OVERVIEW
False accounting covers more than changing figures in formal books. It can include destroying, hiding or altering an account or accounting document, inserting a materially misleading entry, omitting a material fact, or knowingly producing or using materially misleading accounting material.
The prosecution must connect the act to dishonesty and a view to gain or intent to cause loss. An innocent mistake, immaterial inaccuracy or negligent bookkeeping is not by itself false accounting.
STATUTORY PROVISIONS
section 19 of the Theft Ordinance (Cap. 210)
The relevant part of the current statutory provision states:
Section 19(1) — False accounting
Where a person dishonestly, with a view to gain for himself or another or with intent to cause loss to another—(a) destroys, defaces, conceals or falsifies any account or any record or document made or required for any accounting purpose; or (b) in furnishing information for any purpose produces or makes use of any account, or any such record or document as aforesaid, which to his knowledge is or may be misleading, false or deceptive in a material particular, he shall be guilty of an offence.
Section 19(2) — What amounts to falsifying
A person who makes or concurs in making in an account or other document an entry which is or may be misleading, false or deceptive in a material particular, or who omits or concurs in omitting a material particular from an account or other document, is to be treated as falsifying the account or document.
Application
What the provision means in practice.
The defendant dealt with an account or accounting record in one of the ways prohibited by section 19, or knowingly produced or used one that was or might be materially misleading, false or deceptive.
The conduct must be dishonest and performed with a view to gain for any person or with intent to cause loss to another. The use limb also requires the statutory knowledge.
ELEMENTS OF THE OFFENCE
Accounting material
There was an account, record or document made or required for an accounting purpose.
A prohibited act
The defendant destroyed, defaced, concealed or falsified it, or produced or used it when furnishing information.
Material falsity or deception
For an entry, omission or use case, the misleading, false or deceptive particular must be material.
Dishonesty and financial purpose
The defendant acted dishonestly with a view to gain for themselves or another, or with intent to cause loss to another.
DOCUMENTS AND MATERIALITY
The first category comprises documents that are inherently made or required for accounting purposes, including invoices, receipts, ledgers and journals. Other records—such as claim forms or quotations—may also qualify where the prosecution proves that they were made or required for an accounting purpose.
A material particular is one that matters to the purpose for which the document was created and used. Section 19(2) treats both inserting a materially misleading entry and omitting a material particular as falsification.
- Fictitious transactions: Creating invoices for transactions that never occurred may amount to false accounting.
- False valuation: Recording receivables or assets at values known to be false may qualify.
- Accounting purpose versus falsity: The document must have the required accounting character, while the false or omitted particular must be material to the document's purpose.
Penalty
Maximum Penalty
On conviction upon indictment, the maximum sentence is 10 years' imprisonment.
HOW MCS CAN ASSIST
Advice and representation
MCS can assess the charge, the statutory elements and the prosecution evidence; advise on interview, plea, trial and sentence; and identify any defence or evidential issue available on the facts.