“Bogus CPA”
Since 1 October 2022, the Accounting and Financial Reporting Council (AFRC) has dedicated itself to raising audit quality in Hong Kong and to promote the development of the accounting profession.
An issue which has concerned the profession for many years is the “Bogus CPA” issue. Hong Kong’s law may require audited accounts to be prepared under different circumstances. The most common is the requirement for a company to submit annual audited accounts for tax purposes. These audited accounts can only be signed by a certified public accountant (practising), i.e. a certified public accountant with a Practising Certificate (see the FAQ below)
A “bogus CPA” refers to a person providing audit services when he is not qualified to do so, which is a criminal offence. A more common problem is when a small number of certified public accountants (practising) signing large numbers of audited accounts indiscriminately, without due regard to audit quality and professional standards, often through the introduction by intermediaries. This type of misconduct potentially diminishes the overall quality and credibility of financial reporting in Hong Kong, and damages the reputation of the accounting profession and its long-term development.
To address these issues, the AFRC has prepared the following FAQs to enable members of the public, especially companies, to have a fuller understanding of the legal requirements in relation to the signing of audited accounts. We also encourage members of the public to report suspected criminal offences and misconduct to the AFRC and relevant law enforcement agencies.
A1.
A bogus accountant is an unqualified person impersonating, pretending to be, or holding himself / herself out as, a certified public accountant (practising) and providing audit services.
A2.
A certified public accountant (practising) is a certified public accountant holding a Practising Certificate issued by the AFRC under the AFRCO. Each Practising Certificate carries a unique number (PC Number) for the purpose of identifying its holder. The PC Number of each certified public accountant (practising) can also be found in the register of certified public accountants (practising) which is available on the AFRC’s website. Please refer to Q4 below for further details.
A3.
Only a practice unit registered with the AFRC under the AFRCO is qualified to provide audit services.
A practice unit can be:
- a certified public accountant (practising) who practises accountancy on the accountant’s own account under the accountant’s own name;
- a CPA firm (i.e. (a) a certified public accountant (practising) who practises accountancy on the accountant’s own account under a firm name registered with the AFRC; or (b) a firm of certified public accountants (practising) that practises accountancy in partnership and is registered with the AFRC; or
- a corporate practice (i.e. a company registered with the AFRC as a corporate practice).
Under the AFRCO, any unqualified person who pretends to be a practice unit, provides audit services or uses certain misleading descriptions which implies he or she can provide audit services, may be guilty of a criminal offence.
A4.
You may check against the registers of certified public accountants (practising), CPA firms and corporate practices established and maintained by the AFRC. You may access the register of certified public accountants (practising) at https://www.afrc.org.hk/en-hk/auditor-search/find-a-cpa-practising and the registers of CPA firms and corporate practices at https://www.afrc.org.hk/en-hk/auditor-search/find-a-cpa-firm-corporate-practice.
You should also obtain the name and PC Number of the certified public accountant (practising) signing the audited accounts and verify their identity before engaging them to provide audit services.
A5.
If you suspect that an unqualified person has provided audit services to you or the public, e.g. by pretending to be or impersonating a certified public accountant (practising), please report the matter to the Police. You may also report it to the AFRC. Please click here.
A6.
The AFRC will make an assessment after receiving the complaint. If the case involves a suspected criminal offence, the AFRC may refer the complaint to the Police for further handling. You may also report the matter to the Police directly.
If the case involves potential misconduct by a regulatee of the AFRC (including a certified public accountant), the AFRC has the power to investigate the case and impose sanctions on the regulatee.
A7.
There is strictly speaking no “bogus” or fake accountant if the audited accounts are signed by a certified public accountant (practising). It would be a quality issue concerning the standard of audit services provided. A certified public accountant (practising) who signs off audited accounts “indiscriminately” without due regard to audit quality may be guilty of misconduct under the AFRCO.
You should report this to the AFRC. Please click here. The AFRC will take appropriate action, including investigation and inspection.
