The AFRC can discipline:
- PIE auditors registered or recognized under Part 3 of the AFRCO;
- registered responsible persons; and
- professional persons (i.e. CPAs and practice units).
See also Discipline - Overview.
PIE auditor and registered responsible person
Disciplinary action may be taken against a PIE auditor or registered responsible person who has committed FR misconduct. FR misconduct in this context includes:
- a contravention of a provision of the AFRCO;
- a contravention of a condition imposed in relation to the registration or recognition of the PIE auditor concerned;
- a contravention of a requirement imposed on a PIE auditor or registered responsible person under the AFRCO;
- conduct in relation to a PIE engagement which is or is likely to be prejudicial to the interest of the investing public or the public interest; or
- a “practice irregularity” as defined under section 4 of the AFRCO.
Additional situations in which the AFRC may impose sanctions on PIE auditors and registered responsible persons generally relate to insolvency events, the conviction of an offence that impugns the fitness and properness of the relevant persons and mental incapacity.
Professional person (i.e. CPAs and practice units)
Disciplinary action may be taken against a professional person guilty of CPA misconduct. CPA misconduct in this context includes situations where the professional person:
- does an act or makes an omission that amounts to a “professional irregularity” as defined under section 3B of the AFRCO;
- is convicted of an offence under section 21F or 31 of the AFRCO, which generally relates to a failure to properly comply with a requirement imposed by an FR inspector or FR investigator;
- is punished by the Court of First Instance under section 32(2)(b) or 45(2)(b) of the AFRCO for failing to comply with a requirement imposed by an FR inspector, FR investigator or enquirer or for being involved in the failure;
- (where the professional person is a CPA) is convicted of an offence under Part V (Perjury) of the Crimes Ordinance; or
- (where the professional person is a CPA) is convicted in Hong Kong or elsewhere of any offence involving dishonesty.
PIE auditor
The AFRC may impose, singly or in combination, the following sanctions on a PIE auditor:
- public or private reprimand;
- remedial action;
- pecuniary penalty;
- imposition of a condition on the registration or recognition;
- revocation or suspension of the registration or recognition; and
- prohibition from applying to be registered or recognized as a PIE auditor for a period of time.
Registered responsible person
The AFRC may impose, singly or in combination, the following sanctions on a registered responsible person:
- public or private reprimand;
- remedial action;
- pecuniary penalty; and
- removal of name from the list of registered responsible persons permanently or for a period of time.
Professional person (i.e. CPAs and practice units)
The AFRC may impose, singly or in combination, the following sanctions on a professional person:
- public or private reprimand;
- pecuniary penalty;
- revocation or suspension of the professional person’s registration;
- cancellation or non-issuance of a practising certificate; and
- investigation costs and expenses.
See also Disciplinary Sanctions.
Please refer to the Sanctions Policy for PIE Auditors and Registered Responsible Persons and Sanctions Policy for Professional Persons.
See also Disciplinary Sanctions.
PIE auditor and registered responsible person
The AFRC may order a PIE auditor or registered responsible person to pay a pecuniary penalty not exceeding the amount which is the greater of —
- HK$10,000,000; or
- three times the amount of the profit gained or loss avoided by the person as a result of FR misconduct.
Professional person (i.e. CPAs and practice units)
The AFRC may order a professional person to pay a pecuniary penalty not exceeding HK$500,000.
See also Disciplinary Sanctions.
Please refer to Disciplinary Process.
Disciplinary actions will normally be determined on the basis of written representations. However, if, in addition to written representations, the regulatee wishes to make oral representations, the regulatee may ask for a meeting with the AFRC at the same time as the regulatee files his or her or its written response to the NPDA. In this regard:
- the AFRC will consider reasonable requests for a meeting;
- when making a request, the regulatee should explain why oral representations, in addition to written representations already made, will assist the AFRC in its disciplinary decision-making, and the issues which the regulatee would like to address the AFRC on in the meeting; and
- the AFRC expects any oral representations to be limited as far as possible to matters which could not be adequately dealt with by way of written representations.
However, irrespective of whether the regulatee requests it, the AFRC may invite the regulatee to attend a meeting to clarify certain issues if the AFRC considers fairness in the circumstances requires it.
See also Disciplinary Process.
Yes, a regulatee may seek legal advice at any point in the process, which may include instructing legal advisers to make representations to the AFRC on their behalf.
No, the disciplinary process outlined in Disciplinary Process and Nos.6, 7 and 8 above is applicable to all regulatees.
The AFRC has the power to take disciplinary actions by consent if the AFRC considers it appropriate to do so in the interest of the investing public or in the public interest.
A regulatee may make a resolution proposal to the AFRC at any time before the issuance of a Decision Notice. Where a regulatee cooperates with the AFRC and reaches an early resolution, the AFRC may reduce the sanction(s) by up to a maximum of 30%.
Whether the AFRC will agree to enter into resolution negotiations depends on the facts and circumstances of each case. Unless otherwise agreed, all discussion about resolution proposals will be treated as “without prejudice”, meaning that neither the AFRC nor the regulatee may refer to or rely on those discussions in the disciplinary actions or subsequent legal proceedings.
For more information, please refer to the Guidance Note on Cooperation with the AFRC. See also Disciplinary Process.
If a regulatee does not apply to the Accounting and Financial Reporting Review Tribunal (Tribunal) for a review of the AFRC’s decision within 21 days (or such period as extended by the Tribunal), the decision will take effect on the day after the period expires.
If, before such period expires, a regulatee notifies the AFRC in writing that the regulatee will not make a review application, the AFRC’s decision will take effect on the day after the AFRC is so notified.
If a regulatee applies for a review within 21 days (or such period as extended by the Tribunal), the AFRC’s decision will not take effect until the Tribunal makes a final determination or the regulatee withdraws the review application.
Notwithstanding the above, if the AFRC considers it appropriate in the public interest to do so, it may specify any other day on which its decision is to take effect.
The AFRC must disclose to the public the material facts of the disciplinary case, the AFRC’s decision with reasons, and the disciplinary sanction imposed or action taken, unless the disclosure:
- relates to a private reprimand;
- may adversely affect any criminal proceedings before a court or magistrate; or
- in the AFRC’s opinion, is not in the interest of the investing public or in the public interest.
All press releases on the AFRC’s disciplinary actions are made available on Disciplinary Cases.
If a regulatee is ordered to pay a pecuniary penalty, the penalty must be paid to the AFRC by the deadline specified in the Decision Notice, by cheque made payable to the “Accounting and Financial Reporting Council” and delivered to:
Accounting and Financial Reporting Council
10/F, Two Taikoo Place
979 King's Road, Quarry Bay
Hong Kong
Please quote the AFRC’s case reference stated in the AFRC’s correspondence relating to the matter.