Opinion | End of self-regulation for Hong Kong accountants is a home-made problem
End of self-regulation and salary freezes are not surprising as city's reputation as a financial centre at risk in wake of pre-IPO audit scandals
The Big Four accounting firms are facing fresh operating challenges in Hong Kong. After persistent weakness in the city's listing market, the accounting industry faces a reform in the city's decades-old self-regulatory regime.
Three of the Big Four firms will cut or freeze the pay of thousands of their accountants in order to cope with the weakening market conditions, sources at the firms say.
Accountants from PricewaterhouseCoopers and Deloitte will freeze salaries from this month and reduce new hiring, while Ernst & Young - which has already moved to cheaper premises outside of the prime Central district - will cut pay to cope with the challenging times ahead. A partner from one of the Big Four firms told IPO Watch that Hong Kong's business climate had been battered by the mainland's slowdown over the past 12 months.
The partner explained that the Big Four in reality are merely a string of independent local partnerships, albeit with global footprints grouped under a common branding banner. That makes them extremely susceptible to local economic conditions.
And when local conditions tend to depend on IPO audit fees to make ends meet, a downturn there really hurts businesses staffed for high levels of activity.
The quartet, including KPMG, have a combined workforce of 30,000 across Hong Kong, the mainland, Macau and Taiwan.
