By Alison Leung
HONG KONG, Dec 30 (Reuters) – Hong Kong’s pending acceptance of Chinese accounting standards will mark an important advance in Beijing’s drive to globalise its financial sector, but could also challenge international investors with reports prepared by an industry prone to scandal.
A proposed rule change likely to take effect next year would see Hong Kong’s stock exchange let locally-listed Chinese firms report using their home accounting standards, a move designed to lower costs and keep Hong Kong competitive with Shanghai.
But concerns about supervision of Chinese auditors have led to delays, making it unlikely the exchange will meet its Jan 1 target date to implement the change.
The change will also lead to variant results for certain industries, such as insurance, although those differences are expected to fade over time as standards converge.
“There is a confidence issue,” said Judy Wong, president of the Association of Chartered Certified Accountants (ACCA) Hong Kong, a group whose members stand to lose substantial business to lower-cost Chinese accounting firms under the rule change.