The Accounting and Financial Reporting Review Tribunal (

) handed down its first determination in the case of 

Yip Kai Yin and Elite Partners CPA Limited v The Hong Kong Institute of Certified Public Accountants

The Applicants applied to review the decision of Respondent, the Hong Kong Institute of Certified Public Accountants’ (

) which (amongst other things) prohibited the 1

 Applicant from undertaking a public interest entity (

) engagement as a Responsible Person of the 2

 Applicant until the latter completed an independent monitoring review (

) to the satisfaction of the HKICPA or the Accounting and Financial Reporting Council (

After reviewing the statutory framework in relation to the regulation of registered PIE auditors and holding that the Tribunal shall determine review applications de novo, the Chairman (Jonathan Chang SC, sitting as sole member of the Tribunal by agreement of the parties) confirmed the HKICPA’s decision to impose the Condition on the following grounds:

1. The Applicants did not challenge the proprietary of the Engagement Performance Review requirement. They only objected to the Prohibition Condition on the basis that it was a disproportionate measure.

2. The purpose of the Engagement Performance Review was to allow the HKICPA to better assess the suitability of the 1

 Applicant to undertake PIE engagements as an engagement partner or engagement quality control reviewer. It would be inimical to the objective of such a review to allow the 1

 Applicant to act in those roles when one possible outcome was that the review report may suggest he is unfit to do so. It followed that the Prohibition Condition was proper, justified and proportionate.

3. The imposition of the Prohibition Condition was not a sanction imposed against the Applicants, but was a measure for the protection of the investing and general public and to maintain public confidence in Hong Kong as a leading international financial centre. Having regard to those objectives, the hardship caused to the Applicants, whilst not irrelevant, must come secondary to the overall assessment. In any event, the hardship to the Applicants was mitigated by the limited scope of the Prohibition Condition.

, instructed by MinterEllison LLP, appeared for the Respondent.

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