Reactions were mixed when new regulations concerning IPO sponsors, proposed by the Securities and Futures Commission (SFC), took effect on October 1. Some lauded the strengthened guarantee that the revised rules give to investors. Others feared the deterrent effect of the tightened regulations on the growth of small and medium-sized enterprises looking to raise capital on the stock market.

One group that definitely welcomes the new rules, and the opportunities they present, is corporate investigators. Many rely on this group to do the "dirty work" of uncovering inventive attempts by aspiring IPO listers to mislead investors. The new rules are expected to spur an increase in demand for corporate-investigation services not just from IPO sponsors, but also from law firms and other parties that have an interest in an IPO being done properly.

Steve Vickers, CEO of Steve Vickers and Associates, has handled a large number of exercises involving pre-IPO investigative due diligence. He says the key feature of the rule changes is that there is now even more of an emphasis on comprehensive due diligence.

"There's a lot of emphasis on the Code of Conduct and the role of sponsors and their obligations, but the only thing with any solid teeth is the amendment to the existing Companies Ordinance, which now clearly states that sponsors have civil and criminal liability," he says.

While overall there seems to be a greater appreciation from investors that government regulators are stepping up anti-fraud efforts, there still seems to be a disconnection in terms of companies' compliance efforts meeting the increased enforcement.

Big Four accounting firm EY recently conducted a survey of 681 executives in Asia-Pacific on the subject. "Forty-eight per cent said their anti-fraud policies in place were good in theory, but didn't work well in practice," says Chris Fordham, managing director of fraud investigation and dispute services at EY.

Despite his growing team of technology specialists, former law-enforcement officers, people with legal training, and others with audit and consulting backgrounds, Fordham says he is still behind his headcount plans for Hong Kong and China.

"We're still recruiting heavily. It tends not to be not so much the qualifications of the individuals, but more the soft skills and general aptitude of the candidate that sparks our interest in them," he says.

Meanwhile, some mid-tier investigative firms are creating alliances to integrate their services and maximise their capabilities in providing comprehensive and cost-effective solutions. Such is the case of Verity Consulting and MAWSL Consulting, two relatively young firms with a steadily growing history of successful collaboration.

"We are looking for previous experience, but we also want fresh graduates that we can train," says Verity Consulting founder Kelvin Ko.

Maidie Ku, founding principal of MAWSL, says that there are many ways in which fraud can be conducted, with the result usually being someone getting some form of unauthorised privilege. "Employee fraud can be done internally, by embezzling company funds, or externally, by colluding with outside parties such as in procurement kickbacks," she says.

Other than a major in accounting, Ku is not finicky about the qualifications of the candidates which she recruits.

"I know some forensic accountants who are not really certified public accountants, but they have accounting knowledge," she says. "The main thing is getting the right experience and a lot of exposure to fraud, plus having professional scepticism and a detective mindset. It is possible to gain the right experience by getting into audit firms that offer this kind of service."