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Companies (A) Bill and Professional Accountants (A) Bill
The Companies (Amendment)(No. 2) Bill 1995 and the Professional Accountants (Amendment) Bill 1995 were published in the Gazette today (Friday).
A Government spokesman said the amendment to the Companies Ordinance ( Cap. 32) would lift the restriction on the appointment of a body corporate as auditor while the amendment to the Professional Accountants Ordinance (Cap. 50) would prescribe the conditions under which incorporated auditing practices might register with the Hong Kong Society of Accountants (HK$A).
Amendments also include a requirement to have adequate professional indemnity insurance cover and limitations on who may be directors and shareholders of such companies.
Introducing the background to the Bills, the spokesman said the HKSA had made submissions to the Administration since August 1988 to request auditing practices be permitted to incorporate with limited liability.
"They expressed that the principle of unlimited liability for all partners irrespective of fault was inequitable, an auditor should be able to seek protection from liability resulting from the professional negligence of his partners and that incorporation would help bring the extent of personal liability within known and reasonable bounds.
"It is noted that incorporation of firms of auditors is permitted in the United Kingdom and in various other jurisdictions," he said.
He explained that the proposal was accepted in principle by the Standing Committee on Company Law Reform if adequate auditing standards would be maintained and incorporated practices of certified public accountants or public accountants would take out sufficient professional indemnity insurance cover to meet claims against them.
The spokesman said the HKSA had taken active steps to address the two concerns identified by the Standing Committee.
"The Society implemented a new Practice Review programme in 1992 by sending reviewers to individual practice units to monitor compliance with auditing standards and requirements.