour – was soon welcomed 

into the household. The dog, who the family 

named Cleo, overcame the breed’s negative 

reputation. So much so that when Morris

was being posted to the United States, the 

idea of leaving Cleo with her original, neglectful 

owner was not an option. 

“We approached the landlord and said, 

‘We’d like to take the dog with us...’ We 

were quite surprised as he agreed. We took 

Cleo with us to the States and she came 

with us to Hong Kong,” explains Morris, 

who is also honorary treasurer at the Society 

for the Prevention of Cruelty to Ani- 

mals. “She died a very old and happy dog... 

She was so docile with our children. An absolutely 

perfect dog.” 

The heavy workloads demanded of CPAs 

means that coping with stress is never an easy 

task. Many turn to their hobbies such as a 

sport or try to find time for a short vacation. 

But some CPAs, such as Morris, manage to 

find a bit of escapism – falling in love along 

the way – through furrier means: animals. 

Norman Tsui and (from left) Star, 

Little Pea, Kate Tsui, Ah Si, Cathy 

Chui and Fei Fei 

Puppy love 

Morris goes beyond taking care of his two 

dogs – Piggy, adopted from the SPCA, and 

Coco, rescued from Lamma Island. For 10 

years, he has been involved with the SPCA, 

where he not only helps keep a grip on the 

purse strings but also takes an interest in 

the charity’s on-the-ground work. “We’ve 

had a couple of very successful cases recently 

where we’ve shut down illegal dog breeding 


Work-life balance 


Rob Morris and 

Coco (left) and Piggy 

“ I can ask what I hope are sensible 

questions, and we can do budgets. But 

aside from that you also need to have an 

animal welfare interest.” 

operations in Hong Kong. In the earlier of the 

two cases we successfully brought prosecutions 

against the people who were involved,” 

he says. 

Operations such as this put a huge strain 

on the SPCA’s resources, says Morris. In 

this case, 140 dogs from the breeding farm 

were not able to find new homes until after 

legal proceedings were completed. “These 

animals are evidence in the case against the 

person who was running the farm,” he says. 

“We essentially had to look after the dogs 

ourselves for about nine months.” 

To stop noise reaching the ears of neighbours, 

the breeders cut the vocal cords of 

many dogs so they couldn’t bark. “It’s quite 

sad,” says Morris. 

However, the sorry tale is reaching a 

happy ending. “Now by and large the dogs 

are adopted,” says Morris, who even adopted 

one of the puppies himself. The dog now 

lives with his daughter in Vancouver. 

The SPCA is known for its veterinary service, 

adoption centres, dog-training sessions 

and programmes such as Cat Colony Care, 

which aims to reduce the number of stray 

cats in communities by providing free neutering 

surgery. But a large part of what the 

society does, Morris says, focuses on education 

– particularly of children – to encourage 

responsible pet ownership and respect for 

animals. 

With the SPCA relying almost fully on 

memberships and donations, Morris ensures 

the charity steers away from anything that 

would put their financial security at risk. “I’m 

a bit like a non-executive director in a corporate 

sense,” he says. “We have fully capable 

accounting staff who actually work on a daily 

basis there, but my job is to oversee that and 

make sure that we are financially secure.” 

The skills Morris developed as a CPA have 

better equipped him to be the charity’s treasurer. 

But it is his sincere interest in something 

other than numbers that really qualifies 

him for the role. “I can ask what I hope 

are sensible questions, and we can do budgets,” 

Morris says. “But aside from that you 

also need to have an animal welfare interest,” 

he says. “It’s been a fantastic opportunity for 

me to do something which I enjoy and also 

provide some benefit to the greater society, 

including the rest of the animal kingdom.” 

Six little pigs 

While his colleagues may own dogs, cats and 

the occasional rabbit, Norman Tsui’s pets 

set him apart. “They are gentle, they don’t

fight... Generally speaking they are quite 

nice and adorable,” says Tsui, a director at 

BDO and an Institute member, about his six 

long-haired guinea pigs. 

Tsui owned guinea pigs as a primary 

schoolboy, and his love for them was rekindled 

when he stumbled upon a pet shop in 

Singapore selling guinea pigs “more beautiful” 

than the ones from his childhood. “In 

Singapore they are more varied. I bought one 

and my girlfriend – wife now – bought one 

too. After that we bought another one then 

another one,” he says. 

Tsui’s current herd includes six-year-old 

Star (the only remaining guinea pig brought 

over from Singapore), four-year-old Fei Fei, 

two-year-old Little Pea, two-year-old Ah Si, 

“ It’s just amazing 

when you look at 

them. The way they 

yawn is quite cute 

because of their 

very small mouths. 

It’s so sweet.” 

one-year-old Cathy Chui and one-year-old 

Kate Tsui. 

When it comes to pet care, Tsui and his 

wife have a long to-do list. From cleaning, 

feeding the guinea pigs and changing 

the bedding of three cages, to making sure 

breeding activity is kept to a minimum, they 

take it in turns to supervise. 

Keeping a watchful eye on his pets is as 

gripping for him as it is beneficial to the creatures. 

“I like feeding them, I don’t see it as a 

chore or as time consuming,” says Tsui who 

feeds them every night after work. “When 

you feed them you’re actually playing with 

them too. It’s just amazing when you look 

at them. The way they yawn is quite cute 

because of their very small mouths. It’s so 

sweet.” 

Tsui’s knowledge of guinea pigs parallels 

that of an expert’s, but balancing his guineapig 

hobby and work duties didn’t always 

come so easy. “After moving back to Hong 

Kong, my wife used to work for an audit firm 

and both of us had to work quite late. It was 

quite difficult. There were days when we 

can only feed them twice a day: early in the 

morning and late at night.” 

That time commitment is now reaping 

priceless rewards. “They really make you feel 

happy especially, say, if there are problems at 

work,” he says. “You go back, play with them 

and it makes you feel more relaxed. They’re 

such calm animals.” 

Feline friends 

Penny Leung’s pets quite literally walked into 

her life. On one rainy day in 1995, a pregnant 

cat walked into Leung’s house in Montreal 

Penny Leung 

and Digui 

“ They welcome me 

at the front door 

when I return home. 

I like the sound they 

make even when 

they complain.” 


Work life balance 

Alfred Chung 

and his crystal red shrimp 

and gave birth to three kittens. 

“The cats relocated to Hong Kong with me 

in 2001. [They have all] passed away apart 

from Digui, who became a family member 

from birth,” says Leung, assistant manager at 

a local trustee service provider and an Institute 

member. 

As well as Digui – the eldest cat at 17 years 

old – Leung lives with an eight-year-old tabby 

called Tsui Tsui and a three-year-old black 

and white short-haired cat named Milton. 

Both were rescued from the street. Milton, 

who is female despite her male moniker, 

was found when she was two weeks old by 

a friend who provides animal home-staying 

services. She has been living with Leung 

since Christmas 2010. “I will probably adopt 

her soon,” Leung says. 

Leung sees tending to her three cats as a 

way to escape stress and encourages other 

CPAs to consider having pets in their house- 


hold. “They 

help me to not 

think about 

work-related 

things instantly... 

They welcome 

me at the 

front door when 

I return home,” she 

says. “I like the sound 

they make even when they 

complain. I like their soft and 

warm fur and how they purr when I 

stay close to them, although Tsui Tsui gives 

me quite a few scratches once in a while.” 

Leung says cats are ideal pets for busy accountants 

like her because of the animal’s 

self-sufficient nature. “Their independent 

character suits me a lot. For cats, you just 

need to give them a clean litter box and food. 

No need to walk them,” she says. 

While 

Leung has always 

loved being 

around animals, her 

previous job working as 

an accounting officer for an animal welfare 

charity increased her interest. “It was really 

fun. There was a vet clinic in the same building 

so sometimes we would bring pets with 

us to work,” recalls Leung. “There were also 

cats and dogs staying in the building. So we 

could see them walk around everyday. Working 

for them was meaningful.”

Marine magic 

While Leung says cats are the perfect pet for 

a busy accountant, Alfred Chung, an auditor 

at Grant Thornton and an Institute member, 

thinks otherwise. “With some animals, they 

require you to take care of them all the time. 

And I’m very busy all the time especially peak 

season when I finish around 1:00 a.m.,” says 

Chung, who has kept crystal red shrimp as 

pets for about two years. 

Of all the shrimp species, crystal red 

shrimp are known to be the most sensitive to 

water conditions – a trait that drew Chung 

into raising them in the first place. “I remember 

searching information about them on the 

Internet beforehand. I was attracted to them 

as this kind of shrimp is very sensitive to the 

water, [but] they can easily breed,” he says. 

How pets can 

reduce stress 

It has been long believed that the companionship of a pet 

can be good for everyone including, of course, Hong Kong 

Institute of CPAs members who have to cope with their 

busy work life. 

This idea has been fuelled by studies conducted over the 

years on the relationship between animals and the well-being of 

humans. 

Last year, Deborah Wells, a psychologist at Queen’s University 

Belfast, examined the value of pets to human health for The 

Psychologist, the official monthly publication of the British 

Psychological Society, as part of her research on the therapeutic 

benefits of animals. 

Wells says that animals have the potential to contribute 

significantly to our quality of lives and should not be overlooked 

“ They are very 

peaceful in the tank. 

I feel so relaxed 

when taking care of 

them after a whole 

busy day.” 

Starting with just four, Chung now has 

11 crystal shrimp crawling around his tank. 

He has a separate tank housing 10 cherry 

shrimp – a variety of freshwater shrimp originating 

from Taiwan. “I’ve always been fascinated 

with the water, fish and other fresh- 

water species. I plan to get more [shrimp], a 

bigger tank and some mini lobsters,” he says. 

“What I like most about crystal shrimp is 

the fact that every shrimp is unique in that 

they have different patterns and colours. 

They will change throughout their life depending 

on how you look after them,” he explains. 

“For example, the colour of the shell 

will be less strong if they don’t have enough 

food. Their colour is a reflection of how 

much you have cared for them.” 

Despite the challenges of taking care 

of shrimp – including constantly having to 

monitor the water’s chemical composition – 

Chung’s aquarium gives him instant access 

to tranquility. “They are very peaceful in the 

tank,” he says. “I feel so relaxed when taking 

care of them after a whole busy day.” 

as an alternative, or complementary, form of therapy 

in modern day healthcare practices. 

“No one knows the exact mechanism underlying 

the ability of pets to de-stress their owners, but quite 

a few studies point to the action of stroking a pet 

having a calming effect, helping to lower both blood 

pressure and heart rate,” Wells tells A Plus. 

Psychologists say pets make ideal companions 

for those with demanding jobs who need to wind 

down. But Wells adds that having an animal in the 

house can do much more than alleviate stress. 

“Psychologically, pet ownership can also help 

to boost self-esteem, feelings of self-worth and 

decrease loneliness.” 

A helping paw 

Research has found that in comparison to other pets, dogs can 

substantially ease the psychological pressures of their owners. 

In a study by Colorado State University in the United States, 

researchers monitored the levels of oxytocin – a hormone with 

stress-relieving properties that women typically produce in much 

larger amounts than men – of 20 dog owners after they had spent 

time with their dogs after work compared with them reading. 

Results found that for women, oxytocin increased 58 percent 

with the dog and only 26 percent with quiet reading. For men, 

oxytocin dropped 56 percent when reading and only 22 percent 

after playing with the dog. 

Wells agrees that owning a four-legged friend can be just as 

beneficial as doing a spot of meditation or yoga. “Dogs are probably 

more capable of boosting their owners well-being than cats, and, 

in turn, both of these pets are more capable of boosting human 

well-being than other types of companion animal,” she explains. 

With their infectious thirst for going on walks, dogs also help 

to improve physical fitness, she adds. “[This] indirectly... helps to 

increase social contacts.” 


IFRS/HKFRS 8 

IASB starts its post-implementation 

review of IFRS 8 Operating Segments 

It is important that members should bring application issues to the 

Institute’s attention, write William Lim and Candy Fong 

In July, the International Accounting 

Standards Board published for 

comment a request for information 

on the effects of implementing 

IFRS 8 Operating Segments, with a 

comment deadline of 16 November 2012. 

The request for information is part of the 

IASB’s post-implementation review of IFRS 8, 

which was issued in November 2006 and 

has been effective since 1 January 2009. 

IFRS 8 is the first standard to be subject 

to a post-implementation review since the 

Trustees of the IFRS Foundation introduced 

the review process in 2007. The purpose 

of the post-implementation review is for 

the IASB to collect feedback on whether 

IFRS 8 is working as intended, as well as to 

gather more practical information on the 

challenges and costs associated with its 

implementation. 

This article is intended to encourage 

Institute members to participate in the postimplementation 

review process. It provides 

a recap of the important requirements 

of IFRS 8 and some application issues 

commonly encountered in practice. 

IFRS 8 is the same as HKFRS 8 Operating 

Segments and any reference to IFRS 8 

applies equally to HKFRS 8. 

Scope of IFRS 8 

Segment reporting is not mandatory in all 

financial statements prepared under IFRSs/ 

HKFRSs. 

An entity is required to disclose segment 

information in accordance with IFRS 8 when 

(a) it has issued debt or equity instruments 

that are traded in a public market, or (b) 

files, or is in the process of filing its financial 

statements with a securities commission or 


other regulatory organization for the purpose 

of issuing any class of instruments in a public 

market. 

This requirement applies equally to 

a parent with the same features in its 

consolidated financial statements. 

A public market is any domestic or foreign 

stock exchange, or an over-the-counter 

market, including local and regional markets. 

Question 1: Entity A is a listed entity in 

Hong Kong. The management of Entity 

A believes that disclosing segment 

information required by IFRS 8 will be 

seriously prejudicial to the interest of 

the entity. Can Entity A omit the segment 

information required by IFRS 8 in its 

financial statements for that reason? 

Answer: No. IFRS 8 does not provide any 

exemption for entities that fall within the 

scope of IFRS 8. Therefore, even when the 

management of Entity A concludes that 

disclosure of segment information required 

by IFRS 8 will be seriously prejudicial to its 

interests, the segment information may not 

be omitted in the IFRS financial statements. 

Two-step approach 

IFRS 8 takes the following two-step 

approach in identifying operating and 

reportable segments. 

Step 1: Identification of the entity’s 

operating segments 

IFRS 8 adopts a management approach to 

segment reporting and requires operating 

segments to be identified and measured 

on the same basis as how financial 

information is reported internally for the 

purpose of allocating resources between 

segments and assessing their performance. 

Specifically under IFRS 8, an operating 

segment is a component of an entity: 

a. that entity engages in business activities 

from which it may earn revenues and 

incur expenses (including revenues and 

expenses relating to transactions with 

other components of the same entity); 

b. whose operating results are regularly 

reviewed by the entity’s chief operating 

decision-maker who makes decisions 

about resources allocation and 

performance assessment; and 

c. for which discrete financial information 

is available for the entity. 

The chief operating decision-maker is 

not necessarily an individual with a specific 

title, but rather a function that allocates 

resources and evaluates performance of 

the operating segments of the entity. Often, 

the chief operating decision-maker is the 

highest ranking management at the entity 

who allocates resources to and assesses 

the performance of the operating segments 

of the entity (e.g. the chairman or the 

executive directors of an entity). 

Question 2: Entity A is a pharmaceutical 

company. A research division has been set 

up to develop a new drug. Expenses have 

been incurred for the division but revenues 

have not been generated. Can that research 

division be an operating segment? 

Answer: Under IFRS 8, an operating 

segment can be such that it has not yet 

earned external or internal revenues 

and the chief operating decision-maker 

is making decisions and assessing the

performance of the segment based solely 

on expenses. Therefore, the research 

division can be an operating segment 

provided that discrete financial information 

is available and that information is 

reviewed by the chief operating decisionmaker 

for resources allocation and 

performance assessment. 

Question 3: Entity A has an operating 

unit that provides content to websites. 

Entity A derives substantially all its revenue 

from three service lines — advertising, 

promotions and customer service. The 

financial information reviewed by the chief 

operating decision-maker includes revenue 

by service lines only. Operating expenses 

and assets are reported on a combined 

basis at the entity level. Does each of 

Entity A’s service lines represent a separate 

operating segment? 

Answer: No. The individual service lines 

are not separate operating segments. 

Discrete financial information is not 

available because there is no measure of 

segment profit or loss by service lines. 

However, in another situation where the 

information provided to the chief operating 

decision-maker contains revenue and gross 

profit by service lines, sufficient financial 

information would be available to enable 

the chief operating decision-maker to 

assess performance and allocate resources, 

and hence the service lines are considered 

as separate operating segments. 

Under IFRS 8, two or more operating 

segments can be aggregated into one single 

operating segment when all of the following 

aggregation criteria are met: 

a. The aggregation is consistent with the 

core principle of IFRS 8 (i.e. to provide 

information to enable users of financial 

statements to evaluate the nature and 

financial effects of the business activities 

and the economic environments in which 

the entity operates); 

b. The operating segments have similar 

economic characteristics; and 

c. The segments are similar in each of the 

following respects: the nature of the 

products and services, the nature of the 

production processes, the type or class of 

customer for their products and services, 

the methods used to distribute their 

products and provide their services, and, 

if applicable, the nature of the regulatory 

environment. 

IFRS 8 does not define the term 

“similar.” Therefore, the determination 

as to whether two or more operating 

segments are similar is dependent on the 

A PLUS 

individual facts and circumstances and is 

subject to a high degree of judgment. 

Step 2: Identification of the entity’s 

reportable segments 

Once the entity’s operating segments have 

been identified under step 1, the entity 

should then determine what the reportable 

segments are for financial reporting 

purposes. 

Under IFRS 8, an operating segment is 

required to be reported separately when 

it meets any of the following quantitative 

thresholds: 

a. Its reported revenue is 10 percent or 

more of the combined revenue of all 

operating segments, or 

b. The absolute amount of its reported 

profit or loss is 10 percent or more of the 

greater, in absolute amount, of (i) the 

combined reported profit of all operating 

segments that did not report a loss and 

(ii) the combined reported loss of all 

operating segments that reported a 

loss, or 

c. Its assets are 10 percent or more of 

the combined assets of all operating 

segments. 

Question 4: Can two operating segments be 

combined as one reportable segment when 

they meet the above aggregation criteria but 


IFRS/HKFRS 8 

fail the above quantitative thresholds? 

Answer: Paragraph BC30 accompanying 

IFRS 8 clarifies that the above aggregation 

criteria take precedence over the above 

quantitative thresholds. Therefore, if two 

or more components of a business meet 

the aggregation criteria, they may be 

combined as one single operating segment 

and hence as one reportable segment, 

notwithstanding that they may individually 

exceed the quantitative thresholds. 

Question 5: Can two operating segments 

identified under step 1 that do not meet the 

quantitative thresholds be combined and 

reported as one reportable segment? 

Answer: Yes, provided that the operating 

segments have similar economic 

characteristics and share a majority of 

criterion c of the aggregation criteria set out 

above. 

Moreover, IFRS 8 requires that if 

the total external revenue reported by 

operating segments constitutes less than 75 

percent of the entity’s revenue, additional 

operating segments should be identified 

as reportable segments even if they do not 

meet the 10 percent quantitative threshold. 

Key disclosures under IFRS 8 

IFRS 8 requires an entity to report a measure 

of profit or loss for each reportable segment. 

In addition, it requires an entity to report 

a measure of total assets and liabilities for 

each reportable segment, if such amounts 

are regularly provided to the chief operating 

decision-maker. 

Various items are also required to be 

disclosed when they are either included 

in the measure of segment profit or loss or 

otherwise regularly provided to the chief 

operating decision-maker. The measures 

for segment reporting purposes are the 


measures reported to the chief operating 

decision-maker for resources allocation 

and performance assessment purposes. 

Question 6: Entity A is operationally based 

in Japan while its shares are listed on the 

Hong Kong stock exchange and its financial 

statements are prepared in accordance 

with IFRSs. For internal reporting purposes, 

information provided to the chief operating 

decision-maker is based on Japanese GAAP 

measures. Is Entity A required to convert 

the Japanese GAAP measures to IFRS 

measures for segment reporting purposes? 

Answer: No. IFRS 8 requires Entity A to 

report segment information based on the 

measures reported to the chief operating 

decision-maker (i.e. the Japanese GAAP). 

This is also consistent with the overall 

management approach set out in IFRS 8. 

However, Entity A is required to disclose 

reconciliations from the segment reporting 

measures to the IFRS financial statements. 

Reconciliations 

IFRS 8 requires reconciliations to be disclosed 

between: 

a. The total of the reportable segments’ 

revenues and the entity’s revenue. 

b. The total of the reportable segments’ 

profit or loss and the entity’s profit or loss 

before tax. 

c. The total of the reportable segments’ 

assets and the entity’s assets. 

d. The total of the reportable segments’ 

liabilities and the entity’s liabilities. 

Items (c) and (d) are required if such 

amounts are regularly provided to the chief 

operating decision-maker. 

Question 7: Entity A operates two types 

of stores – clothing and home products, 

which are considered as two operating 

segments in accordance with IFRS 8. The 

“IFRS 8 uses a management 

approach to identify 

segments and hence 

significant judgment may 

be needed.” 

management discussion and analysis 

included in Entity A’s annual reports 

discusses the performance of these 

segments separately. Is it appropriate for 

Entity A to aggregate the two operating 

segments as one reportable segment? 

Answer: No. It would not be appropriate 

to do so because it is unlikely that the two 

operating segments would meet the above 

aggregation criteria as they are not “similar” 

on various aspects. Also, the presentation 

of one reportable segment would not be 

consistent with the overall management 

approach required by IFRS 8. Indeed, over 

the past few years, various regulators have 

expressed concerns about the inconsistency 

between the management discussion and 

analysis and segment information disclosed 

in the financial statements. 

Question 8: IFRS 8 requires entity-wide 

disclosures, including information about 

products and services, geographical areas 

and major customers. Entity A has just one 

reportable segment. Is Entity A required to 

make any entity-wide disclosures? 

Answer: Yes, Entity A is required to make 

entity-wide disclosures despite the fact that 

it has only one reportable segment. 

This article details some IFRS 8 application 

issues commonly encountered in practice. 

As mentioned, IFRS 8 uses a management 

approach to identify segments and hence 

significant judgment may be needed. If you 

have any application issues on IFRS 8 please do 

not miss the chance to give comments on the 

request for information by 16 November 2012. 

William Lim and Candy Fong are HKFRS/IFRS specialist 

partners from the national technical department of Deloitte 

Touche Tohmatsu.

119 

TechWatch 

The latest standards and 

technical developments 

Financial reporting 

HKFRS 10 

The new financial reporting standard HKFRS 

10 Consolidated Financial Statements is 

effective for financial years beginning on 

or after 1 January 2013. HKFRS 10 includes 

a new definition of control that 

determines which entities are 

consolidated. HKFRS 10 states 

that an investor controls an 

investee if it has power over 

the investee; exposure 

or rights to variable 

returns from its involvement 

with the 

investee; and the 

ability to use its 

power over the 

investee to affect 

the amount of the 

investor’s returns. 

HKFRS 10 

includes, for the first 

time, guidance on 

how these principles 

of control 

and consolidation 

apply 


to asset managers and others in a fiduciary 

position. However, this new guidance involves 

much judgment to apply practically. 

The key to the assessment of control 

for asset managers involves determining 

whether the manager is acting as agent (that 

is, on behalf of others) or as principal (that 

is, for himself) when it makes decisions 

concerning the entity. If the asset manager is 

acting as principal, then the asset manager 

may need to consolidate the fund, even if the 

asset manager’s interest in that fund is less 

than 50 percent. 

Invitations to comment on consultation 

documents 

The Institute issued an invitation to comment 

on the IFRS Foundation’s Constitution Drafting 

Review: Separating the Role of the IASB Chair 

and the Executive Director, with comments 

requested by 21 September. 

The drafting review incorporated changes 

to the constitution to reflect the separation 

of the role of chairman of the IASB and chief 

executive officer of the IFRS Foundation. This 

change is in line with the conclusions of the 

monitoring board governance review. 

This separation has already been 

implemented following an internal structural 

reorganization at the end of 2011. The chair of 

the IASB no longer serves as the CEO of the 

IFRS Foundation. Instead, this responsibility 

has been included in a new role of executive 

director. 

The Institute also sought comment on the 

International Valuation Standards Council’s 

discussion paper, The Valuation of Trade 

Related Property, with comments requested 

by 17 September. 

The IVSC first published Guidance Note 

12 The Valuation of Trade Related Property in 

2005 and updated it in 2007. In 2009 IVSC 

commenced its standards improvements proj- 

ect, which involved reviewing all previously 

issued IVSC publications. The IVSC standards 

board originally proposed to update and 

replace GN12 with a new standard, IVS 232 

Trade Related Property, and an exposure draft 

was released for public comment in June 2010, 

along with drafts of all the other standards that 

the board was proposing to update. 

The board did not approve the draft IVS 

232 for publication but instead agreed a 

project to undertake a review of the particular 

valuation issues raised by trade related property 

and to decide the nature and extent of 

any future pronouncements that IVSC should 

make in relation to this class of asset. This 

discussion paper set out a number of issues 

identified by the board on which respondent’s 

views were invited. 

This discussion paper sought to establish 

whether trade related property represents 

a distinct asset class that presents unique 

valuation challenges, whether there are procedures 

that differ from those in the existing 

IVSs that should be regarded as mandatory 

and whether guidance is required on the application 

of different valuation approaches to 

trade related property. 

Ethics 

Invitation to comment on IESBA 

exposure draft 

The Institute has issued an invitation to comment 

on IFAC’s International Ethics Standards 

Board for Accountants exposure draft, 

Responding to a Suspected Illegal Act, with 

comments requested by 31 October. 

The explanatory memorandum to the 

exposure draft provides background on and 

explanation of the proposed changes to address 

the circumstances where a professional 

accountant in public practice or business 

shall, or has a right to, override the fundamen-

tal principle of confidentiality and disclose 

a suspected illegal act to an appropriate 

external authority. 

The exposure draft proposes adding two 

new sections addressing illegal acts to the 

Code of Ethics for Professional Accountants 

– one each for professional accountants in 

public practice and professional accountants 

in business – and several revisions to other 

related sections. The proposed new sections 

delineate the expected course of action for 

a professional accountant to take if those 

charged with governance do not respond to 

the issue appropriately. 

The IESBA proposes that the effective date 

for the changes be one year after approval 

of the final standard. Subject to comments 

received on the proposed changes, the IESBA 

intends to finalize the revisions to the code in 

the second half of 2013. 

Professional accountants 

in business 

IIRC releases draft outline of integrated 

reporting framework 

The International Integrated Reporting 

Council has released a draft outline of the 

integrated reporting framework. The outline 

establishes for the first time the basic structure 

of the framework and is intended to 

keep stakeholders informed as the framework 

is developed. 

Corporate finance 

Consultation on short trading 

halts proposal 

Hong Kong Exchanges and Clearing has 

released a consultation paper on a proposal 

to implement short trading halts that would 

allow listed companies to publish announcements 

with price sensitive information on the 

HKEx news website during trading hours to 

enable investors to digest the contents of the 

announcement. Significant features of the 

proposed model are set out in chapter four 

of the consultation paper. The deadline for 

responses is 8 October. 

Consultation conclusions on ESG 

reporting guide 

HKEx published consultation conclusions 

on an environmental, social and governance 

reporting guide on 31 August. The guide is 

divided into four areas: workplace quality, 

environmental protection, operating practices 

and community involvement. Each of the 

areas is divided into three sections: aspects, 

general disclosure recommendations and key 

performance indicators. 

Given that respondents welcomed the 

proposed introduction of the guide, HKEx has 

decided to implement the guide, with amendments 

based on respondents’ comments. 

The guide will be a recommended practice 

appended to the listing rules. It will apply to 

listed companies with a financial year-end 

after 31 December. 

Subject to further consultation, HKEx 

plans to raise the obligation level of some 

recommended disclosures in the guide to 

“comply or explain” by 2015. 

Restructuring and 

insolvency 

Official Receiver’s Office Panel A scheme 

rules updated 

The Official Receiver’s Office published a set 

of new Panel A scheme rules on 23 August. 

The Panel A scheme was set up by the 

office in 1996, with support from the Institute, 

to outsource non-summary winding-up cases 

with estimated realizable assets exceeding 

HK$200,000. 

Since the Panel A scheme was established, 

the opportunities for practitioners 

to gain experience in the insolvency field 

have increased significantly. Also, a tender 

scheme for small insolvency cases with estimated 

realizable assets not likely to exceed 

HK$200,000 has been introduced. 

In the light of these developments, a 

review of the Panel A scheme rules was 

conducted and changes to the rules have 

been made. The changes include strengthening 

the requirements for applying to join the 

Panel A scheme by stipulating a higher level 

of experience and resources than those under 

the tender scheme for small insolvency cases. 

The office invited feedback from the 

Institute’s restructuring and insolvency 

faculty executive committee on the draft 

revisions to the rules. The revised rules 

have taken on board many of the comments 

made by the committee. 

Protection of Wages on Insolvency Fund 

expansion of scope 

The Protection of Wages on Insolvency 

(Amendment) Ordinance came into effect 

on 29 June. As a result, the Protection 

of Wages on Insolvency Fund has been 

broadened to cover pay for untaken annual 

leave and untaken statutory holidays for 

employment contracts terminated on or 

after 29 June. 

Taxation 

A PLUS 

Advance ruling on the taxability of 

interest income 

The Inland Revenue Department has published 

an advance ruling relating to Sections 14 

and 15(1)(f) of the Inland Revenue Ordinance. 

The taxpayer in the case was incorporated in 

Hong Kong and is a member of a group with 

overseas headquarters. Pursuant to the group’s 

arrangement, the taxpayer will place its surplus 

funds with its overseas fellow subsidiary. 

The funds will be remitted by direct wire 

transfer from the taxpayer’s bank account in 

Hong Kong to the subsidiary’s overseas bank 

account. Thereafter, interest income will be 

derived by the taxpayer. The IRD ruled that the 

interest income is not taxable, as the above 

sections are not satisfied. 

Please refer to the full version of TechWatch 119, 

available as a PDF on the Institute’s website: 

www.hkicpa.org.hk 


Tech Q&A 

The Institute has recently issued an invitation to comment on the IESBA 

exposure draft Responding to a Suspected Illegal Act. Could you provide 

details of the proposed requirements? 

The proposals only address suspected 

illegal acts because whether an 

act is illegal or not is ultimately a 

matter determined by a court of law. Illegal 

acts are defined as acts, omissions to act 

or a commission, whether intentional or 

unintentional, committed 

by a client, by those 

charged with 

governance or 

by management 

or employees 

of a client that 

are contrary 

to laws and 

regulations. 

Personal 

misconduct 

unrelated to 

the business 

activities of 

the entity is 

excluded. 

The proposals 

would require a 

professional accountant, when 

encountering a suspected illegal 

act, to take reasonable steps to 

confirm or dispel the suspicion 

and to discuss the matter with the 

appropriate level of management. 

If the response of those with whom 

the matter has been discussed is 

considered to be inappropriate, the 

accountant shall escalate the matter 

to appropriately higher levels of 

management and those charged with 

governance. 

In the case of a suspected illegal act at 

a subsidiary level in a group of companies, 

this escalation would normally reach parent 

level as the management at the parent level 

is responsible for governance in subsidiaries. 

If this response is not appropriate and, as 

judged by the accountant, the suspected illegal 

act is of such consequence that disclosure 

would be in the public interest, the following 

would be necessary: 

• An accountant providing 

professional services 

to an audit client 

would be required 

to disclose certain 

illegal acts to 

an appropriate 

authority; 

• An accountant 

providing nonaudit 

services 

to a client that is 

not an audit client 

or a professional 

accountant in 

business would be 

required to disclose 

the matter to the entity’s 

external auditor and, in certain 

circumstances, the accountant 

would have a right to disclose 

certain illegal acts to an 

appropriate authority and 

would be expected to exercise 

that right. 

The proposals would also 

require an accountant to consider any applicable 

legal or regulatory requirements 

and to comply with those requirements. 

It also requires the accountant to consider 

whether it is appropriate to terminate the professional 

relationship with the client or resign 

from the employing organization. However, 

termination or resignation are not substitutes 

for disclosure to an appropriate authority. 

Having said that, the proposals provide 

that in exceptional circumstances the accountant 

would not be required to disclose 

the matter or be expected to exercise any 

right to do so. In some exceptional cases, a 

reasonable and informed third party would 

conclude the consequences of disclosure are 

so severe as to justify non-disclosure. An example 

would be threats to the physical safety 

of the accountant or others. Circumstances 

of a commercial nature, such as the loss 

of a client or income, would not constitute 

exceptional circumstances. 

The proposals would require documentation 

of the steps the accountant took 

to respond to suspected illegal acts. The 

documentation shall include the persons 

consulted, responses received and disclosure, 

if any, made to an appropriate 

authority. The International Ethics Standards 

Board for Accountants considered whether 

there should be a materiality threshold for 

such documentation and concluded that this 

would not be appropriate. 

The Institute’s ethics committee is deliberating 

on the proposals and will be preparing 

a submission. The IESBA proposals are likely 

to be controversial. The Institute welcomes 

comments on all matters addressed in the 

exposure draft. Please provide your comments 

to Simon Riley, director of standard 

setting, by 31 October. 

Send your questions and comments to 

commentletters@hkicpa.org.hk. The standard setting 

team will answer these questions in accordance 

with its policy, posted on the Institute’s website. 


Careers 

People on the move 

The latest professional appointments from around the region 

BDO 

Gabriel Wong 

Principal, specialist advisory 

Wong has in-depth experience 

advising clients on regulatory 

investigations, fraud investigations, 

breach of contract and dispute resolution 

and anti-bribery and corruption. He also 

has experience working in a regulatory authority 

enforcement division. 

Ernst & Young 

Arthur Tam 

Executive director, professional 

practice 

Tam joined Ernst & Young in 

1994 and has extensive experience 

in auditing, risk assessment, quality 

assurance and managing assurance technology 

across the Asia Pacific. 

Mimosa Chan 


practice 

Chan has experience in accounting 

and auditing, providing training 

and technical support both locally and 

across the Asia Pacific. She specializes in financial 

instruments and fair value measurement. 

Napson Hon 

Executive director, financial 

services 

Hon has extensive experience in 

providing tax services to financial 

services organizations, including banking, capital 

market, insurance and asset management 

companies. 


Andy Ng 


practice 

Ng is experienced in auditing listed 

and private clients in various 

industries and providing training and technical 

support on accounting and auditing matters. 

Phil Gough 

Executive director, financial 

services 

Gough specializes in advising 

clients on finance function transformation. 

He has 23 years of financial services 

experience covering banking and insurance 

with 18 years in finance. 

Alan Lee 

Executive director, advisory 

Lee has extensive experience in 

advising clients on information 

security, business process level 

controls, project governance and regulatory 

compliance in various types of IT projects. 

He also assists organizations in implementing 

programmes to improve personal data 

privacy. 

Alex Grell 

Acting head, business 

development 

Grell has more than 17 years of 

professional services business 

development experience. He was previously 

based in Ernst & Young’s Sydney office for 18 

months. Prior to joining E&Y, Grell helped establish 

the Australian subsidiary office for a 

prominent global consultancy. 

RSM Nelson Wheeler 

Sandra To 

Principal, audit and assurance 

To has extensive experience in 

providing audit and assurance 

services for listed and private 

companies. To also has experience in initial 

public offerings and mergers and acquisitions 

in Hong Kong and Singapore. 

Chan Ka-ho 

Director, tax 

Chan has more than 10 years of 

experience in handling compliance 

and advisory taxation issues 

in Hong Kong and the Asia Pacific. He has 

experience in negotiation and settlement with 

tax authorities on corporate and individual tax 

disputes, as well as tax due diligence reviews 

for mergers and acquisitions. 

Kenny Wong 

Director, corporate advisory 

Wong has more than 14 years 

of accounting and commercial 

experience and specializes in 

corporate insolvency. He has extensive experience 

in cross border assignments, receiverships, 

bankruptcy and forensic accounting 

investigations. 

Johnathan Lai 

Director, corporate advisory 

Lai has more than a decade of experience 

in corporate advisory. 

His focus has primarily been in 

forensic accounting and litigation support. He 

also has considerable experience in corporate 

insolvency, restructuring, bankruptcy as well as 

digital forensics and e-discovery. 

Nobukazu Harada 

Director, Japanese practice 

Harada has more than 10 

years of experience in serving 

Japanese companies in Hong 

Kong and China. His expertise covers incorporations, 

audit, accounting, taxation, work 

visa applications, due diligence, internal 

control, mergers and acquisitions and business 

consulting. 

Email your announcements to Lucid Wong at 

lucid.wong@mandl.asia

Events 

Your guide to courses, workshops and member activities 

Auditing and assurance 

Accountants’ professional 

liability seminar will provide a 

refresher on accountants’ liability, covering 

the risks and appropriate risk management 

measures. 

CPD hours: 1.5 

Language: English 

Date: 8 October 

Time: 6:30 - 8:00 p.m. 

Review of valuation by auditors 

will teach you how to perform valuation 

reviews and fair value measurements 

during the course of an audit. 




Time: 6:30 - 8:00 p.m. 

Annual auditing update 2012 – 

developments in the auditing 

profession will cover various topics 

of interest to auditors and will include a 

discussion panel sharing experiences on 

auditing Chinese enterprises. 




Time: 9:00 a.m. - 1:00 p.m. 

CPD knowledge 

Briefing session on CPD 

requirements is a free seminar 

providing an opportunity for members 

to understand the Institute’s CPD 

requirements and learning initiatives. 

CPD hour: 1 

Language: Cantonese 


Time: 12:30 - 1:30 p.m. 

General business and 

professional knowledge 

Challenges for Chinese SEC 

registrants will help Chinese 

companies listed in the United States 

understand their options in light of 

increased scrutiny following accounting 

scandals involving mainland companies. 




Time: 6:30 - 8:00 p.m. 

Financial services interest 

group lunch seminar will address 

issues surrounding the international 

debt crisis and its effects on emerging 

markets, the economy and different 

classes of assets. 

CPD hour: 1 



Time: 1:00 - 2:00 p.m. 

Accounts receivable 

management for export 

businesses will discuss the elements 

of good accounts receivable management 

and highlight export credit risks in the 

market. 




Time: 6:30 - 8:00 p.m. 

The art and science of knowing 

people in professional 

business will explain ways to define 

your own character and adapt to the 

people you interact with. 

CPD hours: 3 



Time: 7:00 - 10:00 p.m. 

Leadership and business 

strategy 

360° goal setting is a half-day 

workshop where participants will learn 

how to efficiently empower and support 

their staff by working with them to set up 

specific goals. 


Language: Cantonese 


Time: 9:30 a.m. - 1:00 p.m. 

How to lead difficult dialogues 

with your clients, partners 

and staff will demonstrate why 

dialogue leadership is important to 

building a successful practice. 

CPD hours: 3 



Time: 6:30 - 9:30 p.m. 

Visit the Institute’s website for other programmes and 

to enrol and pay online: www.hkicpa.org.hk 


Romantic Rome 

To experience Rome is not only to 

take in its incredible history or 

exceptional architecture. Look 

beyond the obvious places to visit, 

such as the Sistine Chapel, the Colosseum 

and the Pantheon, and you will discover 

Rome’s real charm on its cobbled streets, 

down wrong turns and through hidden finds. 

Those overly focused on mounting a 

cultural assault on Rome may miss out on 

many aspects of the city’s atmosphere, people 

and food. 

To take it all in, the best way to travel is 

by foot. Stroll from piazza to piazza – Rome’s 

squares are part of its glory. Among the most 


Business travel 

Institute member and CFO of Travelzoo Asia Pacific Honnus Cheung savours 

la dolce vita among the treasures of the Italian capital 

celebrated are the Piazza di Spagna and Piazza 

Trinità dei Monti. They are separated 

by the steep Scalinata della Trinità dei Monti, 

better known in English as the Spanish Steps. 

The neoclassical Piazza del Popolo and the 

Piazza di Trevi – site of the celebrated fountain 

– are also must-see attractions. Another 

famous square, Campo de’ Fiori, was the centre 

of medieval Rome and a former execution 

ground that now hosts markets, shops and historic 

monuments. 

The Italian capital is a shoppers’ paradise, 

though you can expect to pay big bucks 

in the high-end shopping streets such as Via 

Corso and Via Condotti. Via Vittorio Veneto is 

perhaps Rome’s most famous street, immortalized 

in the 1960 Federico Fellini film La 

Dolce Vita and home to the Café de Paris and 

Harry’s Bar. For a less touristy, but equally 

chic shopping experience, venture to Via del 

Governo Vecchio for luxury and unique finds. 

The Tevere – the ancient Tiber – winds 

its way through the heart of the city and is 

crossed by numerous ponti, or bridges. One of 

them, Ponte Sisto, leads to southern Rome and 

offers picturesque views of the city, with the 

Janiculum – the Gianicolo, second tallest of 

Rome’s fabled seven hills – peaking to the west 

and St. Peter’s Basilica rising from the skyline 

to the north.

Previous page: St. Peter’s Square and St. Peter’s 

Basilica 

This page (from top): The Colosseum; 

the Pantheon; the Piazza di Trevi; the Scalinata della 

Trinità dei Monti (Spanish Steps) 

AFP 

PHOTO: GEORGE W. RUSSELL 

St. Peter’s is situated in the Vatican, home 

of the pope, leader of the Roman Catholic 

Church, and is the world’s smallest independent 

state. Its fewer than 800 residents live in 

an area of less than half a square kilometre – 

around the size of Tiananmen Square. 

If you want a chance to see the pope in person, 

he addresses the public on Wednesday 

mornings, when he speaks from his window 

overlooking the Piazza di San Pietro (St. Peter's 

Square). Tickets are required and expect the 

square to be heaving with the faithful, as well 

as many visitors, seeking a glimpse of Pope 

Benedict XVI, the incumbent. 

After, you can visit the Vatican Museums, 

which include the Pinacoteca Vaticana, the 

Collection of Modern Religious Art and several 

sculpture museums. The nearby Sistine Chapel 

features nine paintings by Michelangelo as 

well as his masterpiece, “The Last Judgment,” 

above the altar and works by Raphael, Ghirlandaio, 

Botticelli and other masters. 

Rome, of course, has an abundance of museums 

and galleries. The Galleria Borghese is 

worth a visit as much for its settings as for its 

contents. The 17th century villa houses a glorious 

collection of Renaissance art as well as a 

large assemblage of Bernini sculptures. 

For fans of performing arts, October marks 

the traditional start of the opera and concert 

season. The 19th century landmark Teatro 

dell’Opera di Roma presents Amilcare Ponchielli’s 

La Gioconda, featuring the American 

soprano Jennifer Wilson, premiering on 23 October. 

The Auditorium Parco della Musica, designed 

by Renzo Piano, offers a packed schedule 

of concerts and shows. 

Rome does not have the drinking culture 

associated with northern European cities, although 

wine bars are now common and gastropubs 

are gaining in popularity. A campari 

and soda in Piazza Navona – which was built 

as a sports arena 2,000 years ago – might 

set you back a small fortune but the peoplewatching 

is unparalleled. Don’t forget to 

have a tartufo, a chocolate ice-cream treat, 

at Tre Scalini. 

Most Hong Kong visitors are familiar with 

Italian food, one of the most globally travelled 

cuisines. Roman specialities include the wellknown 

spaghetti alla carbonara and bucatini 

all’amatriciana as well as more exotic tripe, 

pork and rabbit dishes. 

Where to eat 

• Al Ceppo Restaurant Traditional food in 

the Parioli neighbourhood. Via Panama 

2. 8530-1370. 

• Capo Boi Fresh, delicious seafood. Via 

Arno 80. 841-5535. 

• Da Francesco Good local cuisine in al 

fresco surroundings. Piazza del Fico 29. 

686-4009. 

• Hostaria da Nerone Home-cooked 

Roman food near the Colosseum. Via 

delle Terme di Tito 96. 474-5207. 

Where to stay 

• Ambasciatori Palace Luxury on one 

of the world’s most famous avenues. 

Via Vittorio Veneto 62. 474-2044. 

• Casa Il Rosario This Dominican 

convent accepts tourists as well as 

pilgrims. Via di Sant'Agata dei Goti 10. 

679-2346. 

• Hotel delle Nazioni Roma Elegant 

choice for any type of stay. Via Poli 6. 

679-2441. 

• Hotel Eden Romantic allure in the 

heart of the Eternal City. Via Ludovisi 

49. 478-121. 

• Hotel Napoleon Charming, quiet and 

family run. Piazza Vittorio Emanuele II 

105. 446-7264. 

• Pyramid Hotel Comfort for the 

budget-conscious traveller. Via dei 

Magazzini Generali 4. 578-0009. 

What to see 

• Auditorium Parco della Musica 

The city's modern arts complex.Viale 

Pietro de Coubertin 30. 8024-1281. 

• Baths of Caracalla The monumental 

ruins of public baths used between the 

second and sixth centuries. Via delle 

Terme di Caracalla 52. 3996-7700. 

• Colosseum The stunning ruin of the 

1st century Flavian Amphitheatre is a 

Roman treasure. Piazza del Colosseo 1. 

3996-7700 

• Musei Capitolini Art and archaeology 

exhibits focusing on the city. Piazza del 

Campidoglio 1. 060-608. 

• Teatro dell’Opera di Roma The 

capital's ornate landmark concert hall. 

Piazza Beniamino Gigli 7. 481-601. 


Beyond port and plonk 

There’s more to 

Portuguese wine than 

meets the palate, 

George W. Russell reports 

Portugal’s vineyards have long 

lived in the shadow of their counterparts 

in France and Spain. The 

country is far better known for its Port and 

Madeira than table wines. 

Even in Hong Kong, Portuguese wines 

are more closely identified with trips to 

Macau, where they are more widely consumed 

and better appreciated. Indeed, 

some major resorts such as the MGM Grand 

devote more than one-third of their wine 

lists to wine from Portugal. 

To be sure, the best known wines from 

Portugal found in Macau are the crisp, 

green, low-alcohol Vinho Verde styles often 

associated with quaffing on a summer 

afternoon. But as the days cool, it’s worth 

taking a look at some more robust vintages. 

The international appeal of Portugal’s 

wines hasn’t been helped by the fact that 

90 percent of the country’s wines are produced 

using Portugal’s 200-plus indigenous 

grape varieties such as Touriga Nacional, 

Baga and Rabo de Ovelha. Others are 

referred to by their Portuguese names, 

such as Aragonês, known elsewhere as 

Tempranillo. 

For oenological purposes, Portugal is 

divided roughly into three clusters: northern 

Portugal, central Portugal and southern 

Portugal. Northern Portugal includes 

the Douro and Dão regions where much of 

the country’s finest reds come from. 

The valley of the Douro – difficult terrain 

that 17th century winemakers had to 

create into terraces – is known for its rich 

red wines. Touriga Nacional is the principal 

grape variety grown in the Douro. The 

valley’s hot, dry climate produces dark, aromatic 

wines similar to full-bodied Cabernet 

Sauvignon. 

One excellent Douro available here in 

Hong Kong is the Quinta do Vallado 2007 


After hours 

Terraced vineyards have covered the schist slopes of the 

Douro Valley in northern Portugal since the 17th century. 

(HK$220, Fairmont Fine Wines, Wanchai). 

It delivers concentrated fruits such as plums 

and cherries. 

Central Portugal is the least well-known 

when it comes to wine production. Very 

little good wine is produced around Lisbon 

and vintages from the Carcavelos, Colares, 

Bucelas and Setúbal areas are rarely seen 

outside Portugal. However, the centre of 

the country does contain the Ribatejo and 

Estremadura regions, where many fine 

wines are produced. 

Ribatejo wines are rarely found in Hong 

Kong but one worthwhile purchase is the 

Conde Vimioso Tejo 2009 (HK$78, Watson’s 

Wine Cellar, Central). This blend of 

Touriga Nacional, Aragonês and Cabernet 

Sauvignon has red fruit, almost jam, notes. 

Southern Portugal includes the Algarve, 

the enclave of second homes for British 

emigrants that unsurprisingly produces 

poor wine, but also Alentejo, an important 

grape-growing region and another significant 

contributor of Portuguese wines to 

Hong Kong. 

Fine Alentejo reds include the Cortes 

de Cima 2007 Touriga Nacional (HK$495 

Grand Wine Cellar, Sheung Wan) with 

its complex blueberry-blackberry aroma, 

notes of leather and firm tannin structure. 

A more economical alternative is the 

Quinta do Carmo 2007 (HK$235, Rare 

and Fine Wines, Sheung Wan), another 

rich, fruity vintage ideal for accompanying 

AFP 

autumnal meat and game dishes. 

Portuguese whites shouldn’t be ignored. 

And there’s absolutely nothing wrong with 

quaffing a sharp, raw Vinho Verde on those 

last heady days of summer heat. 

In terms of value for quaff, you can’t go 

past that staple of picnic baskets and Outlying 

Island seafood restaurants, Aveleda’s 

famous Casal Garcia Vinho Verde Branco 

(HK$58, Lam Hoi Kee, Yung Shue Wan). 

Made from Loureiro, Trajadura, Arinto and 

Azal grapes, it’s crisp and refreshing with 

sustained citrus notes. 

For a slightly more upmarket experience, 

try the Quinta de Gomariz Loureiro 

2010 (HK$150, Ample Vision Wines, Kwun 

Tong). On its own, the Loureiro grape tastes 

like something between a Sauvignon Blanc 

and a Viognier. It has a touch of sweetness 

but still has that summery, spritzy appeal. 

The Douro valley also produces some 

fine whites, such as the Altano Branco 

Douro 2010 (HK$98, Watson’s Wine Cellar, 

Central) made by Symington Family 

Estates. This has fruity notes at the apricot 

and pineapple end of the spectrum, with a 

pleasing citrus acidity. 

The nearby Dão region is better known 

for its reds, but also produces interesting 

white wines such as the Quinta das Maias 

2007 (HK$180, Chateau Lamma, Yung 

Shue Wan). An ideal seafood accompaniment, 

this has a pleasing sweetness with 

fetching hints of sea salt.

Timeless magic 

Vintage watches never 

go out of style, writes 

Akua Achampong 

Vintage watches, both original and 

reissued, are popular among enthusiasts. 

In keeping with the widely 

accepted idea that classic styling never goes 

out of fashion, these timeless timepieces 

have remained relevant. 

Jaeger-LeCoultre recently launched 

a range of their Rendez-Vous collection 

aimed at women customers. The Art Deco 

movement of the 1920s and 1930s heavily 

influences the pieces on offer, yet the styling 

is resolutely feminine and poised. They 

feature a day-night indicator set against a 

guilloché dial within either a 29 mm or 

34 mm case. 

As an ode to their horological 

pasts, many brands have 

either relaunched or redesigned 

pieces from their 

historical collections. 

Vacheron Constantin 

has brought out a 

range dedicated to 

vintage designs. Its 

Historiques collection 

features eight 

designs with different 

watches added 

intermittently. They 

pay tribute to the classic 

brands’ rich and varied 

history in watch design, 

including traditionally 

fashioned timepieces and 

Art Deco creations. 

One example, the Ultra- 

Fine 1955, is a nod to the 

clean and ultra-thin designs 

that the Swiss maker is 

famed for. Its relaunch in 2010 saw little 

change from the original released 55 years 

earlier. It has a total height of just 4.10 

mm, making the 1955 model the thinnest 

Patek Philippe Chronometro 

Gondolo 5908 

mechanical watch in the world. The 

mechanical manual winding movement 

is based on the thinnest 

watch movement ever made, the 

1.64 mm thick Calibre 1003 

from 1955, but has been 

rebuilt in 18-karat gold. 

The American 1921, rereleased 

in 2009 as part of 

the same collection, also 

invokes Art Deco influences. 

Its initial release came at a 

time when the wristwatch was 

a relative innovation. 

In addition, the 

watch presents an 

unusual feature. In an 

attempt to break away 

from conventional 

designs of that time, 

its dial was shifted 45 

degrees from its usual 

orientation, creating a 

tasteful obscurity in its 

appearance, unusual for 

both that era and now. 

The Art Deco movement 

represented a shift in style 

and design in the early 20th 

century. The emergence of linear 

symmetry marked a departure from 

conventional asymmetric organic 

curves, combining various influences 

like cubism and modernism. A new 

purely decorative design movement 

was born – one that channelled func- 

tionality, modernity and glamour. 

In homage to the spirit of Art 

Deco, the Patek Philippe Gondolo 

collection is a contemporary take on 

watches from that era. The name for the 

collection derives from the Chronometro 

Gondolo watches that the company man- 

ufactured for Gondolo & 

Labouriau, a Brazilian 

retailer, between 1902 

and 1930. 

The several variations 

of watch 

included in this 

collection are 

all rectangular 

in shape but all 

differ in design and 

finish. Like many 

Art Deco watches, the 

emphasis is on style 

rather than technology, 

defined by hand-wound 

movements,uncomplicated 

calibres and elaborate patterns. 

There is stylistic 

variety, including Arabic 

Jaeger-LeCoultre and Roman numerals and 

Rendez-Vous 

coloured dials. 

The majority of vintage watches have a 

particular masculinity to their appearance, 

but Van Cleef & Arpels’ vintage Alhambra 

collection is a marriage of feminine elegance 

and classic features. All watches in 

the collection incorporate the iconic fourleaf 

clover motif, whether as the watch face 

or as a linked bracelet strap with the watch 

face baring this same design, and a Swiss 

quartz movement. 

Vintage-styled watches possess the 

timelessness that contemporary and niche 

designs lack. They exude charm and have 

an ornamental style rarely employed 

on modern timepieces. They are worn 

not just to tell the time but purchased as 

sought-after collectables too. Such styles 

have withstood various reinventions and 

relaunches but always remain popular with 

watch lovers and collectors alike – standing 

the test of time. 


The Gap store recently opened near 

my accountant friend’s office. Strolling 

past, I could see him peering at 

the shop sign quizzically, trying to work out 

what would be sold in a Generally Accepted 

Accounting Principles shop. 

“Gap sells hoodies,” I explained. He nodded 

unconvincingly, although I knew he had no 

idea what a hoodie was. 

It’s not just that he is old (born in the Late 

Cretaceous) but also that he is over-immersed 

in his own world. Even the way he stared too 

long at the lunch bill marked him out as an accountant. 

“Just pay it. Don’t extrapolate the 

restaurant’s annual revenue from it,” I said. 

But I couldn’t blame him. It happens to all 

professionals who do the same thing for too 

many years. Here are 20 signs you’ve been an 

accountant for too long: 

1. When you download an ebook from Kindle 

you refer to the price as “the net book value.” 

2. At the Oscars, you can’t understand why 

there’s no prize for the production accountant. 

3. You think the most gripping part of the 

Miss Hong Kong finals on TV is when they 

announce which accounting firm collated 

the votes. 

4. You own 10 shirts and all of them are white. 

5. You think The Beatles song “Dear Prudence” 

is about the hidden costs of conservative 

investing. 

6. Instead of “I’ll bet my bottom dollar,” you 

say, “I’ll risk my final consideration.” 


Let’s get fiscal 

Get your daily dose of Nury’s humour at www.mrjam.org 

20 signs you’ve been an 

accountant for too long 

Leaving number-related matters at the office is 

a hard task for some, says Nury Vittachi 

7. You know what the word “fungible” means 

and love throwing it into conversations: “I 

like my men/women to be tall, dark and 

fungible.” 

8. When pop stars sing “What is love?” you 

call out, “An intangible asset with a challenging 

value profile.” 

9. When you make a list of pros and cons of 

getting married, one column is headed “opportunity 

cost.” 

10. You have three pairs of shoes and all of 

them are black. 

11. When you phone home from the bar on a 

Friday night, you tell your spouse, “Can 

you pick me up? I’m in a state of extreme 

liquidity.” 

12. When your spouse wants to have children, 

you say, “Put your request in writing, listing 

up-front costs, recurrent expenditure and 

return on investment.” 

13. You think of your children as “Liability 1” 

and “Liability 2.” If they fail to put on their 

seat belts you tell your spouse, “Please deal 

with our unsecured liabilities.” 

14. When you and your spouse look at your 

drooping flesh in the mirror you say, “I 

think our figures have depreciated.” 

15. When your spouse says “We need to talk,” 

you print out some appraisal forms. 

16. You think of the Christmas letter your 

spouse writes to distant family members as 

The Annual Report. 

17. At a marriage counselling session, you use 

the term “year-on-year performance.” 

“ You think of the 

Christmas letter 

your spouse writes 

to distant family 

members as The 

Annual Report.” 

18. When your child gets a mixed school report, 

you make a spreadsheet of grades 

against school fees so you can set a breakeven 

point. 

19. When grandpa dies, you tell your colleagues 

he has “gone into receivership.” 

20. When your child fails half his exams, you 

pay half the school fees with a note saying, 

“Here’s the money pro rata.” 

Does this sound like you? If it does, then 

you need a holiday. Go to the Gap, buy a hoodie 

and take all liabilities, whether secured or 

not, on a nice long vacation. Your office will 

be fine without you. We’re all replaceable. Or 

fungible, if you prefer. 

Nury Vittachi is a bestselling author, columnist, lecturer and 

TV host. He wrote the Institute’s first two storybooks, May 

Moon and the Secrets of the CPAs and May Moon Rescues 

the World Economy. A third, May Moon’s Book of Choices, 

was published in August.

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