GAA leadership prof ileRaphael Ding

O n the 37th floor of Wu Chung House, the home of the Hong Kong Institute of CPAs, Raphael

Ding leans forward on the bright red sofa and flicks through his notes. “I’ve looked at some statistics,” he says.

Number crunching is important to every accountant, but for the Institute’s Chief Executive and Registrar, membership figures are particularly engrossing. “When I took over, the Institute had just under 34,000 members and now we have 38,700,” he says, looking up. “So in the past three years the average annual growth is about 4.5 percent.”

That rapid growth illustrates the strength of the profession in Hong Kong, Ding observes. “Accounting in Hong Kong remains a very attractive profession, despite all the challenges and the uncertain-ties about the future, especially about the Hong Kong accountant’s positioning within greater China.”

Three years into the Institute’s top management job, Ding believes he under-stands the challenges and, in most cases, sees a solution. “I would say the biggest challenge for me over the past three years has been our ongoing dialogue with the Hong Kong government regarding the

In his first interview for A Plus since taking office three years ago, Institute Chief Executive and Registrar Raphael Ding sets out an ambitious agenda to negotiate audit regulatory reform, create opportunities in China and maintain Hong Kong’s status as an international financial centre. George W. Russell reportsPhotography by Juliet Shayne Lui

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PARTNERS INPROGRESS

July 2015 31

GAA leadership prof ileRaphael Ding

reform of listed company audits,” he says.“The second one is the ongoing dialogue

with the Chinese authorities on cross-border audit activities, including access to audit working papers. And last but not least is the development of our Sixth Long Range Plan, which will guide us for the next five years, and beyond, in terms of development of the Hong Kong profession.”

Ding sees a light at the end of the tun-nel in terms of both listed company audit reform and cross-boundary activities. “I think we have started to see the shape of the model for regulating listed company auditors and what remains is really work-ing out the details before the bill goes to the Legislative Council,” he says, noting the Hong Kong government’s consultation conclusions released on 26 June.

“The ongoing dialogue with the Chi-nese authorities has also been approaching the end,” he adds, citing the provisional regulations regarding cross-border ac-tivities issued in May and that took effect from 1 July.

That leaves the fulfilment of the long-range plan. However, Ding sees an even more pressing need: remaking the Institute

as an organization fit for purpose in the future. “We have a very ambitious project and that is to completely revamp the Profes-sional Accountants Ordinance and the en-tire governance structure of the Institute,” he explains.

Sweeping changesDing plans to launch the complete overhaul once the government has settled the reform of listed company audits. “We will look at all aspects of the Institute, starting from the governance structure, including the composition and election mechanism of the Council and the division of responsibili-ties between Council and management and various committees,” he says.

The current structure, Ding points out, was established more than 40 years ago when the Professional Accountants Ordinance was promulgated. “We need to redraw the responsibility between Council and management, because under the ordi-nance, Council is given full responsibility for all aspects of the Institute and I don’t think that is going to work anymore, given that we have close to 39,000 members.”

A newly drawn segregation of responsi-

“ We have a very ambitious project and that is to completely revamp the Professional Accountants Ordinance and the entire governance structure of the Institute.”

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“We need to engage more with people from within and outside the profession.

We have organized quite a few joint events with the ICAEW, CIMA, HKIoD

and CFA Institute, among others.”

bilities between Council and management will require a different staff mix, says Ding. “I’m trying to reduce the adminis-trative staff and increase the number of professional and technical staff,” he says. “We are a little bit too labour intensive and I have high hopes for the new member activity system we are going to implement in Q3 this year. It’s a first step in trying to automate the capturing and processing of information about members.”

Regulatory systems will also be re-examined. “Even after the regulatory re-form of listed company audits, the Institute remains a regulator of non-listed-company auditors and of the general behaviour of our members and students,” Ding points out.

“We will still be a big self-regulatory organization and we have to make sure our investigation, inspection and disciplinary systems will become more effective and efficient in the future.”

The Qualification Programme is also scheduled for a revamp. “We want to make sure it’s up to date and to make sure the practical experience that firms are offering to trainees remain relevant,” says Ding. “We are leaving no aspect of the Profes-sional Accountants Ordinance unexam-ined, so we will cover everything.”

Cooperative spiritDing advises members to expect a series of member consultations and even some public consultations over the next three years. However, he adds that a number of initiatives will take shape soon, such as the financial controllership programme. “This

is the first project of its kind ever under-taken by an institute or professional body in this region,” he says.

The programme is designed to help practising accountants who are making a transition into the commercial sphere. “We will try to make it as practical as possible,” says Ding. “We looked at similar courses offered by other institutes but we felt they didn’t have enough practical learning and also not enough local content.”

The answer, Ding says, was to develop a course tailor-made for Hong Kong accountants. “The unique characteris-tic is that we are going to engage very experienced corporate accountants, and professional accountants in business, to be the facilitators, so there will be a lot of practical experience sharing,” he says. “We believe that is really the key if we are to be successful and that will differentiate our course from all the others.”

One of the course modules was developed jointly with the Chartered Institute of Man-agement Accountants. “We believe CIMA is the right platform for us to work with,” says Ding.

However, the programme also symbolizes a broader spirit of cooperation. “We have been working more with other bodies,” says Ding. “We need to engage more with people from within and outside the profession. We have organized quite a few joint events with the Institute of Chartered Accountants in England and Wales, CIMA, the Hong Kong Institute of Directors and the CFA Institute, among others.”

To further strengthen its connection

The recent redesign of the A Plus magazine you are currently reading is just one small part of the Institute’s renewed commitment to effective communications with its nearly 39,000 members.

In addition to an automated member activity system, the Institute is exploring how to best use digital platforms to improve its electronic communications. “We’ve done a comparative study of some of the e-initiatives currently done by the leading bodies,” says Institute Chief Executive and Registrar Raphael Ding.

An important challenge is discovering how to communicate detailed and in-depth documentation in the age of short-form messaging. “We know how difficult it is and the e-channel will be just one of the many channels we will be using,” says Ding. “I know its limitations, and I do not want to raise expectations that we can do wonders.”

One idea is developing an advanced electronic delivery service for CPD programmes. “At the moment, our e-CPD activity consists of recording face-to-face CPD and that’s not good enough,” he says. “The next step will be more interactive but that will be very costly and I need to have a critical mass to justify the development of interactive education programmes.”

Modernizing the message

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GAA leadership prof ileRaphael Ding

“ We are the trusted adviser to international players in terms of what’s going on in this part of the world, and the trusted adviser to Mainland China in relation to developments of the profession in the region and internationally.”

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with stakeholders, the Institute started paying visits to a number of major Hong Kong business and trade organizations and political parties in January following Dennis Ho becoming the Institute President. “We need organizations outside the profession to have a bet-ter understanding of the profession and to open up more doors for our members,” says Ding. “As a result of these visits, we have invited business leaders to come to share their diverg-ing experience with our members.”

Global ambitionsDing believes it is important to maintain the Institute’s high profile globally. “The highlight in terms of international activities is my appointment to the International Federation of Accountants board and to the IFAC Planning and Finance Committee.”

Chaired by IFAC Deputy President Rachel Grimes, the Planning and Finance Committee not only manages budgeting and finance but also strategic develop-ment. “It’s a bit like our long range plans,” says Ding. “It’s a very im-

portant board committee and I feel deeply honoured to be appointed as a member.”

Hong Kong also carries global influence through its founding membership in the Global Account-ing Alliance. “The GAA is a little bit like a G10,” says Ding. “Its member bodies are from the more developed countries, which account for a substantial percentage of the world economy, who get together to discuss issues of common interest and maintain dialogue with IFAC and other international bodies.”

GAA meetings, Ding adds, have enabled access to some of the world’s most influential regulators, such as the chairs and senior execu-tives of the Securities and Exchange Commission and Public Company Accounting Oversight Board in the United States, the Financial Report-ing Council in the United Kingdom, the International Forum of Indepen-dent Audit Regulators and heads of European regulators.

Hong Kong has built up sub-stantial rapport with other GAA members since its founding in November 2005. “We trust each

other and we share information about what’s going on within our own countries that will be of relevance to the others, so together we know what’s going on around the world,” says Ding. “It has been very successful and a good oppor-tunity for Hong Kong to work with the international players.”

Hong Kong’s global clout is an essential factor in maintaining its position as an international financial centre. “I think the Institute’s posi-tion is we are the trusted adviser to international players in terms of what’s going on in this part of the world, and the trusted adviser to Mainland China in relation to developments of the profession in the region and internationally, so we are a very effective bridge between China and the rest of the world,” says Ding.

He sees the Institute continuing as an outward-looking, cosmopoli-tan organization. “We are the most internationalized and everything we do follows international standards,” he says, “so that really has put Hong Kong in a very good position.”

Institute Chief Executive and Registrar Raphael Ding can recall his concern about the future of small- and medium-sized practitioners when he was a Council member. “I was telling the SMPs you need to pool your resources together,” he says. “There’s no way you can sustain without the scale.”

He sees the mergers of smaller practices to create economies of scale and the acquisition of niche businesses as part of the answer. “Most SMPs in developed econo-mies are not doing audit as their main business,” he says, adding that even though Hong Kong requires small-entity audits, almost all small-scale manufacturing has moved to China. “We’ve lost that

audit business,” he says. While financial service com-

panies continue to prosper, SMPs face a challenging environment. “Companies within that sector are highly regulated and SMPs don’t have the resources to understand the increasingly complicated and demanding regulations.”

SMPs, Ding adds, also need to critically look at succession plan-ning if they want to stay in business. “They need to up their game be-cause the competition at the lower end of the market will continue to increase, not only from professional accountants who have practices that are bigger, but also from ac-counting service providers who don’t have to be registered CPA firms.”

Helping SMPs keep abreast

The Global Accounting

Alliance facilitates

cooperation among

11 of the world's leading

professional accounting

organizations, including

the HKICPA.

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