Honorary AdvisersPresident and Vice-Presidents of the Hong Kong Institute of Certified Public Accountants

Board MembersDoug Oxley(President)Stella P L Cho(Vice-President)Wilson Y W Fung(Vice-President)Chan Cheuk HayJohnson C H KongAndy T M LiLindy W W Yau

Editorial CommitteeLindy W W Yau(Chief Editor)Selwyn S Y Cheng(Deputy Chief Editor)Lisa S K Wong(Deputy Chief Editor)Michael C W Wong(Monitor of the Issue)Peggy P K ChanCharles K C Chiu Thomas C F ChungChris K C Lau

Staff ResponsibleBo Bo F P Man(Assistant Director)Florence V Tong(Assistant Administrative Officer)

December 2007Hong Kong Institute of Accredited Accounting Technicians Limited香港財務會計協會有限公司

27/F, Wu Chung House,213 Queen’s Road East,Wanchai, Hong KongTel: 2823 0600Fax: 2823 0606Hotline: 2823 0660Web: www.hkiaat.orgE-mail: hkiaat@hkiaat.org

(Circulation: 9,200 copies)

Contents

HKIAAT News

President’s Message 1

President’s Engagements 2

Membership and Student Fees for 2008 2

Thanks to our Subject Reviewers 2

Annual Dinner and Prize Presentation Ceremony 2008 3

New AAT-branded Merchandise 3

Professional Bridging Examination

Feature Interview: Jimmy Lau 5

Top Students in the June 2007 Examination 6

2008 Examination Timetable 7

Important Notes for Candidates 8

Accounting Technician Examination

Top Students in the June 2007 Examination 9

2008 Examination Timetable 10

Important Notes for Candidates 11

Members’ Corner

Career Assistance: Making A Dream Come True

    by William Tong 12

Featured Employer: Michael Tsoi & Co. CPA 15

Welcome to New Members 16

Continuing Professional Development 16

Studies in Foundation Accounting

Book-keeping and Accounts Examination

and Computerised Accounts Examination 18

Certified Accounts Clerk Qualification 20

Activity Highlights

Examination Technique Seminars 21

CPD Seminar 1 – Audit Risk Evaluation 22

Greenfield

Sudoku 23

Q&A 24

Features

Hong Kong Financial Reporting Standards: HKAS 27

    by Lindy W W Yau and Morris Y M Kwok 25

Examination Techniques

    by Dr. Teresa M H Ho 31

President’s Message

Doug OxleyPresident

Dear members and students

Time flies and I stand at the end of my second year as President of the HKIAAT. I am proud that the HKIAAT has been able to continue to make great strides throughout 2007. We have maintained a steady foothold in our core examinations: the Accounting Technician Examination and the Professional Bridging Examination. Our membership numbers are on the rise, with 1,507 members as at 1 December 2007.

In addition to the regular promotional and student activities, below are some highlights of our achievements in 2007:

• At the close of 2006, we appointed external consultants to review our current examination structure and syllabuses. The consultants researched on the market needs for accounting technicians in Hong Kong and developed a new qualification framework for the HKIAAT. Our parent institute, the Hong Kong Institute of CPAs, conducted a two-month consultation on this framework in the spring. We have now finalized the syllabuses and transitional arrangements for the New Qualification Framework, which will be launched in June 2009.

• In June, a batch of 143 students graduated from the first cohort of the Practical Accounting for Small and Medium Enterprises course. There are a further 700 students studying in the second and third cohort of this course, the only accounting course offered to senior secondary students under the Applied Learning Scheme (formerly Career Oriented Curriculum).

• In July, through our first Professional Development Programme, we were able to reach out to secondary school teachers who were interested in teaching the Applied Learning course.

• In November, the first HKIAAT CPD Seminar, on Audit Risk Evaluation, was successfully launched. We have always stressed the importance of our members to constantly update their accounting knowledge and skills through continuing professional development. The HKIAAT will continue to work hard in developing quality CPD seminars which are suitable for our members and students.

Reviewing our achievements in 2007 gives us the opportunity to reflect on how to better serve members and students in the coming year. Our biggest challenge in 2008 will be the implementation of the New Qualification Framework. We make a pledge that, here at the HKIAAT, we shall put our best efforts into helping our students throughout the implementation period. We look forward to your continued support in taking this big step forward together with us. Lastly but not least, on behalf of the HKIAAT, I wish you all a prosperous year ahead!

HKIAAT News

2

President’s Engagements

The President and other representatives of the HKIAAT attended the following events during November and December 2007:

• Hong Kong Inter-Tertiary Accountancy Association High Table Dinner 2007 cum Inauguration Ceremony• Hong Kong Institute of Vocational Education (Chai Wan) Student Awards Presentation Ceremony 2007• Hong Kong Institute of Vocational Education (Shatin) Student Awards Presentation Ceremony 2007• Vocational Training Council 25th Anniversary Dinner• The Hong Kong Polytechnic University Faculty of Business High Table Dinner 2007• The Vocational Training Council Graduation Ceremony 2007• Hong Kong Institute of CPAs Annual Dinner 2007• Hong Kong College of Technology 50th Anniversary Banquet• Hong Kong Institute of Human Resources Management 30th Anniversary Dinner

Membership and Student Fees for 2008

The annual membership and student fees will be due soon! Members and students should have received their renewal package in early December 2007.

For the calendar year 2008, the Board had decided that there will be no fee increase. All students of the Accounting Technician Examination will continue to pay the current student fee at HK$520, while the membership fee remains at HK$600. These fees will be due on 1 January 2008.

All members and students are obliged to pay the annual fees before the due date. Delay or failure to settle the fees for more than three months will result in removal of the member’s or student’s name from the register. Members and students whose names are removed must pay their registration fees again in order to be re-instated. Students who have claimed exemptions before are also required to pay the prevailing exemption fees again and must abide by the closing dates for registration for the examinations.

Members are further reminded that they are required to return the completed CPD Declaration Form to us to ensure that their membership can be renewed. For more information on CPD requirements, please refer to the “Members’ Corner” section of T/Dialogue.

Both members and students are reminded that the annual update form must be returned together with payment. Please notify us of any changes in your personal information, particularly the e-mail addresses, as we intend to increase our communication with our members and students through electronic means in the coming year. For further enquiries, please contact us at 2823-0600.

Thanks to Our Subject Reviewers

Articles published in the Features column during the second half of 2007 were reviewed by the following subject specialists:

Ms. Lisa Wong – Community College of City UniversityMr. Chris Lau – Hong Kong Institute of Vocational Education (Chai Wan)Ms. Arison Woo – PolyU Hong Kong Community College Dr. Teresa Ho – Kaplan Financial (HK) Limited

On behalf of the HKIAAT, the Editorial Committee would like to take this opportunity to thank all the reviewers for devoting their valuable time to this task.

HKIAAT News

�

Annual Dinner and Prize Presentation Ceremony 2008

Mark a date in your diary for Wednesday, 30 January 2008, when the HKIAAT Annual Dinner and Prize Presentation Ceremony will be held at the World Trade Centre Club. We are delighted to announce that Ms. Ada Chung, the Registrar of Companies, will be our Guest of Honour at the event.

The Prize Presentation Ceremony is an annual event that recognizes and commemorates the outstanding performance of HKIAAT top students, scholarship recipients from various educational institutes and winners of the Accounting Case Competition.

The dinner is also an occasion for accounting professionals and academics to get together. Honourable guests will include government officials, presidents / chairmen of professional bodies and business associations, and heads of academic institutes.

The tentative programme is as follows:

Time Event6:30pm Cocktail reception and registration7:00pm Prize presentation ceremony8:00pm Dinner (Chinese cuisine)

Members and students are cordially invited to attend the Ceremony. Please contact the Secretariat at 2823-0600 to reserve your seat on or before 10 January 2008. The charge for the dinner is HK$450. A confirmation/notice will be sent to confirm your reservation.

New AAT-branded Merchandise

Two new souvenirs proudly carrying our AAT-brand – a name card holder and a ladies’ scarf – are now available for purchase at the HKIAAT office. You can get an exclusive discount on these great items by presenting your member/student card!

ItemSelling price

Non-member / student Member / student

Scarf $180 $150

Name card holder $100 $80

The HKIAAT would not be held responsible for the content of the advertisement.

FTC AD

Professional Bridging Examination

�A few years ago, start-up programmer Jimmy Lau decided to take a different turn in his career and move into accountancy. HKIAAT was the door to a whole new world for him. Jimmy, an HKIAAT student, talks to T/Dialogue about his experience of taking the HKIAAT examinations and his career prospects.

Then and nowJimmy was a programmer at an IT company, where his main duties revolved around computer applications. As the IT market changes in the blink of an eye, specialists have to constantly adjust themselves swiftly in response to rapidly-changing business scenarios. Jimmy knew this kind of volatile environment wasn’t for him, while a career in the very systematic accountancy world sounded much more appealing.

With the company’s support and encouragement, Jimmy started to study for a more promising career which better mirrored his interests. “I have always been sensitive to numbers,” Jimmy claims. He enrolled on accounting programmes until he took up a job in which he had to be stationed in mainland China. Later, he picked up the London Chamber of Commerce and Industry International Qualifications (LCCI) courses. He then turned to the HKIAAT examinations as he found the syllabus to be practical and to be a good base for developing his ability in making assumptions and judgments based on a set of given numbers.

After taking a series of HKIAAT examinations to obtain his accounting qualifications, Jimmy is currently working as an accountant in a manufacturing company which exports toy products to the US market. Being an accountant isn’t all about reading numbers and figures. Jimmy uses his financial reporting expertise, analyzing the data in hand, to come up with financial forecast reports. With all necessary information, he can confidently present his analysis to the finance manager and communicate with the sales manager to prepare the operating budget, financial position forecast, monitor cash flows, promptly record all transactions and safeguard the company’s resources.

Just as Rome was not built in one day, this professional confidence was hard won. Before obtaining his professional qualifications from the HKIAAT, Jimmy went through periods during which he felt lost and confused, just like many others. He had also been caught in the middle of one of those been-there-done-that situations where he blindly followed

Feature Interview: Jimmy Lau

instructions executed by his supervisors without understanding the reasons why. After sitting the HKIAAT examinations, Jimmy now understands the mechanism behind the figures presented to him. He sees more than just plain numbers. Many times he finds himself capable of answering questions before being asked, or getting tasks done before they were assigned because now he possesses the accounting know-how. His supervisors are supportive and they encourage his further studies and as a better qualified staff member he will have more opportunities for advancement inside the company.

Speaking from experienceJimmy has the following thoughts and insights

on the Accounting Technician Examination (ATE). “The ATE is difficult at first. Once you have overcome the main hurdles, it gets easier.” As challenging as it sounds, Jimmy believes the ATE is of appropriate difficulty. “If the examination wasn’t of a certain standard, how could the HKIAAT maintain the quality of its members?”

To prepare for the ATE and Professional Bridging Examination (PBE), Jimmy’s key to success is concentration. “Do not underestimate the examinations as they demand high concentration. Do not spend the first half an hour of a study session getting all warmed up then wander off to play video games or go on a date. Time management is important,” Jimmy suggests. He thinks that many HKIAAT students tend to recite facts without understanding them. “Take business law as an example. Understanding is more effective when you remember; remembering is more effective when you understand. Students need to be made aware of the interaction between memory and understanding. Practice makes perfect. Revise, read some past papers, and read the questions carefully because they aren’t always straightforward. Even though the questions may change, application of theories stays the same.” Jimmy also suggests students take the initiative in finding responsive classmates and starting study groups. “Sometimes making it work by putting a collaborative effort together can be an effective study technique.”

Not only did the HKIAAT provide a clear and fast route for Jimmy to achieve his career goal, it has also given him confidence needed to operate in today’s highly competitive market. Upon completing the PBE, Jimmy hopes to get qualified and do part-time teaching for HKIAAT courses. We applaud his enthusiasm and wish him all the best in all his future endeavours.

Melanie Hong

Professional Bridging Examination

�

Top Student

Top Students in the June 2007 Examination

Chan Yat Lui

Mr. Chan was granted full exemption from the Accounting Technician Examination in December 2006 and completed the Professional Bridging Examination in June 2007. This was the first time he had taken the Professional Bridging Examination. He obtained his Associate of Business Administration in Accountancy from City University of Hong Kong in 2005. He is now working as an accountant in Yiu Cho Yan CPA.

Paper I – Financial Reporting

Thoughts from Mr. Chan:

I would like to take this opportunity to thank my family, girlfriend and colleagues for their kind support. Regarding my strategy in preparing for the examination, I believe that working hard is the only way to succeed in PBE. Also, I would recommend that candidates use the book “Financial Reporting” written by Lisa Wong and Teresa Ho. It helped me understand how to apply the accounting standards in a simple way.

Paper II – Management Accounting

Top Student

Tang Chi Ho

Mr. Tang was a graduate of the Accounting Technician Examination in June 2005 and completed the Professional Bridging Examination in June 2007. He is now working as an auditor in CIG CPA & Co.

Paper III – Financial Management

Lee Choi Ha

Miss Lee was granted full exemption from the Accounting Technician Examination in December 2006. This was the first time she had taken the Professional Bridging Examination. She obtained her Higher Diploma in Accountancy from the Hong Kong Institute of Vocational Education (Chai Wan) in 2006 and is now working as an audit assistant at Gentle Secretaries Limited.

Thoughts from Mr. Tang:

I am very honoured to share my study methods in the preparation for the PBE paper. I failed the Management Accounting exam when I first attempted it, so this is my second attempt at this exam.

I believe it is important to pick an appropriate place to study. I guess it really comes down to what really works for you and choose the most effective place to keep you focused.

Also, I believe that intensive discussions about the materials learnt in class will really help you understand the fundamental concepts. Not only can discussions help us remember what we learn in class, it also helps us prepare for discussions in QP workshops in the future.

So, my advice to students who want to improve on their academic results is this: really know where your weaknesses and strengths lie, make sure you find a quiet place to study, and participate actively in class. In the end, it really comes down to self motivation and the ability to focus, and I think all of us have it inside to excel.

I hope this is useful to all of you. I wish you the best of luck with your studies.

Professional Bridging Examination

7

Paper IV – Legal Environment

Leung Tsz Pui

Mr. Leung was a graduate of the Accounting Technician Examination in December 2005 and completed the Professional Bridging Examination in June 2007. He took the PBE Intensive Revision Programme at FTC Kaplan in 2007. He is now working as accounts clerk at Mitsubishi Elevator Hong Kong Company Limited.

Top Student

Thoughts from Mr. Leung:

I am glad to be the top student for this paper. I would like to thank HKIAAT for giving me this award.

My study strategies were to read the materials in the recommended reading list and refer to the ordinances in the Bilingual Laws Information System. These helped me better understand each topic and obtain a good result in the examination.

Practising past papers can teach you how to organize, present and elaborate your answers. A well-organized answer, in my opinion, will enable you to obtain higher marks.

Finally, I would like to thank those who have always supported me.

2008 Examination TimetablePaper Date Time

Paper I – Financial Reporting 12 June / 11 December 2008 (Thursday) 2:00 pm – 5:00 pm

Paper II – Management Accounting 14 June / 13 December 2008 (Saturday) 2:00 pm – 5:00 pm

Paper III – Financial Management 19 June / 18 December 2008 (Thursday) 2:00 pm – 5:00 pm

Paper IV – Legal Environment 21 June / 20 December 2008 (Saturday) 2:00 pm – 5:00 pm

The HKIAAT would not be held responsible for the content of the advertisement.

HKMA AD

Professional Bridging Examination

8 Date HKIAAT Action Candidate Action Remarks

The fourth week of February 2008

For students who have entered the December 2007 examination:

A combined Examination Results Report together with Status Report AND Examination Entry Form will be despatched.

Upon receipt of the Examination Results Report and Examination Entry Form, students must check that all details contained in the document are correct. If any of the data is incorrect, students should contact the HKIAAT IMMEDIATELY.

SCRIPT REPORT SERVICEIf a student wishes to have a written report on his/her performance, he/she should make a written application within two weeks from the date of announcement of the results and send this, together with the payment of a non-refundable fee of $680 per paper, to the HKIAAT.

Verbal, late or incomplete applications will not be accepted.

The HKIAAT will NOT deal with enquiries about the examination results.

Students should note that the script report service is NOT a re-marking exercise. It is purely an exercise to let the student know his/her performance in the examination.

For students who have not entered the December 2007 examination but are on the HKIAAT Register before 15 November 2007:

An Examination Entry Form will be despatched to students.

Upon receipt of the Examination Entry Form, students must check that all details contained in the document are correct. If any of the data is incorrect, students should contact the HKIAAT IMMEDIATELY.

For students who have successfully completed the Professional Bridging Examination in the December 2007 sitting:

An Examination Certificate will be ready for collection three months after the results are released.

29 February 2008 Students who have not received the Examination Report and/or Examination Entry Form or have misplaced them should contact the HKIAAT IMMEDIATELY for a duplicate copy.

No duplicates will be issued to students after 31 March 2008 (the deadline for Examination Application).

31 March 2008 Closing date for examination applications for the June 2008 examination.

Important Notes for Candidates (From December 2007 Results Announcement to June 2008 Examination Entry)

Accounting Technician Examination

�Paper 1 – Financial Accounting

Top Students in the June 2007 Examination

Yuen Man Chun

Mr. Yuen obtained a Bachelor degree of Engineering in Civil and Structural Engineering from the Hong Kong University of Science and Technology. He is now working as an audit assistant at S. F. Kwok & Co.

Paper 3 – Cost Accounting

Chong Lai Na

Miss Chong completed the Accounting Technician Examination in June 2007. She obtained the Diploma in Accounting Studies (Professional Accounting) at YMCA College of Careers in 2003 and is now working as an accounts clerk at Top World (Greater China) Ltd.

Yu Suet YimThis was the first time Miss Yu had taken the Accounting Technician Examination. She is now taking the Diploma course in Accounting Studies (Professional Accounting) at the YMCA College of Careers.

Paper 2 – Business Communication

Paper 4 – Information Technology Applications in Accounting

Leung Hoi Ting

Miss Leung studied the Certificate in Information Technology Applications in Accounting at the Hong Kong Management Association. She is now working as an audit semi-senior at CS Corporate Services Limited.

Top Student

Thoughts from Miss Yu:

I was a bit surprised when I heard I was the top student in this paper. What I would like to say is that understanding effective communication theories and applying them in real world situations are crucial to achieving your goals in the business environment.

If you are scared of writing business correspondence, you need to change your attitude. Just tell yourself you can manage it and get used to it; then you can do much better than you expect. Of course, we cannot be complacent. It is important to read through the course materials and practise more. You will find that this can help you refine and sharpen your writing skills.

Paper 5 – Hong Kong Taxation

Or Wan Ying

Miss Or completed the Accounting Technician Examination in June 2007. She completed the Hong Kong Taxation course at Hong Kong School of Commerce (HKSC) in 2006. She is now working as an assistant accountant at Full Home Limited.

Top Student

Thoughts from Miss Or:

I am very pleased to be the top student for this paper.

I would like to thank my teacher, Mr. Antony Sin at the HKSC. He was conscientious in teaching and was willing to answer students’ questions after class.

I think it is very important to find an interest in studies. It is very helpful

to fully understand each topic, as it improves memory. I also learned question-answering techniques by practising past papers.

Learning needs a lot of practice.

Don’t be afraid of failure. Try again and again, for failure is the mother of success!

Top Student

Thoughts from Miss Leung:

I am so surprised to be the top student in this paper. Here I would like to thank my lecturer at the HKMA, Mr. Atom Yuen, for his guidance and support during the class.

In fact, my study method is quite common. I believe practising past papers is

the most effective way to revise. You also need to stay sharp and focused during the examinations.

Accounting Technician Examination

10

Top Student

Paper 6 – Hong Kong Business Law

Kwong Hiu Ying

This was the first time Ms. Kwong had taken the Accounting Technician Examination. She studied the Diploma in Accounting Studies at the Hong Kong Management Association. She is now working as a research assistant at the Chinese University of Hong Kong.

Thoughts from Ms. Kwong:

I would like to take this opportunity to thank the Hong Kong Institute of Accredited Accounting Technicians Limited for giving me the award, as well as the knowledgeable teachers in the Hong Kong Management Association who helped me a lot in preparing for the examination.

I believe that you have to put sufficient time and effort when preparing for the examination. There are lots of resources and information you can get from the HKIAAT website and library. If you can fully utilize them, you can prepare for your examination in an easier and more efficient way.

Also, it is easy to get confused as accounting is changing so rapidly to keep in step with the dynamic commercial environment. My advice is that you should not just focus on your textbooks

and memorize everything for the examination. Instead, you should try to identify the important concepts and get supplementary information on them. You can also identify topics which you are weak at and focus on them.

If you still have difficulty, don’t worry, I am sure you can get help from your peers and your senior.

Paper 7 – Advanced Accounting & Paper 8 – Auditing

Ip Wai Chong

Ms. Ip was the top student in both Paper 7 and Paper 8. She was also the Top Student for Paper 1 in December 2005 and Papers 5 and 6 in December 2006. She completed the Accounting Technician Examination in June 2007. She took the Certificate Programme in Accounting Studies in Hong Kong Management Association in 2007 and is now working as an executive secretary at N.H. Consultants Co., Ltd.

Top Student

Thoughts from Ms. Ip:

It is my pleasure to receive this award. I sincerely thank Mr. K P Wong for his guidance and warm support.

Over the last two years, I have gained invaluable experience through studying in the accounting field, something which was brand new to me not long ago.

As you sow, so shall you reap.

Attitude is the key to success. Taking studies seriously and making a commitment to yourself will lead to the fulfillment of your goals.

2008 Examination Timetable

Date

Time

Friday, 6 June 20085 December 2008

Saturday, 7 June 20086 December 2008

Friday, 13 June 200812 December 2008

Saturday, 14 June 200813 December 2008

9:30 am –12:30 pm

Paper 1 – Financial Accounting

Paper 5 – Hong Kong Taxation

Paper 2 – Business Communication

Paper 3 – Cost Accounting

2:00 pm –5:00/5:30 pm*

Paper 7 – Advanced Accounting

Paper 4 – Information Technology Applications in Accounting*

Paper 8 – Auditing

Paper 6 – Hong Kong Business Law

*DacEasy Accounting for Windows v. 11 (English version) and Microsoft Excel 97 (or higher version) (English/Chinese versions) will be used in the Paper 4 examination. Please note that the time allowed for this paper is 3½ hours (from 2:00 pm to 5:30 pm).

Accounting Technician Examination

11Date HKIAAT Action Candidate Action Remarks

The fourth week of

February 2008

For students who have entered the December 2007 examination:

A combined Examination

Results Report together

with Status Report AND Examination Entry Form will be

despatched.

Upon receipt of the Examination Results

Report and Examination Entry Form,

students must check that all details

contained in the document are correct. If

any of the data is incorrect, students should

contact the HKIAAT IMMEDIATELY.

SCRIPT REVIEWIf a student wishes to have his/her script

reviewed, he/she should make a written

application within two weeks from the

date of announcement of the results and

send this, together with the payment of a

non-refundable fee of $330 per paper, to

the HKIAAT.

Verbal, late or incomplete applications will

not be accepted.

The HKIAAT will NOT deal with enquiries about the

examination results.

Students who make

a review application

are reminded that the

review result is final and

conclusive.

For students who have not entered the December 2007 examination but are on the HKIAAT Register before 15 November 2007:

An Examination Entry Form

will be despatched to students.

Upon receipt of the Examination Entry

Form, students must check that all details

contained in the document are correct. If

any of the data is incorrect, students should

contact the HKIAAT IMMEDIATELY.

29 February 2008 Students who have not received the

Examination Report and/or Examination

Entry Form or have misplaced them should

contact the HKIAAT IMMEDIATELY for a duplicate copy.

No duplicates will be

issued to students after

31 March 2008 (the

deadline for Examination

Application).

31 March 2008 Closing date for

examination and

exemption applications

for the June 2008

examination.

Important Notes for Candidates (From December 2007 Results Announcement to June 2008 Examination Entry)

Members’ Corner

12

Need a career that you really like?

Other than looking up classified advertisements and approaching

employment agencies or head-hunters for jobs, what else can

you do to build a career that you feel proud of?

Career assistance at local universities

Many of us probably came to know about career assistance from

career exhibitions or talks at secondary school. For university

students, career assistance takes a richer form and includes

career workshops, videos, summer job placements and graduate

recruitment talks. Some universities provide online career

assessment tools and psychological assessment tools to help

students find out their aptitude and career inclination.

Mentoring is introduced to provide guidance to students in

building a career. However, most mentorship programmes are

very short-lived and students’ benefits are mostly limited to an

opening ceremony, a couple of high table dinners and a few

meetings with their busy mentors during the whole course of the

mentorship. Professional quality mentoring has yet to emerge.

After graduation, those who are fortunate will land a job from

which they have some experience from a summer engagement.

Universities might provide some limited career counselling on

an individual basis upon request through their student affairs

offices. Activity-based career assistance is also available at

universities.

Career assistance in the US and Western Europe

What kind of career assistance can students expect on the other

side of the world?

In November 2005, the US Government’s Department of

Commerce launched a pilot career assistance programme project

as part of its leadership development programme to develop

leaders within the organization. The intention is to address the

shortfalls of “mission-critical occupations and competencies”

and to pave the way for succession plans for the following five

years. The department received high-level support from the

Office of Personnel Management to develop this “Human Capital

Management Plan” (US Department of Commerce, 2005).

Career Assistance: Making A Dream Come TrueWilliam Tong

In the commercial sector, companies offer professional career

counselling to those not only in their home country, but also for

employees preparing for expatriation to other host countries.

This transition calls for assistance not only for the expatriated

staff but also for their spouses. This is one aspect of the so-called

dual career assistance.

In a comprehensive career assistance programme, one can

find career workshops covering individual development plans

to match the aspirations of the individual with the nature of

certain professions. Participants are also given training on job

applications, resume writing, interview techniques and job

search skills. Web learning and psychometric tests are used to

facilitate a convenient and effective training. Career assistance

has become more client-centred rather than activity-based.

Dual career assistance

As employers become more conscious of the importance of

the work / life balance, career assistance is being extended to

the spouses / partners of the newly recruited, particularly for

executives who are considered valuable to the organization.

For example, certain universities offer dual career assistance by

including job-seeking services for the spouse / partner of newly

recruited faculty and department heads. Internet resources such

as links to job databases and recruitment agencies, and specific

number of hours of individual counselling, are provided to help

the spouse / partner with their job searches. This happens at

the Virginia Polytechnic Institute and State University (Virginia

Tech, Human Resources) which started its career assistance

programme in autumn 2005.

Where internal resources are not available to support these

services, they are procured from professional coaching firms.

Professional coaches with different expertise ranging from

placement specialists to psychologists are made available to

ensure best use of psychometric assessments and tailored-made

individual career coaching.

Other than providing support at the local scene, dual career

assistance also takes on an international form to serve

multinational businesses. This is very much so when relocation of

executives is required in the course of expanding businesses into

other parts of the world. Career coaching firms, as a business

Members’ Corner

1�

partner, are now also growing into these major cities in provision

of expatriation support alongside the multinational expansion.

Before leaving their home country, expatriate staff and their

spouses are given briefing sessions on the host country from

these professional coaches to prepare them for possible cultural

shock. Host country orientation continues upon arrival, using

host country coaches, and is coupled with job-search coaching

for the spouse / partner.

Career assistance beyond university

For those who have turned to other educational institutions

for their post secondary studies, and those who have started

employment already, career assistance may seem to be a remote

luxury. Young people trying to build a successful career have

only themselves to rely on.

Certain professional accounting associations provide a placement

service to the extent of providing an updated bulletin board for

classified job advertisements and internet links with job-search

databases for students and members, as well as career planning

seminars for secondary school leavers. Individual coaching is too

costly to be generally available. Leung S.A. (2002) considers that

Hong Kong is still at an early stage of counselling and there is

a lot to learn from human resources development in the US.

The use of assessment tools in Hong Kong is limited, partly due

to language and cultural differences. Almost all of these tools

are in English and therefore are subject to language biases.

Although these tools have been tested in Western cultures,

they have not been proven by research to be applicable to the

Chinese community and the occupational structure here in Hong

Kong. With the limited usage of assessment tools, and limited

availability of individual career counselling, career assistance has

yet to see its potential unleashed.

Career assistance programme and employee assistance

programme

Career assistance programme should be distinguished from

employee assistance programme. Career assistance programmes

focus on providing assistance to members of the staff to

help them establish a career within the organization, and are

extended to their spouses in certain situations (such as for new

recruitments and for expatriation) to help them settle as quickly

as possible so that their performance is not affected by personal

problems that might arise. Employee assistance programmes are

mostly given to staff who are have personal issues which might

affect their performance and are too sensitive to be revealed

to other members of the staff within the organization. These

call for third-party intervention to provide counselling services

to help the employees overcome their problems. Executive

coaching is an example of third-party intervention.

The purpose of an employee assistance programme is two-fold:

preventive and maintenance. Recruitment costs are high and

helping employees solve personal issues directly promotes their

wellbeing and reduces staff turnover. Companies may wish to

maintain or even to enrich their employees’ performance level by

providing private professional counselling services to employees

in need. The key to the success of such a plan is to make sure

there is a confidential situation so that employees feel safe about

disclosing their personal issues with the private coach assigned

to them while the company shoulders the coaching costs.

Employee assistance programmes are also given to employees

who are about to leave the organization, often because of

downsizing or acquisitions and mergers. The programmes aim

to help the out-going employee find a job to continue their

career; at the same time they help avoid bad-mouthing from

employees who have to leave the company.

Career assistance in multinational corporations

Career assistance is gaining ground in multinational companies

where human resources are greatly valued as assets. Companies

using career assistance tend to be those that want to maintain

the high quality of human resources needed in their management

functions, and for innovative functions such as design office.

How local accountants might react to career assistance

Chinese accountants, being more reserved by nature culturally

and professionally, may find it difficult to accept taking the

initiative to approach an internal service within their organization

to plan their career. They might find it strange to sit in a class

on resume writing and interview techniques for fear that their

immediate supervisor might suspect their loyalty. Careless action

like this might undermine department stability, which is already

weak in the relatively volatile human resources market witnessed

in the accounting field in recent years. For these reasons, a full-

fledged career assistance programme may not find much room

for development among accountants in small and medium-sized

enterprises in Hong Kong. As for the Big Four, even though these

firms are becoming increasingly conscious of the need for a good

work / life balance among their staff members, their employees

sometimes still find their workload to be too heavy to continue

their career in these trying environments. An accounting career

therefore often seems to drift because of an introverted culture

and work stress, rather than following a charted course.

Members’ Corner

14

Value of human resources

It is impossible to over-stress the importance of matching interests

to a career in order to make the career a happy and rewarding

one. Often stories are told about people taking no interest in

their profession from the very start, and these people getting de-

motivated to the extent of becoming resentful, regretful and yet

feeling helpless about having invested a lifetime in a profession

they do not like. Given competitiveness, one might find it too

risky to change profession as time goes by, and therefore become

stuck with a job (not even a career) until retirement comes. The

obvious result is constantly jumping job whenever there is some

element of bargaining power. However, when that power is

gone, stagnation and lifelessness set in. At the organizational

level, this phenomenon increases recruitment and retention

costs. At the societal level, this is a waste of human resources.

Future of career assistance

Student accountants might look to their institution to provide

support in terms of professional orientation before they embark

on their quest for the numerous qualifications. Professional

bodies can contribute more to nurturing future accountants by

continuously helping student members during their qualification

process.

If you were invited to make a dream career for yourself, what

would your dream be? Some may see a career starting with an

initial orientation and aptitude assessment, and provision of

career counselling in terms of recurrent workshops and online

interactive assessment and training, plus just-in-time individual

career counselling so that they are able to reflect and reassess

their career direction as they mature in their profession. Those

who are serious about their profession will aspire to a happy

career and perhaps even become one of the future leaders in

this profession.

The Author

William  Tong  is  an  executive  and  life  coach.  He  has  enjoyed  a  multi-disciplinary  career.  Not  only  is  he  an 

accounting professional and a business executive, he is also a certified clinical hypnotherapist from the US. He 

has studied how the brain functions in the context of learning. He is now a professional trainer in management 

soft skills and he coaches executives and business owners for excellence. As a project manager of a MNC, he 

provides expert advices on the final screening of executive trainees recruited from top universities. He has also 

been a mentor to many local university students since 1998. Last year, he was featured in the Tuesday Report 

on TVB Jade channel on the subject of life coaching. He can be reached at wtong@transformation.com.hk.

Professional institutions and their governing bodies can join in to

take a more humanistic perspective to membership development

by going beyond membership size and quality control and

adopting a more client-centred focus in career assistance

programmes. The US model offers a good starting point.

References:

Leung S.A. 2002, “Career counselling in Hong Kong: Meeting

the social challenges”, Career Development Quarterly.

Retrieved 11 November 2007 from http://findarticles.com/p/

articles/mi_m0JAX/is_3_50/ai_84558588/pg_7

US Department of Commerce, “Leadership Development: Career

Assistance Program”. Retrieved 7 November 2007 from http://

ohrm.os.doc.gov/Leadership_Development/PROD01_001247

VirginiaTech, “Dual Career Assistance Program at Virginia Tech”.

Retrieved 7 November 2007 from http://www.hr.vt.edu/

employment/dualcareer/ 

Members’ Corner

1�After more than 30 years in an accounting practice, CPA Michael Tsoi is an advocate for training the younger generation and he knows the importance of giving trainee accountants a platform to get connected with the real world. His firm, which is located in the heart of the hustle and bustle of Central district, is packed with boxes of books. “These are stashes of money,” Michael tells his employees.

Small but mighty

Michael started out as a sole proprietor. Today, the firm has expanded to 15 employees: one CPA, one supervisor, four audit seniors, two secretaries and seven juniors/trainees. The group provides one-stop services and accounting solutions for companies. “In a medium-sized firm, the accountant is the consultant,” Michael says. Compared to big accounting firms, accountants in small and medium-sized firms tend to be less specialized so they have to be more versatile and more flexible. Michael sees that fresh graduates tend to be fond of working for big accounting firms; only a few prefer to work in a small firm like his. “Big firms offer training but often they tend to be specialized in one particular field. Small firms, however, can offer students a more comprehensive perspective on the real world.”

The practical dimension is important

Over the years, Michael has employed a variety of graduates at different levels from both local institutes and overseas universities. “HKIAAT students are very practical, courteous and willing to work.” Michael often intentionally assigns them duties such as filing documents with the Inland Revenue Department or discussing tax queries with an assessor on the phone. He believes that trainees need to learn to take up tasks and know how to deal with the everyday matters. “The immensely practical dimension of this career can only be learned from experience.”

The main problem he sees with students is that they are sometimes not sensitive to relevant current issues. “How much of a successful accountant could one possibly be without knowing the name of the Commissioner of Inland Revenue? If students only focus on studying theory and working behind a desk, they are good for nothing.” He feels that the experience in an audit firm is useful for later jobs. He also thinks that students should open their minds more. “Financial accounting, such as analyzing balance sheets and giving correct interpretations, is students’ largest weakness. Overseas graduates are very open with ideas and opinions, while Hong Kong students are not. Local students embrace politeness but lack an open mind.”

Featured Employer: Michael Tsoi & Co. CPA

“Talk like an accountant”

Michael started hiring HKIAAT students three years ago when he became acquainted with the employment placement service offered through T/Dialogue and the HKIAAT website. Three HKIAAT students are currently employed in Michael’s firm. As practical as the HKIAAT students are, Michael is concerned about their language ability and communication skills, both in spoken and written English. “A successful accountant has to be able to present oneself,” he maintains. While he thinks that students’ business communication skills and overall English standards need to be polished, he points out that Putonghua is equally essential. Michael also suggests the HKIAAT to evaluate the students’ minimum education requirement as to raise the general education standard.

Students today are elegantly dressed and well turned out but their confidence should come from within. “You have to talk like an accountant,” Michael asserts. He recommends that students should consider receiving training abroad for one or two years. “A connection with an overseas practitioner, especially one in the UK or Australia, could yield a valuable life-time experience.”

When it comes to the HKIAAT papers, Michael points out the importance of Paper 7 – Advanced Accounting, since financial interpretation is vital in this industry. “The HKIAAT papers are practical. If students aspire to become a CPA, passing HKIAAT exams is their way to enter the QP. With more practical experience in an accounting firm, they can set up their own practice.” Michael is happy to see his trainees eventually prosper to setting up their own business with their own names. “Being a CPA is a level of satisfaction, for many it’s a dream come true.” And now, Michael is looking to pass the torch to his brightest trainees. “I welcome partners. After all, I am an old man. I can’t take everything to the grave.”

Melanie Hong

Members’ Corner

1�

Welcome to New Members

Associate

AU Pak Lun Patrick

CHAN Chui Shan

CHAN Man Wah

CHAN Tak Yee

CHANG Chi Wai Stanley

CHENG Kam Hung

CHEUNG Ngar Man

CHEUNG Yu Hong

CHOW Tsz Ho

CHU Pui Man Carman

FOK Tat Choi

HA Suk Man

HO Yiu Fai Leo

IP Kai Ho

IP Wai Chong

KAN Cheuk Him

KOO Tak Shing

KWOK Mei Kwan

LAM Crystal

LEUNG Ka Ling

LEUNG Kin Ming

LEUNG Nga Wun

LEUNG Tik Sun

LEUNG Yu Yan

LIM Kwun Ping

LUI Sin Yee

MAN Ling Sui

MOK Ngo Yin

NGAI Mei Fung

POON Chung Yin

TSANG Ka Wun

TSE Ho Yin

TSOI Man Shut

WAN Yin Ki

WONG Hiu Yan Goldie

The HKIAAT would like to extend its warmest welcome to the following new members:

Fellow

WONG Kit Mei

WONG Kwok Kuen

WONG Miu Yee

YEUNG Cheung Kit

Fellow

CHEUNG Shun Kin

CHOW Ka Yan Michelle

FUNG Wang Wai

HA Wai Yi Katherine

HO Sin Lin

HO Siu Hong

HONG Cheung Yau

HUNG Ling Ling

IP Ka Yee

KWAN Kee Wai

LAI Kwai Fong

LAI Mei Kuen

LAU Bo Yiu

LAU Ka Wai

LAW Wing Chun

LO Sin Yi Martina

LUK Po Ling

MUNG Mei Tsz Monica

NG Ka Pui

OR Wan Ying

TAI Sau Han

TAM Mei Yan Amy

TANG Yuet Ying

WONG Fung Sang

WONG Wai Kwan

WU Lai Ping

YEUNG Man Ying Mandy

Continuing Professional Development

CPD Declaration

Members are reminded that they are required to comply with a minimum of 20 hours of unstructured Continuing Professional Development (CPD) requirements per year upon renewal of membership. Time spent by a member in assimilating knowledge on

professional, technical and managerial subjects relevant to his or her own work in the profession of accountancy, is considered to be

an indication of CPD achievement. Unstructured CPD will normally be achieved through private reading and study. Details of the CPD

guidelines can be found on our website at www.hkiaat.org/index.php/membership/index/45/.

The reporting period for CPD compliance is a period of 12 months commencing from 1 December each year and ending 30 November

of the following year. For those who join us in the middle of the year, the CPD requirements are imposed on a pro-rata basis. Those

who join in November will be exempt from any CPD requirements for that year.

A declaration form together with the debit note for the annual membership fee has been sent to all members. You are required to sign

and return the form to the Secretariat as a confirmation of your fulfillment of the CPD requirements before the deadline.

Members’ Corner

17

Upcoming CPD Programmes

The Hong Kong Institute of CPAs (HKICPA) is organizing the following CPD Programmes in January and February 2008. Our members enjoy the same fee as HKICPA members and students. Apart from regular seminars or conferences, there are also e-learning programmes, workshops on soft skills and courses of longer duration on Putonghua. If you are interested and would like to enrol in these programmes, please visit the Institute’s website on professional training at http://www.hkicpa.org.hk/membership/cpd/activities/activities.php.

Date and Time Topic Format Language Fee

7 January 2008

6:30 pm – 8:00 pmShare Placements and Rights Issues Seminar English $180

10 January 2008

6:30 pm – 8:00 pmThe Most Promising Frontier, Media, in China Seminar Cantonese $180

11 January 2008

6:30 pm – 8:00 pmAccurate Forecasting with Business Intelligence Seminar Cantonese $180

12 January 2008

9:30 am – 5:30pmWhen a Leader Should Apologize– And How? Workshop Cantonese $1,350

14 January 2008

6:30 pm – 8:00 pm

Wealth Management in Hong Kong & Mainland

China: Opportunities for CPAsSeminar Cantonese $180

15 January 2008

6:30 pm – 8:30 pmAn Introduction to Islamic Finance Seminar English $180

16 January 2008

6:30 pm – 9:30 pmHKAS 12 Income Taxes (re-run) Seminar Cantonese $400

19 January 2008

2:30 pm – 6:00 pmImplementation of HKSQC 1 and HKSA 220 Workshop Cantonese $670

21 January 2008

6:30 pm – 9:30 pm

HKAS 17 and 40 Leases and Investment Property

(re-run)Seminar Cantonese $400

24 January 2008

9:30 am – 11:30 am

Forum on the use of the electronic Practice Review

Self-Assessment Questionnaire (e-Questionnarie)Forum English

Free of

charge

25 January 2008

6:30 pm – 8:30 pm

Derivatives and Hedge Accounting, a Valuator

PerspectiveSeminar Cantonese $180

26 January 2008

9:30 am – 5:30pm

Managing Information Resource – The Business-IT

StrategyWorkshop Cantonese $1,350

28 January 2008

6:30 pm – 8:00 pmCorporate Governance Seminar English $180

29 January 2008

9:30 am – 5:30pmManaging up: Throwing the Elephants Workshop Cantonese $1,350

30 January 2008

6:30 pm – 8:30 pm

How to Exploit and Evaluate Physical Security

DevicesSeminar Cantonese $180

28 February 2008

6:00 pm – 8:00 pm

Forum on the use of the electronic Practice Review

Self-Assessment Questionnaire (e-Questionnarie)Forum English

Free of

charge

Studies in Foundation Accounting

18

Book-keeping and Accounts Examination and Computerised Accounts Examination

Top Students in the June 2007 Book-keeping and Accounts Examination

English Paper

Wan Chun Wah

Mr. Wan is student from Wah Yan College, Hong Kong. He studied by himself for the Book-keeping and Accounts Examination.

Top Student

Thoughts from Mr. Wan:

When I took the June 2007 Book-keeping and Accounts Examination, I was just a Form � student and had studied accounts in my private study. It is really my honour to be one of the top students in the examination.

Although accounting is considered to be a business subject, we should study it in the same way we study the science subjects. Accounting requires you to have a crystal clear understanding of the underlying principles and concepts. If you don’t understand something, please ask your teachers. They can definitely help you a lot.

My advice is to do more exercises in order to equip yourself with better accounting knowledge. In doing exercises, you can find out which areas you are weak in or

concepts you do not understand well.

Being diligent and having a clear understanding can help you achieve outstanding results in accounting.

Lo Kai Wing

Mr. Lo is a student from St. Joseph’s College studying for the Hong Kong Advanced Level Examinations.

Top Student

Thoughts from Mr. Lo:

Being focused and meticulous are very important in doing accounts. There is no shortcut: practice makes perfect! The only thing that matters is whether you really enjoy what you are studying.

Siu Chi Fai

Mr. Siu is a student from St. Joseph’s College studying for the Hong Kong Advanced Level Examinations.

Top StudentThoughts from Mr. Siu:

I would like to share my study tips with other students. I pay attention during lessons even when I am very tired. After I understand the materials, I do many exercises for practice. I check and review my answers carefully. I find out why some answers are wrong and remind myself not to make the same mistakes again.

Studies in Foundation Accounting

1�

Keung Yuen Fung

Mr. Keung is a student from Hang Seng School of Commerce studying for the Hong Kong Advanced Level Examinations.

Top Student

Thoughts from Mr. Keung:

I am Michael Keung, a Form 7 student from Hang Seng School of Commerce. It is a great honour for me to become a top student of the June 2007 Book-keeping and Accounts Examination (English). May I take this chance to thank my school, teachers and family, and the HKIAAT. Without them, I could not obtain this award.

I am very interested in accounting and finance. I aim to study these subjects at university. The HKIAAT is one of the most prestigious and respectable institutes providing an accounting qualification. Obtaining this qualification is very useful not only for my studies but also for my future career. I hope the HKIAAT and other institutes can continue to provide more high quality courses, training and examinations to students in the future.

Only practice and a thorough understanding of theory can lead to success in examinations. By doing a lot of exercises, plus having tons of determination, I am sure that you can obtain a good result in your accounting examinations.

Chinese Paper

Cheung Kam Ting

Miss Cheung is a student from Concordia Lutheran School – North Point.

Top Student

Thoughts from Miss Cheung:

It gives me great pleasure to be awarded the top student prize in the June 2007 Book-keeping and Accounts Examination. I believe that the key to success is hard work. As the old saying goes, “Practice makes perfect”, so I did lots of exercises to prepare for my examinations. In the future, I want to be a professional accountant. I believe if I continue to work hard and put great effort into my studies, I can meet this goal. I would like to thank Mr. Larry Lee, my accounting teacher, for his guidance and support.

Top Students in the July 2007 Computerised Accounts Examination

Chan Yuk Yin

Miss Chan obtained a Certificate in Computerised Accounts from the Hong Kong Management Association in 2007. She is now working as a treasury coordinator at Sime Darby Hong Kong Finance Limited.

Top Student

Thoughts from Miss Chan:

It is my great pleasure to be awarded a top student prize in this paper. I would like to share my joy with those who have encouraged and supported me along the way. My bosses, Ms. Judith Leung and Mr. C S Wong, have been very kind. Their trust and encouragement in helping me acquire a better knowledge of accounting are much appreciated. I would also like to thank my teacher, Mr. Michael Lam, whose clear and organized instructions have enabled me to understand this subject. I cannot lay claim to any unique study method: what I did was simply practise as many past papers as possible, and to pay heed to the answering techniques in past papers.

English Paper

Studies in Foundation Accounting

20

Fan Hiu Ting

Mr. Fan is now studying Diploma in Professional Accounting at the Hong Kong Christian Service Kwun Tong Vocational Training Centre (KTVTC).

Top Student

Thoughts from Mr. Fan:

I started to study in KTVTC in September 200�. I studied hard and discovered my real interest in accounting. In the second half of the school year, we had to learn DacEasy. Thanks to the kindness and clear teaching of my teachers, I learnt the basic concepts of the subject efficiently. To me, one important aspect of my success is to revise what is learnt quickly. Instead of just taking notes, analyzing is also important. By discussing homework with my classmates, I can also grasp concepts more clearly.

I believe that to become a professional accountant I have to gain more work experience and continue to upgrade my knowledge with the HKIAAT.

December 2007 and January 2008 Examinations

Examination Entry Acknowledgements and Examination Attendance Dockets for the above examinations were sent to schools or candidates in November and December 2007 respectively. Students should inform the HKIAAT in good time if they have not received an Examination Attendance Docket or have misplaced it.

Application for the Coming Sessions

Book-keeping and Accounts Examination

Application deadlines15 April 2008 for the June 2008 session

15 October 2008 for the December 2008 session

Examination dates21 June 2008 for the June 2008 session (English and Chinese Papers)

20 December 2008 for the December 2008 session (English Paper ONLY)

Examination time 2:00 p.m. – 5:00 p.m.

Fee HK$300

Computerised Accounts Examination

Application deadlines30 April 2008 for the July 2008 session

31 October 2008 for the January 2009 session

Examination dates5 July 2008 for the July 2008 session

10 January 2009 for the January 2009 session

Examination time 2:30 p.m. – 5:00 p.m.

Fee HK$430

Applications for examination entry are accepted throughout the year. It takes three weeks to assess the applications and to send confirmation letters. Please ensure that your residential address is correct and you can be reached by mail. It is your responsibility to notify us of any change to your personal details in good time. If you find any discrepancies in the information sent to you, please contact us immediately.

Certified Accounts Clerk Qualification

We are pleased to announce that Miss Lo Kwan has successfully completed both the Book-keeping and Accounts Examination and the Computerised Accounts Examination and has been awarded the Certified Accounts Clerk qualification.

Activity Highlights

21

Examination Technique Seminars

The following Examination Technique Seminars were held recently to help students prepare for the December 2007 examinations.

Professional Bridging Examination (PBE) Speaker

27 October Paper I – Financial Reporting Ms. Shirley Wong

12 November Paper II – Management Accounting Mr. Frederick Woodier

27 October Paper III – Financial Management Mr. Michael Wong

26 October Paper IV – Legal Environment Mr. Kenneth Chang

Accounting Technician Examination (ATE) Speaker

26 October Paper 3 – Cost Accounting Mr. Andy Li

20 OctoberPaper 5 – Hong Kong Taxation Mr. Au Yeung Sin Kai

Paper 6 – Hong Kong Business Law Mr. Alfred Chan

27 OctoberPaper 7 – Advanced Accounting Mr. Patrick Ng

Paper 8 – Auditing Mr. David Chow

The Examination Technique Seminars were held at the Hong Kong Institute of CPAs’ training rooms. A seminar for ATE Paper 3 (Cost Accounting) was added to the regular seminars in order to help students studying this subject. Speakers covered a wide range of topics including examination format, the different types of questions and corresponding answering techniques. Speakers also shared study tips and introduced supplementary resources students can refer to when studying for examinations. Sound illustrations were made by reference to the Question & Answer booklets. The Q&A sessions were very useful as they enabled speakers to point out areas to which students should pay more attention to during their studies.

We would like to take this opportunity to thank all the speakers for their time in preparing for the seminars which were extremely helpful to the students studying for the HKIAAT examinations.

At the examination technique seminars.

Activity Highlights

22

CPD Seminar 1 – Audit Risk Evaluation

HKIAAT’s first CPD Seminar was held on Monday, 19 November 2007 at the HKICPA Training Centre.

Our speaker, Mr. Simon Wong, shared his valuable auditing experience and insights from his audit career with our members and students. After reviewing the auditing standards in detail, Mr. Wong went on to explain the different types of risks involved in performing audits. He also provided practical advice by illustrating his points with some case studies. Members and students left the seminar feeling better informed about things to look out for when performing audits and having received some valuable tips on how to improve their audits.

We would like to take this opportunity to thank Mr. Wong for sparing the time to speak to our members and students on this topic at this successful seminar.

Mr. Simon Wong introducing HKSA 200.

The HKIAAT would not be held responsible for the content of the advertisement.

St. perth AD

Greenfield

2�

To: Hong Kong Institute of Accredited Accounting Technicians Limited, T/Dialogue Entry Form for Sudoku – December 2007 Issue

Name:

Address:

HKIAAT Member / Student*:

Registration No.:

Telephone No.: (Home)

(Office)

(Mobile)

* Please tick the appropriate box

Yes No

(To keep your Journal in good shape, please use a photocopy of this form.)

SudokuThanks to all of you who sent in your entries to our last Sudoku puzzle. We appreciate the effort made by all members and students who participated. The first 10 entries with the right answers have won a HK$100 Park’N’Shop cash coupon. Congratulations to the winners!

Answers to the October 2007 issue puzzle

Winners of HK$100 Park’N’Shop cash coupon:

1. CHAN Kwai Chun2. CHAN Wai Sun3. CHEUNG Lai Fong4. CHEUNG Wai Chun5. LI Wai Chun6. MAN Elite7. SIU Wai Ching8. TAM Yim Ting9. YIP Ho Kwan10. YIP Sin Yee

Notification has been sent to the winners. Please collect your Park’N’Shop cash coupon at the HKIAAT reception on or before Thursday, 31 January 2008.

(Source: www.puzzles.li)

Try Our Sudoku!

Want to be in our next batch of winners? Have a go at the Sudoku puzzle below and send in your entry as soon as possible to 27/F, Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong (Fax: 2823 0606). Prizes will be given to the first 10 entries with the correct answer on a first-come-first-served basis. The solution and winners’ list will be published in the next issue.

December 2007 Sudoku:

Sudoku is a placement puzzle, also known as Number Place. To complete the Sudoku, you must enter numerals from 1 to 9 in each cell of a grid. Each row, column and 3 x 3 region (as marked) must contain each numeral once only.

6 4 3 8 9 2 5 7 1

8 7 1 6 4 5 2 3 9

2 9 5 7 3 1 4 6 8

5 1 6 9 8 3 7 2 4

4 8 7 2 5 6 1 9 3

3 2 9 1 7 4 8 5 6

7 3 2 4 6 8 9 1 5

9 6 4 5 1 7 3 8 2

1 5 8 3 2 9 6 4 7

6 4 5 9

5 1 3

5 8 2

6 9 5

2 7

6 1 3

2 4 7

9 7 1

1 6 3 8

Greenfield

24

The Q&A section here is to answer questions from members and students. You are welcome to write to us with your queries at:

Q&A, Greenfield, T/DialogueHong Kong Institute of Accredited Accounting Technicians Limited27/F, Wu Chung House213 Queen’s Road EastWanchai, Hong KongFax: 2823 0606E-mail: hkiaat@hkiaat.org

Q&A

Q: I have just joined the HKIAAT as an associatemember. Do I need to complete 20 hours ofCPD each year? If not, how many CPD hoursmust I complete? How do I submit supportingdocumentsofmyCPDhoursifmostofmyCPDisunstructured?

A: The reporting period for the Continuing Professional Development (CPD) compliance is a period of 12 months commencing from 1 December each year and running to 30 November of the following year. Members must complete 20 hours of CPD per year. If members join in the middle of the year, the CPD requirements are imposed on a pro-rata basis. For example, if you joined the HKIAAT as a member in August, you are required to complete 6 hours of CPD from August to November 2007. Those who join in November are exempt from any CPD requirements for that year.

Upon the renewal of your membership each year, you are required to sign and submit a declaration that you have complied with the CPD requirements. The HKIAAT currently does not require members to submit supporting documents of their CPD activities, whether structured or unstructured. However, you are strongly advised to keep a register of your CPD activities for a personal record of your development.

Q: IjoinedtheHKIAATasafellowmemberearlierthisyear.IsthereanHKIAATmembershiplistwheremyemployercancheckthatIampartoftheHKIAATmembership?

A: The HKIAAT members’ list is available on the HKIAAT website at www.hkiaat.org/member/MemberSearch.php. You may search for members using their surname or given name. The members’ list also shows the status of your membership (Associate or Fellow).

Q: IamanHKIAATstudentandcompletedhalfofthepapersintheAccountingTechnicianExamination(ATE)twoyearsago:thenIstoppedmystudies.IknowthattheHKIAATisplanningtochangetoanewsyllabus.WillIhavetotakealltheATEpapersalloveragain?Havethesyllabuseschangedalot?WherecanIfindoutmoreinformationonthis?

A: The New Qualification Framework will be implemented in June 2009. Existing students of the HKIAAT are eligible for cross-credits, which means that you will have credit under the new HKIAAT paper for each existing ATE paper you have previously completed.

Past registered students who are no longer on the students’ register and have yet to complete the ATE will be entitled to the same cross-credits provided that they reinstate their studentship. More details will be announced in due course.

The syllabuses for the examinations (Accredited Accounting Technician Examination, Professional Assessment and Professional Bridging Examination) under the New Qualification Framework have been finalized and are now available on our website www.hkiaat.org/index.php/whatsnew/updates_on_the_hkiaat_new_qualification_framework/168.

Features

2�Hong Kong Financial Reporting Standards: HKAS 27 (Relevant to ATE Paper 7 – Advanced Accounting & PBE Paper I – Financial Reporting)

Lindy W W Yau ACA, FCCA, FAIA, FCPA and Morris Y M Kwok MPA, ACMA, CPA

HKAS 27 “Consolidated and Separate Financial Statements”

This article provides the definition of a subsidiary and some

conditions for exemption from consolidation. It also addresses

the basic consolidation procedures for the preparation

of consolidated financial statements and accounting for

investments in subsidiaries in separate financial statements.

Scope and definition

HKAS 27 applies to the preparation and presentation of

consolidated financial statements for a group of entities

under the control of a parent. HKAS 27 contains the following

definitions:

1. Parent: an entity that has one or more subsidiaries.

2. Subsidiary: an entity, including an unincorporated entity,

that is controlled by another entity (known as the parent).

One typical example of an unincorporated entity is

partnership.

3. Control: the power to govern the financial and operating

policies of an entity so as to obtain benefits from its

activities. For example, if the parent owns more than 50%

voting power of a subsidiary, control is presumed to exist.

Definition of a subsidiary

HKAS 27 focuses the concept of control on the definition

of a subsidiary. In other words, if company A controls more

than 50 percent of the voting power in B, B is a subsidiary of

A since A can exercise the power to govern B’s financial and

operating policies.

In addition, even if less than half of the voting rights are

acquired, it is still possible for control to exist where there is:

(1) power over more than half of the voting rights by virtue of

an agreement with other investors;

(2) power to govern the financial and operating policies of

the entity by law or an agreement;

(3) power to appoint or remove the majority of the members

of the board of directors; or

(4) power to cast the majority of votes at the board meeting

or equivalent governing bodies. For example, if A has 30%

of the voting shares in B and has a right to nominate three

out of five members of the board then B is a subsidiary of

Not a subsidiary

Power to cast the majority of votes at the board meeting?

No

Power to appoint or remove the majority

of directors?

No

Power to govern financial and

operating policies?

No

Obtain > �0% voting shares by virtue of agreement with other investors?

No

Control > �0% voting shares?

YES

YES

YES

YES

YES Subsidiary

Subsidiary

Subsidiary

Subsidiary

Subsidiary

No

Potential voting rights

HKAS 27 also discusses the effect of potential voting rights on the parent/subsidiary relationship. Potential voting rights are financial instruments like share warrants or options, debt or equity instruments that are convertible into ordinary shares in the future. For example, if A has the power to govern the financial and operating policies of B after exercising or converting these financial instruments, B is a subsidiary of A.

A since A controls the power to cast the majority of votes

at the board meeting.

Features

2� Example 1ABC Ltd owns 30 percent of the voting shares in XYZ Ltd and 10 percent of the convertible debentures issued from XYZ Ltd at the beginning of year one. If the convertible debentures were exercised, ABC Ltd would have an additional of 25 percent voting shares in XYZ Ltd. Is XYZ Ltd a subsidiary of ABC Ltd in year two if: (a) the convertible debentures are exercised in year one?(b) the convertible debentures are exercised in year

three?

(a) In this case, XYZ Ltd is a subsidiary of ABC Ltd in year two since the exercise of the convertible debentures in year one would give ABC Ltd 55 percent voting shares in year one .

(b) In this case, XYZ Ltd is not a subsidiary of ABC Ltd in year two since the exercise of the convertible debentures in year three would give ABC Ltd 55 percent voting shares only in year three.

Exemption from consolidation

HKAS 27 and section 124(1) of the Companies Ordinance require every parent company to present consolidated financial statements. In other words, all immediate parent companies in the group should prepare their own consolidated financial statements. An immediate parent company is a company which has a subsidiary but is also itself a subsidiary of another company. For example:

In the above example, company A and company B are both required to prepare consolidated financial statements since both companies are parent companies.

However, an immediate parent company is exempt from the requirement to prepare group accounts if it satisfies the

conditions specified under section 124(2) of Companies Ordinance and HKAS 27. The following table compares the conditions for exemption from consolidation:

No Conditions

Section 124(2) of the Companies Ordinance

HKAS 27

1. (a) The parent (i.e. B) is itself a wholly-owned subsidiary (i.e. of A) OR

P P

(b) The parent (i.e. B) is a partially-owned subsidiary of another entity (i.e. of A) and its other owners do not object the exemption.

N/A P

2. The parent’s (i.e. B’s) debt or equity instruments are not traded in a public market.

N/A P

3. The parent (i.e. B) did not file and is not in the process of filing its financial statements with regulatory organization.

N/A P

4. The ultimate (i.e. A) or intermediate parent of the parent produces consolidated financial statements available for public use that comply with Hong Kong Financial Reporting Standards (HKFRSs) or International Financial Reporting Standards (IFRSs).

N/A P

So section 124(2) permits a parent not to prepare group accounts only if the parent company is a wholly-owned subsidiary of another company at the end of its financial year. In other words, if a Hong Kong incorporated parent company is a wholly-owned subsidiary of another company, this parent company does not need to comply with the exemption criteria under HKAS 27.

C

BImmediate

parent company

AUltimate parent

company

80%

70%

Features

27Example 2Case 1A owns 100 percent of the ordinary shares of B and B owns 80 percent of the ordinary shares of C. All companies are incorporated in Hong Kong and listed in Hong Kong. A has prepared consolidated financial statements in accordance with HKFRSs.

In this case, B can apply for exemption from consolidation under the Companies Ordinance since B is a Hong Kong incorporated company and is a wholly-owned subsidiary of A and so satisfies the exemption requirement under section 124(2) of the Companies Ordinance. The exemption criteria under HKAS 27 do not apply in this case.

Case 2Same information as in Case 1 except that B is incorporated in the US.

In this case, B cannot apply for an exemption from consolidation under the Companies Ordinance since B is not a Hong Kong incorporated company. Instead, B can apply for an exemption from consolidation under HKAS 27. As B satisfies all the exemption conditions under HKAS 27, B needs not prepare consolidated financial statements.

Case 3A owns 80 percent of the ordinary shares of B and B owns 70 percent of the ordinary shares of C. A and C are incorporated in Hong Kong but B is not. A has prepared consolidated financial statements in accordance with HKFRSs. B is not a listed company and the other owners in B do not object to the exemption from consolidation.

HKAS 27 also requires that if the immediate parent company (i.e. B) satisfies the exemption criteria and elects not to present consolidated financial statements, the company (i.e. B) should present its own separate financial statements.

Exclusion of subsidiaries from consolidation

HKAS 27 states that all subsidiaries should be consolidated except where on acquisition a subsidiary meets the criteria to be classified as held for sale. The criteria include:

(1) The subsidiary must be available for immediate sale in

its present condition. In other words, the sale should be

completed within a year.

(2) Its sale must be highly probable. For the sale to be highly

probable, management must be committed to sell the

subsidiaries and must be actively looking for a buyer.

If the above conditions are met, the subsidiary does not

have to be consolidated and it should be accounted for in

accordance with HKFRS 5 “Non-current Assets held for Sale

and Discontinued Operations”.

However, a subsidiary cannot be excluded from consolidation

because of the following reasons:

(1) the investor is a venture capital organization, mutual fund,

unit trust or similar entity; or

(2) its business activities are dissimilar from those of other

entities within a group.

Reporting dates and accounting policies

According to HKAS 27, all companies in the group should have same financial year-end as the parent. If the reporting date is different, adjustments should be made for the effects of significant transactions or events that occur between that date and the date of the parent’s financial statements. For example, A, the parent whose financial year-end is 31 March,

In this case, B can only apply for exemption from consolidation under HKAS 27. Since B is not incorporated in Hong Kong it does not meet the section 124(2) requirements; however it does meet all four conditions for exemption under HKAS 27.

A

100%

B

80%

C

A

100%

B

80%

C

A

80%

B

70%

C

Features

28has a subsidiary B whose financial year-end is 31 December. A should adjust B’s financial statements by including transactions occurred between January to March.

In addition, HKAS 27 also requires uniform accounting policies for like transactions and other events in similar circumstances in all the companies within the group. If the accounting policies are not the same, appropriate adjustments should be made in the consolidated financial statements.

Consolidation procedures

The basic principle for preparation of consolidated financial statements is to combine the like items of assets, liabilities, equity, income and expenses of the parent and its subsidiaries after certain consolidation adjustments like intra-group balances and dividends and unrealized profit on inventory. The consolidation adjustments required will vary with different circumstances but basically follow these steps:

ExplanationStep

Establish the group structure

If A buys 13,000 shares out of B’s total of 20,000 shares, A

owns 65% of B

Eliminate inter-company transactions and balances

Intra-group dividends and sales, intra-group balances

Determine goodwill on acquisition

Goodwill = cost of investment – parent’s portion of net

assets of subsidiary

Calculate the minority interest

Minority interest = minority interest’s portion of net assets

of subsidiary

Compute consolidated profit and loss

Parent’s portion of adjusted post-acquisition profits

Prepare consolidated balance sheet

Parent and subsidiary assets and liabilities after elimination of inter-

company transactions and balances

Example 3

The balance sheets of parent P and subsidiary S at 31 December 2008 are as follows:

P S

$000 $000

Fixed assets 180 130

Investment in S 70 -

Current account with S 80 -

Trade receivables 20 15

Cash and bank 10 25

360 170

Ordinary shares ($1 shares) 220 50

Retained earnings 70 20

Current account with P - 60

Trade payables 15 10

Accrued expenses 5 -

Proposed dividend 50 30

360 170

Additional information:

(a) P acquired 30,000 shares in S on 1 May 2008, when S’s retained earnings were $10,000.

(b) On 29 December 2008, S sent a cheque to P for $20,000 but this was not received by P until 2 January 2009.

(c) The proposed dividends are declared and approved by P and S on 12 March 2009 and 14 March 2009 respectively. P has not included any entries in its accounts relating to the dividend receivable from S.

Required:Prepare the consolidated balance sheet at 31 December 2008.

Step 1 Establish group structure

P acquires 30,000 shares of S’s total of 50,000 shares. Therefore P owns 60% (30,000/50,000) of S.

Step 2 Eliminate inter-company transaction and balances

$000

Per current account with S 80

Less: cash in transit 20

Cur rent account w i th S a f te r adjustment

60

Agreed with current account with P 60

Features

2�The journal entries will be: $000 $000

(1) Dr Cash in transit 20

Cr Current account with S 20

Being adjustment of cash in transit.

(2) Dr Current account with P 60

Cr Current account with S 60

Being elimination of intercompany current account.

Step 3 Determine goodwill on acquisition $000

Cost of investment in S 70

Less: P’s share of net assets at acquisition date

Share capital (50 x 60%) 30

Retained profit (10 x 60%) 6

36

Goodwill on acquisition 34

Step 4 Calculate minority interest $000

Share capital (50 x 40%) 20

Retained earnings (20 x 40%) 8

Proposed dividend payable tominority interest (30 x 40%) 12

40

Step 5 Compute consolidated profit and loss

$000

P: Retained earnings 70

Add: adjustment of dividend received from S (30 x 60%) 18

S: P’s share of S’s post acquisition profits [(20-10) x 60%] 6

94

Step 6 Prepare consolidated balance sheet

P Group: Consolidated balance sheet at 31 December 2008

$000

Assets

Non current assets

Property, plant and equipment (180+130) 310

Goodwill 34

344

Current assets

Trade receivables (20+15) 35

Cash and cash equivalents (10+25+20) 55

90

Total assets 434

$000

Equity and liabilities

Equity attributable to equity holders of the parent

Share capital 220

Retained earnings 94

Proposed dividend* 50

364

Minority interest 40

Total equity 404

Current liabilities

Trade and other payables (15+5+10) 30

30

Total equity and liabilities 434

* If dividends are proposed after the balance sheet date, some listed companies, in practice, will present proposed dividends as a separate component of shareholders’ equity but this presentation is not required under HKAS 10. Instead, HKAS 10 only allows for these dividends to be disclosed in the notes to the financial statements.

Features

�0Accounting for investments in separate financial statementsHKAS 27 allows two treatments for investment in subsidiaries in the books of parent company. The following summarizes these two treatments:

Situation Accounting treatment

(1) If the investment in subsidiaries is classified as held for sale

The investment in subsidiaries should be reclassified as non-current assets held for sale and measured at the lower of the carrying amount and fair value less cost to sell in accordance with HKFRS 5.

(2) If the investment in subsidiaries is not classified as held for sale

The investment in subsidiaries should be accounted for either at cost or in accordance with HKAS 39.

Example 4Suppose A acquires 80 percent of the shares in B for $100,000 on 1 January 2008 when the fair value of B’s net assets is $110,000. The fair value less cost to sell for this investment at 31 December 2008 is $90,000.

(a) What is the value of the investment in B if this investment is classified as held for sale on 31 December 2008?

(b) What is the value of investment in B if this investment is not classified as held for sale on 31 December 2008? (Assume A uses the cost method to account for its investment in subsidiaries.)

(a) If the investment in B is classified as held for sale, this investment should be valued at the lower of the carrying amount and fair value less cost to sell. Therefore the investment in B at 31 December 2008 is $90,000 in A’s books.

(b) If the investment in B is not classified as held for sale, this investment should be accounted for either at cost or in accordance with HKAS 39. Therefore, the investment in B at 31 December 2008 is still $100,000 in A’s books.

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