BDO Hong Kong has said it is not in merger discussion with BDO China.
The denial came as a reaction to a news report in the Hong Kong Economic Journal that speculated that a merger between the two BDO firms was imminent.
"Under the current legal and regulatory environment between Mainland China and Hong Kong and different firm cultures, both agreed that a merger will not be realised in the short term," BDO Hong Kong stated.
BDO Hong Kong also denied that BDO China has equity interest in the firm. However, the Hong Kong firm confirmed to be in discussion with BDO China "for closer cooperation with the aim of providing exceptional service to clients which operate in both jurisdictions."
BDO China previously established two subsidiary companies in Hong Kong. According to BDO Hong Kong, the establishment violated BDO regulations and the firm requested the closing of the two companies.
"The concept of territorial integrity is fundamental within the BDO network," BDO Hong Kong chairman Albert Au said. "Not respecting the exclusivity obligation and/or the territorial integrity of another member firm is a serious infringement of the regulations."
"BDO Hong Kong is confident that this matter would be resolved satisfactorily in the current discussion with BDO China and with the involvement and support of BDO International," Albert added.
Contacted by The International Accounting Bulletin, Professor Paul Gillis of the Guanghua School of Management in Peking commented: "BDO as a global organisation would be stronger if the Hong Kong and China member firms combined."
"The Big Four all merged their Hong Kong practices with the Mainland a decade ago," he added.
"But a merger would mean that many Hong Kong partners and staff would have to relocate to the mainland if they wish to continue their careers with the firm."