In Hong Kong, CPA firms wishing to provide professional services in corporate form must register as a “Corporate Practice” under the Accounting and Financial Reporting Council Ordinance and related regulations. This is a legal entity structure regulated by the Accounting and Financial Reporting Council (AFRC, formerly the regulatory arm of the Hong Kong Institute of Certified Public Accountants), designed to ensure that practicing firms have appropriate legal status, corporate governance, and professional accountability.

The establishment of a “Corporate Practice” allows CPA firms to operate as limited companies, bearing limited liability while remaining subject to professional ethics and regulatory requirements. This framework protects the legal responsibilities of partners and shareholders while maintaining professional commitments to clients.

The AFRC is responsible for approving and supervising these corporate practices, including:

• Ensuring that major shareholders and directors are qualified registered accountants;
• Requiring firms to maintain adequate professional indemnity insurance to safeguard client interests;
• Monitoring compliance with auditing standards, financial reporting regulations, and professional ethics.

Becoming a “Corporate Practice” enhances market credibility and strengthens institutionalization in corporate governance, risk management, and sustainable operations. This helps Hong Kong maintain its professional image as an international financial centre and reinforces investor and public confidence in financial reporting.

In summary, the “Corporate Practice of CPA Firms” is an important institutional arrangement in Hong Kong’s accounting profession, combining the protections of company law with the demands of professional regulation to ensure CPA firms provide services legally, compliantly, and professionally.