Presented by : Albert Au, Hong Kong Institute of CPAs
Venue: IFAC SMP Forum, Beijing
Date: 28 October 2009

Summary
 Impact of the economic crisis

On the Hong Kong economy

On SMPs in Hong Kong
 SMPs: adapting to the economic crisis and laying the foundations for sustainable growth
 HKICPA’s response to the economic crisis
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Impact of the Economic Crisis on the Hong Kong economy
 Started about 3 months’ later than in the USA/Europe
 Less impact in Hong Kong, but still very significant
 Benefit of the economic stimulus measures of the mainland
 Some positive signs of recovery:

Rising residential property market and prices

Hang Seng index positive:
- 30 September 2009: 20,955
- 27 October 2008: 11,016
- 30 September 2008: 18,016
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Impact of the Economic Crisis on the Hong Kong economy
 But the real economy is not recovering
 Exports fell 13.9% from August 2008 to August 2009
 Seasonally adjusted unemployment rate in Hong Kong

June
– August 2008 3.2%

June
– August 2009 5.4%
 The worst has not yet been seen
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Impact of the Economic Crisis on Hong Kong SMPs
A delayed impact on SMPs which will last for another year at least
 Reduction in clients’ business activity
 Pressure on fees
 Decreased staff turnover
 General uncertainty
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SMPs Adapting to the Economic Turbulence
How should SMPs adapt?
 By getting closer to clients
 Deliver greater value to clients
 Raised awareness of professional issues
 Sound practice management
 Essential to maintain professional integrity
 Sound practice management
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SMPs Adapting to the Economic Turbulence
Deliver greater value to clients
 Develop and offer
 new, value added services
 specialist services
 Better service delivery
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SMPs Adapting to the Economic Turbulence
Raised awareness of professional issues
 Know your clients and your clients’ businesses better
 Responding to the heightened risk of fraud in clients’ businesses
 Appropriate assessment of clients’ businesses as going concerns
 Maintaining professional standards in the face of downward fee pressure
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SMPs Adapting to the Economic Turbulence
Sound practice management
 A well defined business strategy
 Controlling costs
 Ensuring sufficient liquidity
 Improving efficiency
 Speed of work, billing, payment by clients
 Actively managing the risks
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Laying the Foundations for Sustainable Growth
Sustainable SMP growth
 Adapting to the challenges will also lay the foundations for sustainable growth
 Leadership in charting the way forward
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HKICPA’s response to the economic crisis
Primary focus: providing professional technical support
 Events and correspondence focusing on key topics of heightened relevance in the crisis
 Challenges in auditing fair value estimates
 The auditor’s responsibilities to consider fraud

Going concern / liquidity risk considerations
 Accountants’ reports on solicitors’ accounts
 E-correspondence to all members explaining the reasons and rationale for the amendments to IAS 39 and HKFRS7.
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HKICPA’s response to the economic crisis
Primary focus: providing professional technical support
 Financial reporting and auditing alerts

SMP/SME resource centre on HKICPA website
 Promotion of new areas of work for members (eg HKID Capital
Investment Entrant Scheme)

Investment initiatives to enhance technical training and support
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Thank you
Albert Au
Member, IFAC SMP Committee
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