HK accountants issue AI governance framework for businesses
Hong Kong Institute of CPAs has published a report and practical guidance to help companies build robust AI and data governance frameworks. The report reviewed 124 Hang Seng Composite Large-Cap Index firms' annual reports for FY2025, finding 92 explicitly used AI. A five-step decision framework was
The Hong Kong Institute of Certified Public Accountants has published a report on artificial-intelligence application and governance, showing that companies are expanding AI use but tend to disclose only their AI applications rather than governance frameworks and procedures.
The report reviewed 2025 fiscal-year annual reports from 124 companies in the Hang Seng Composite Large-Cap Index. Of these, 92 explicitly stated they use AI, six said they use it partially, and 26 did not disclose any AI use. The most common application areas were improving operational and industrial processes, followed by enhancing productivity and corporate automation, product and service development, and customer service.
To help companies and the market identify and understand key considerations, the institute proposed an “AI/GenAI Data Use Decision Framework”. This classifies data and AI uses by practicality and risk across five steps: classifying data and defining proposed AI uses; checking for high- or medium-risk indicators; determining the risk level and selecting applicable use conditions; and connecting to the next tool.
Institute president Law Cheuk-kin said companies must treat AI governance as an important part of good corporate governance, based on solid data governance, effective controls and clear human oversight, to manage risks well. He expressed hope that the practical guidance and tools would help companies build sound AI and data governance frameworks, promoting a more sustainable AI application ecosystem in Hong Kong.
Law added that AI is suitable for large-scale analysis and repetitive tasks, but judgmental work still requires humans, and the guidance could serve as a reference for general commercial companies. Noting that AI develops rapidly and risks will keep rising, he said the institute would review the guidance in a timely manner.
Separately, the institute announced the winners of the 2026 Best Corporate Governance and ESG Awards. The judging panel gave 35 awards, with eight organisations winning for the first time, including one newly listed company. The panel also made several observations and suggestions for improvement, including enhancing disclosure of risk management and internal control effectiveness reviews; strengthening disclosure of board assessment methods, scope and findings; improving cybersecurity and AI governance disclosure; and increasing transparency of board member nomination policies and procedures at public-sector organisations.