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March 30, 2009

Hong Kong market to open up to Mainland firms

Mainland Chinese audit firms could soon compete for Hong Kong-listed clients in a move that could have a dramatic impact on both professions.

Authorities are planning to issue licenses to a handful of firms that would allow Mainland Chinese CPAs to sign off on Hong Kong accounts. This would mean the end of a dual system that has placed barriers to prevent Mainland firms accessing the important Hong Kong market.

Experts speaking to the International Accounting Bulletin for this year’s China survey said the Ministry of Finance is very keen on pushing through the reform, which will need the agreement and co-operation of Hong Kong authorities.

Grant Thornton China Management Corporation chief executive Stephen Chipman said the added competition will probably have a greater impact in Hong Kong than in China.

“For Mainland firms, qualifying for that H-share audit license will be critical because a lot of Mainland companies will seek to have Mainland firms do their work,” he explained.

Integration beckons

Accounting networks, such as Grant Thornton, are planning to integrate their Hong Kong firms into Greater China practices, which could help them become more competitive in a new market.

“When we look down the road, we see Hong Kong as a major office of our national Chinese member firm, and that’s how our Hong Kong people see it too,” Chipman said. “The regulations and market restrictions don’t make that easy to achieve today. But as the market becomes one it’s going to accelerate that agenda.”

RSM China partner Mark Wilson said a hurdle could be getting the Hong Kong Institute of Certified Public Accountants to recognise the Chinese CPA qualification although a deal is likely to be struck.

Mazars said it has plans to further integrate its Mainland China and Hong Kong practices by harmonising technical tools, intensifying staff exchanges and increasing joint assignments.

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