Investigations conducted by Hong Kong forensic accountants have become increasingly complex. Often viewed as part accountant and part detective, from contractual and legal disputes to fraud, asset tracking and misconduct, the role has now expanded to accommodate the growth of cybercrime.
Financial crimes plague economies all over the world, as Carmen Chu, executive director (enforcement and AML) at the Hong Kong Monetary Authority, noted at the Fraud and Financial Crime Asia 2023 summit, held in Singapore in early July. There, she outlined how the task of fighting financial crime, especially digital fraud, has become more challenging.
Describing the situation as ‘worrying’, Chu explained how deception cases reported to the Hong Kong Police Force (HKPF) have more than tripled in recent years, with similar increases in financial losses to victims.
The surge in digital fraud is part of a broader uptick in investment scams in Hong Kong
Digital fraud surge
The rapid growth of digital fraud is part of a broader uptick in investment scams in Hong Kong, with the number of reported incidents doubling to 2,850 in 2022 from just over 1,500 in 2021, according to HKPF figures. Investment scams also surged during the first four months of 2023, with reported losses increasing to more than HK$700m, compared with under HK$500m in the same period in 2022.
Reflecting the crossborder, multi-jurisdiction nature of Hong Kong’s business and financial markets, in April the HKPF’s Financial Intelligence and Investigation Bureau and the Institute of Singapore Chartered Accountants (ISCA) signed a memorandum of understanding to advance the development of financial forensics and widen the talent pool of qualified financial forensic professionals in Hong Kong.
A lack of regulation means that companies are using the services of law firms and individual practitioners
The collaboration will include providing specialised training in forensic accounting and investigation, combating financial crime and developing professional ethics. With the rapid growth of complex corporate activities around the region, the demand for forensic accountants is likely to remain high for the foreseeable future.
Regulation concern
There is, however, concern that a lack of regulation around forensic accounting work means that companies are using the services of law firms and individual practitioners instead of recognised CPA firms. Among the dozens of Hong Kong forensic investigation job postings for July, many require experience in data analytics, software engineering, cybersecurity, consulting and risk management, but not necessarily relevant experience with a CPA firm.
To develop and retain a pipeline of forensic accounting talent, a number of larger CPA firms are investing in younger staff, placing emphasis on e-discovery work and creating pathways for them to grow to partners, with the aim that, as their careers develop, they will create multi-faceted forensic accounting ecosystems around them.
In the past, fraudsters may have attempted to conceal data or evidence among reams of spreadsheets or files. Now, accounting professionals can use sophisticated data analytics tools to rapidly review millions and even billions of pieces of data, according to one Hong Kong-based forensic accountant with a background in computer science.
As generative AI tools continue to become more prevalent in the accounting industry, it is vital, says the expert, to recognise strengths and limitations, and build understanding of the best ways for humans and technology to work together.
