Presented by : Winnie Cheung, Chief Executive Venue : Hong Kong Institute of CPAs Date : 23 July 2009

Presented by : Winnie Cheung, Chief Executive Venue : Hong Kong Institute of CPAs Date : 23 July 2009 Financial Crisis Survey 2009

Research Methodology & Objectives The Institute invited members to participate in an online survey, hosted by Cimigo - 2,606 online surveys were completed in April The main objectives of the research were as follows: • Understand perceptions of the profession amongst Accountants • Understand the impact of the current economic downturn, and how this financial crisis has affected views of the profession Ultimately, the research findings will help the Institute to increase their understanding towards their members’ perceptions and will provide valuable insights

Respondent Profiles • 2,606 online interviews were completed in total • 27% of survey respondents are Professional Accountants in Practice (PAIP) • 73% of survey respondents are Professional Accountants in Business (PAIB) • Majority of respondents were seniors in their company • PAIP: 57% Partner/Director/Sole Practitioner, 25% Manager • PAIB: 28% CFO/COO, 21% Team Leader, 20% Divisional Manager • Respondents have a long history in Accounting – average time as CPA is 16 years • Survey respondents skewed toward Male (59%), especially PAIP (67% vs 57% for PAIB) • High average monthly income: HK$54,860 (PAIP, HK$57,667 & PAIB HK$53,853)

Survey Subjects: • Career Choices • Career Prospects, Rewards & Remunerations • Surviving the Financial Crisis

Motivation to Continue with a Career in Accounting • Vast majority of HKICPA members are committed to the industry: 88% are likely to continue with a career in Accounting. Job security, esteem and prospects for advancement are the top 3 motivators for staying in the profession Likeliness to continue career in accounting % Top 2 boxes 88 N=2,291 Bottom 2 boxes 4 Mean 4.37 Base: All CPAs 2,606 Ref: A1, A2

Motivation to Continue with a Career in Accounting • Vast majority of HKICPA members are committed to the industry: 88% are likely to continue with a career in Accounting. Job security, esteem and prospects for advancement are the top 3 motivators for staying in the profession Agreement of motivation areas % Mean Job security 3.08 3.05 3.05 3.03 3.00 2.93 2.84 2.25 Esteem and standing of the profession Career prospects/ advancement Job satisfaction of a professional career in accounting Remuneration package Variety and interest in the work Career/ training opportunities Overseas working opportunities Base: Those CPAs who definitely/ probably will continue a long term accounting career 2,291 Ref: A1, A2

Impact of financial crisis on career choices • The financial crisis has impacted the career choices of over half of the HKICPA members who took part in the survey, with 52% saying it has deterred their next career move. Concerns about job security is the major impact of the crisis Reasons for deterring next career move % Financial crisis deterring next career move? Concern about job security Financial burden Others Recruitment market is quiet Less attractive remuneration offered by new employer No 48% Yes 52% Other family members have lost job recently Personal/ health/ family reasons Base: All CPAs 2,606 Going to retirement/ too old to change Base: Those CPAs who claimed financial crisis deterring next career move 1,347 Ref: A3, A4

Impact of Financial Crisis on PAIP Specialization • The majority of PAIP did not expect to change job specialization as a result of the financial crisis. For the 19% who did expect to change job specialization, Financial Accounting and Analysis/Reporting and Business Consulting were the Top 2 alternatives Job specialization intend to change % Expect to change to another job specialization Financial accounting and analysis/ reporting Business consulting Corporate finance (Financing, M&A) Internal risk control Forensic accounting/ expert witness Insolvency and corporate recovery Company law compliance IPO Auditing and assurance Operations and general administration IT risk assurance and advisory Corporate governance General management/ senior executive role No 81% Yes 19% Sales and marketing (new business development) Base: All PAIP accountants 699 • Expectation to change was highest amongst members with less experience in the field: • <5 years 40% expect to change • 5-10 20% expect to change • > 10 years 16% expect to change Others (each less than 2%) Base: Those PAIPs who expect to change another job specialization as a consequence of the financial crisis 132 Ref: A6, A7

Impact of Financial Crisis on PAIB Business Sector - 1 • Impacts of the financial crisis are more keenly felt at the business sector level – 80% of PAIB agree that the crisis is affecting their sector • However, the majority of PAIB do not think that their job role is so threatened by the crisis that they would have to consider a switch to PAIP status – it is more likely that they might have to consider switching to another industry Financial crisis affecting the business sector Expect to work in accountancy firm/ practice No 20% Yes 80% No 91% Yes 9% Base: All PAIB accountants 1,907 Ref: A8, A9

Impact of Financial Crisis on PAIB Business Sector - 2 • One quarter of PAIB expect to change industry as a result of the current financial crisis – other business services, government administration and business management/consultancy the most likely destinations • Expectation of change is highest amongst PAIB’s with the least amount of experience Industry intend to change Expect to change to another industry Other business services Government administration Finance and investment Import/ export trade/ retail trade Manufacturing Real estate Education Banking (retail and commercial) None Business management and consultancy service No 75% Yes 25% Base: All PAIB accountants 1,907 • <3 years 48% expect to change • 3-5 years 25% expect to change • 5-10 30% expect to change • > 10 years 24% expect to change % Others (each less than 2%) Base: Those PAIBs who expect to change to another industry as a consequence of the financial crisis 475 Ref: A10, A11

Attitudes to Working Overseas N=589 • A quarter of the members who completed the survey have intentions to work overseas in the next 5 years, although the majority of this is a “probable” rather than “definite intent”. China is the most likely destination Intend to reside and work overseas in the next 5 years Location intend to work overseas China Australia Europe Canada Macau U.S Middle East South America Africa Not specified Top 2 boxes 23 Asia (e.g. Japan, Korea, Singapore, India, Sri Lanka) % % Bottom 2 boxes 51 Mean 2.62 Base: All CPAs 2,606 Base: Those CPAs who have intention to reside and work overseas in next 5 years 589 * less than 0.5% Ref: A12, A13

Working in China – Drivers & Barriers • The main attraction of China is career opportunity – mentioned by 8 out of those who would consider relocating there in the next 5 years – new experiences, career progression & remuneration also factored • Unfamiliarity with China Accounting Standards & procedures the main barrier, slightly ahead of concerns over pollution Reasons for having intention to work in China Reasons for not having intention to work in China I'm not familiar with standards/ procedures in China More career opportunities than in Hong Kong Lower pay than in Hong Kong Family/ personal reasons Country/ political/ law issue Better pay than in Hong Kong Have family in Mainland China Currently working in China Health reasons - environment is not healthy Like the opportunity to travel, experience new things Concerned about quality of the accommodation More responsibility at same stage of career Fewer career opportunities than in Hong Kong % Don't speak Cantonese/ Mandarin % No choice in the matter - likely to be employer expectation Already stationed in China in the past years Gain more experience to work outside HK and China Others (each less than 2%) Others (each less than 2%) Base: Those CPAs who have intention to reside and work in China in next 5 years 382 Base: Those CPAs who have intention to reside and work overseas but not in China in next 5 years 207 Ref: A14, A15

Measuring Positive or Negative Career Expectations Significantly higher than the other at 95% confidence level within subgroup • Survey reveals that both PAIP and PAIB are mainly positive toward their career expectations. Accounting is viewed as a secure career with good long term prospects which also enjoys high social standing. • The most negative aspect of the profession is the effect on work-life balance Total Very/ Somewhat positive PAIP PAIB Bottom 2 % Top 2 % Mean Base % % % 9 16 16 16 17 22 23 32 37 51 91 84 84 84 83 78 77 68 63 49 3.15 3.02 2.96 2.95 2.94 2.86 2.89 2.72 2.62 2.41 Professional recognition Long term job security Social status relative to other careers Financial reward (pay, benefits, leave etc) Opportunity to travel 2,578 2,530 2,527 2,569 2,523 2,559 2,518 2,503 2,431 2,571 (695) (689) (684) (691) (681) (691) (679) (671) (661) (693) (1,883) (1,841) (1,843) (1,878) (1,842) (1,868) (1,839) (1,832) (1,770) (1,878) Overall prospects for a satisfying career Mid term employment prospects (next two to five years in the profession) Short term employment prospects (keeping your current job/ not being made redundant) Fast track and opportunity for advancement Work/ life balance (reasonable working hours) Base: All CPAs (exclude “Don’t know”) Ref: B1

Most Recent Monthly Salary Review No Change N=311 N=1,147 • The majority last had a salary review before 1st October 2008 – 66% in total, 69% PAIP and 65% PAIB • 37% had no change in salary at last review and 7% have not had a review in the last year • Of the remainder, 44% received an increase and 12% had a decrease (mainly linked to company-wide cutbacks Salary increase due to promotion % Best description for most recent monthly salary review No 77% Yes 23% Base: Those CPAs who have salary increase in most recent monthly review 1,147 Salary decrease due to the result of company/ firm-wide cutbacks No 29% Yes 71% Mean 2.17 Base: All CPAs 2,606 Base: Those CPAs who have salary decrease in most recent monthly review 311 Ref: B6, B7, B8, B9

Expectation for Next Salary Review • Majority view amongst both PAIP and PAIB is that there will no change to salary at the next review • PAIP less expectant of a salary rise, compared with PAIP Total PAIP PAIB % % % Mean (%) +0.87 -0.39 +1.34 Base: All CPAs 2,606 699 1,907 Ref: B10

Bonus for 2008 • 48% of the members surveyed had received their 2008 bonus – 43% did not, while 9% had been notified at the time the survey was completed. The average bonus worked out to 1.4 monthly salary • Bonus was similar or lower than 2007 for two thirds of the members Best description for bonus in 2008 % Equivalent to more than two-month of basic monthly salary Receive bonus in 2008 Equivalent to 1.5 month to two-month of basic monthly salary Equivalent to less than 1.5-month of basic monthly salary Equivalent to half-month to one-month of basic monthly salary Not sure 9% Equivalent to less than half-month of basic monthly salary No 43% Yes 48% Mean (months) 1.38 Base: Those CPAs who received bonus in 2008 1,247 Bonus comparison between 2007 and 2008 The same 24% More 32% Base: All CPAs 2,606 Less 44% Base: Those CPAs who received bonus in 2008 1,247 Ref: B2, B3, B4

Most Liked Aspects of Profession • Accountants surveyed like the very nature of their itself the best, and they are happy with the career they have chosen on the whole • Other areas that please them are job security, remuneration, status as well as opportunities for training and career advancement Total PAIP PAIB % % % Nature of the job Job security Job satisfaction/recognition Remuneration package Career prospects Training opportunities Challenging job 5-day week Working environment Base: All CPAs 2,606 699 1,907 Ref: C2

Least Liked Aspects of Profession • Workload is the least liked aspect of the profession, causing the most stress. This is especially true for PAIP • Contributing to the dislikes/stress are tight deadlines, long hours and the general challenges of the job • PAIP have a wider range of dislikes than PAIB Total PAIP PAIB % % % Workload Deadlines/time pressure Long hours Job challenges Accounting Standards Job nature Working environment Poor remuneration No balanced life Base: All CPAs 2,606 699 1,907 Ref: C2

Estimated Recovery Time for the HK Economy Significantly higher than the other at 95% confidence level within subgroup • General consensus between Accountants in Practice and in Business is that it will take roughly two years before the Hong Kong economy has recovered from the current financial crisis • PAIB more cautious that PAIP in their estimation Total PAIP PAIB % % % Mean (Years) 2.21 2.18 2.23 Base: All CPAs 2,606 699 1,907 Ref: D1

Expected Effect of the Financial Crisis on Operations Significantly higher than the other at 95% confidence level within subgroup • There is an expectation that the financial crisis will have a positive effect on operations, most of all in terms of Internal Controls/Risk Management and Overall Corporate Controls – expectations that both of these will definitely change for the better • PAIB have stronger expectation that internal controls will improve for the better, suggesting a greater need for such change in their establishments Definitely/ Somewhat for the better Bottom 2 % Top 2 % Mean Total % PAIP PAIB % % Internal controls and risk management Overall corporate governance Capital structure Board structure and function 3 3 5 3 13 4 4 84 76 69 62 59 58 55 4.12 3.95 3.80 3.71 3.59 3.65 3.59 Remuneration policy and directors and senior management's remuneration packages Reporting of related party transactions and relationships Nomination of committee's composition, role and functions Base: All CPAs 2,606 699 1,907 * less than 0.5% Ref: D2

Thoughts on Dealing with the Financial Crisis • The Number 1 suggestion for dealing effectively with the financial crisis is to look for cost-savings & cost efficiencies – closing unprofitable areas, salary reductions and job cuts all seen as effective quick wins • Secondary suggestions were to focus internally: be more competitive, encourage staff to be part of the business and take an opportunity to reorganize the company to work more effectively Total PAIP PAIB % % % Cost reductions/Cost controls Focus on customer service/competitiveness Encourage & motivate staff Review & reorganize company structure Review debt structure/increase cash holdings Look for investment opportunities Stay calm/don’t panic Strong leadership/fast action Mergers & Acquisitions Base: All CPAs 2,606 699 1,907 Ref: D3

Expected/Work Life Change Resulting from the Crisis Significantly higher than the other at 95% confidence level within subgroup • The greatest expected effect of the financial crisis for the Accountancy profession is greater financial pressure on companies and changes to employees remuneration packages • PAIP much more likely than PAIB to expect a reduction in working hours and work pressure Total PAIP PAIB % % % Greater financial pressure Changes of remuneration package Workload and work pressure lessening Reducing working hours and more free time Transfer to work in other offices in China Workload and work pressure increasing No change Increasing working hours Chance to be layoff Others (each less than 1%) Base: All CPAs 2,606 699 1,907 * less than 0.5% Ref: D6

Presented by : Winnie Cheung, Chief Executive Venue : Hong Kong Institute of CPAs Date : 23 July 2009