ENG-2006 — Page 116

88 Financial and Monetary Affairs

In September, the Secretary for Financial Services and the Treasury led a delegation of more than 100 representatives from Hong Kong's financial services sector to Hunan to showcase Hong Kong's strengths and enhance cooperation in the area of financial services. Participants in the delegation included leading figures from the banking sector, securities and insurance industries, venture capital investment and private equity funds, accounting and legal professions, and representatives of the financial regulators. The visit has led to the conclusion of three cooperation agreements between financial services organisations in Hunan and Hong Kong.

Enhancing Hong Kong's Competitiveness as an International Financial Centre

The Government is committed to strengthening Hong Kong's competitiveness as an international financial centre and the premier capital formation centre for the Mainland through enhancing its regulatory regime, promoting corporate governance, upgrading financial infrastructure and fostering the development of the bond market.

Enhancement of Hong Kong's regulatory framework will continue in the light of international experience and standards. The objective is an effective regulatory framework that will ensure sound business standards and confidence of the market but without unnecessary impediments. There are also other major initiatives to enhance Hong Kong's competitiveness as an international financial centre.

Upgrading of the Quality of Financial Reporting

Quality financial reporting is of paramount importance for upholding Hong Kong's corporate governance regime. The Hong Kong Financial Reporting Standards (HKFRS), which are issued by the HKICPA, have been fully convergent with the International Financial Reporting Standards (IFRS) since January 2005. This uniform accounting platform, well understood by global investors and financial analysts, enables the comparison of corporations and their results in different jurisdictions and leads to greater confidence in the transparency and quality of Hong Kong's financial markets.

In addition, the Government is acutely aware of the need to maintain an effective, transparent and accountable regulatory regime for the accountancy profession that is on a par with international standards. The Legislative Council enacted the Financial Reporting Council Ordinance on July 13, 2006, providing the statutory basis for establishing the Financial Reporting Council (FRC), which is a new statutory body to investigate audit irregularities and accounting non-compliances of listed companies in Hong Kong.

The Government announced the appointment of Ms Sophia Kao as the inaugural Chairman of the FRC on December 1, 2006. Together with nine other FRC members (including two ex-officio members, namely the Registrar of Companies and the Chief Executive Officer of the FRC), the FRC is expected to be fully operational as soon as practicable in 2007, to discharge its statutory functions in an impartial, efficient and transparent manner.