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"The HKSA expects to complete the review on 300 units by the end of 1995. In the event that the standards remain inadequate in particular cases, the HKSA is empowered to take disciplinary action," he said.
On the question of professional indemnity insurance, the spokesman said the Society would require corporate practice to take reasonable steps to secure that they were able to meet claims against them arising out of their professional services.
"In addition, the Society will hold a Master Policy of professional indemnity insurance and corporate practices will be required to subscribe a minimum required level of professional indemnity insurance according to rules specified by the Society.
"The HKSA will be empowered to take disciplinary action against corporate practices which fail to comply with the rules," he said
The spokesman pointed out that in order to further safeguard the public interest, the HKSA had agreed to consult the Administration fully on any proposed changes to the rules relating to incorporation, and to respond to any initiatives from the Administration for changes.
"An important measure will be included in the HKSA's auditing standards to safeguard that the interests of audit clients and third parties.
"The auditor responsible for a particular audit is required to clearly identify himself in the audit report and the engagement letter given to the client so as to facilitate aggrieved parties to take civil action against the auditor concerned.
"The measures will have the intended effect of protecting blameless auditors from liability resulting from the professional negligence of their partners," he said.
The spokesman added that advice has been received from the Attorney General's Chambers that personal liability might be incurred, if the negligent individual, in the circumstances of the case, assumed a personal duty of care. It would, therefore, be unsafe for any auditor in an incorporated practice to assume that incorporation would protect him from liability arising from his own professional negligence.
In order to ensure independence of the incorporated practices, it is proposed that in general only professional accountants will be eligible to be directors and shareholders of corporate practices.