The bean counters who wanted their money back won a vote at the extraordinary general meeting of the Hong Kong Institute of Certified Public Accountants on Friday, but one has to question if that was a wise move.
The EGM, demanded by 100 members of the HKICPA, which has 43,000 members and 18,000 registered students in the city, saw all three resolutions on the agenda passed.
For once, accountants have a happy problem - how to deal with excess reserves of US$50 million
Members will be refunded half of the cash reserves of HK$377.86 million (US$48.2 million). They will now be able to directly elect the president and vice-president, instead of continuing with the current practice of council members electing the executives from among themselves.
A resolution was also passed to terminate the contract of chief executive Raphael Ding Wai-chuen and hire a global recruitment firm to seek a replacement at a significantly lower executive pay package than the HK$5 million drawn by Ding.
While the results of the votes have led to a lot of debate, it is clear that members wanted a change and more say in the affairs of the HKICPA, which is a statutory body for the professional training, development and regulation of certified public accountants in Hong Kong.
That the institute is good at accumulating money cannot be doubted considering that it had HK$377.86 million cash plus time deposits at the end of June 2017. As such, its net current assets – current assets minus current liabilities – stands at HK$267.84 million.
By distributing 50 per cent of its total cash or HK$188.93 million, its net current assets will be reduced to HK$78.91 million – enough for just three months of the institute’s annual expenses of HK$253 million.
Albert Au, former president of the HKICPA, feared that this would put the HKICPA dangerously close to the point of cash flow problem and “possibly on the verge of insolvency”.
While Au voiced concern over the HKICPA’s refund to its members, he also said the results of the votes showed many members were not happy with the institute and it was time to increase transparency and to have more discussions with its members on what they want.
“It would be nice to see the HKICPA work faster on the auditor reform and pass on the regulatory power to the Financial Reporting Council, so as to allow the HKICPA to focus on more membership services,” Au said.
The membership of the HKICPA is now being increasingly dominated by younger accountants who would like to use their vote to dictate the future policy direction of the institute.
They have already had their way by voting to not renew Ding’s contract, but they have a task on their hands as finding a replacement will certainly not be easy. There is no doubt the job is tough and the incoming CEO will see a lot more clamour from members on setting the institute’s agenda and direction, while facing a substantial pay cut.
The road is going to be much more rocky ahead for the HKICPA.