The HKEx released its "Consultation Conclusions on Acceptance of Mainland Accounting and Auditing Standards and Mainland Audit Firms for Mainland Incorporated Companies Listed in Hong Kong" on 10 December 2010 (Mainland Accounting Consultation Conclusions) in response to the consultation paper published on 28 August 2009 on proposals to accept Mainland China accounting and auditing standards and Mainland China audit firms for Mainland China incorporated companies listed in Hong Kong (Mainland Accounting Consultation Paper).


The HKEx has decided to adopt the proposals as stated in the Mainland Accounting Consultation Paper as follows:

  1. Using Mainland accounting standards - Mainland China incorporated listed issuers are allowed to prepare their financial statements (for IPOs, annual reports, circulars and other regulatory reports) using Mainland China accounting standards, namely the China Accounting Standards for Business Enterprises and to audit their accounts using Mainland China auditing standards.
  2. Using Mainland audit firms - Mainland China audit firms approved and registered by the Ministry of Finance of China and the China Securities Regulatory Commission are allowed to act as auditors and reporting accountants of Mainland China incorporated listed issuers. In this connection, the HKEx maintains a list of approved Mainland China audit firms on its website.
  3. Using Hong Kong accounting standards and audit firms - As a reciprocal arrangement, companies incorporated or registered in Hong Kong and listed in Mainland China are allowed to prepare their financial statements using the HKFRS or the IFRS and be audited by Hong Kong audit firms registered with the HKICPA using the Hong Kong Standards on Auditing or the International Standards on Auditing.

It remains to be seen, however, whether or not where domestic Mainland China audit firms will be accepted as the sole reporting accountants in a global offering.


Previously, on a general basis, Hong Kong listed companies were normally only permitted (subject to exceptions) to (a) use the HKFRS or the IFRS in preparing financial statements and (b) appoint members of the HKICPA with valid practising certificates as auditors or reporting accountants.


The corresponding Listing Rules amendments to implement the proposals became effective on 15 December 2010.

Copies of the Mainland Accounting Consultation Conclusions can be downloaded via the link below:



After the release of the Mainland Accounting Consultation Conclusions, the HKEx noted that there were mixed comments in media reports and elsewhere on its decision. Accordingly, it issued a statement on 23 December 2010 to clarify certain misperceptions and to further explain the rationale behind the new regime. The questions answered by the HKEx in the statement are:

  1. Why did the HKEx choose to adopt Mainland China accounting standards?
  2. Is Hong Kong the only market outside Mainland China that has accepted Mainland accounting standards?
  3. Has the HKEx’s decision to accept Mainland China accounting and auditing standards and Mainland China audit firms been taken lightly or done in haste?
  4. Why was there such a long delay between the original proposed implementation date (i.e. 1 January 2010) and the implementation of the new framework?
  5. Is the HKEx's decision aimed at winning more Mainland China business? Is there a "quality versus quantity" issue?
  6. Does the framework mean that Hong Kong has handed over part of its regulatory authority to Mainland China?
  7. How can Hong Kong regulators, like the Financial Reporting Council and the HKICPA, carry out investigations on Mainland China audit firms?
  8. Is the HKEx concerned about investor trust and regulatory credibility in Mainland China accounting and governance standards?

Copies of the HKEx's statement can be downloaded via the link below: http://www.hkex.com.hk/eng/newsconsul/hkexnews/2010/1012232news.htm