FAQs - Local PIE Auditor

Under the AFRCO, only a practice unit registered with the AFRC as a registered PIE auditor under Division 2 of Part 3 of the AFRCO or an overseas auditor Recognized by the AFRC as a Recognized PIE auditor under Division 3 of Part 3 of the AFRCO may carry out PIE engagements. It is an offence for any person who is not a registered or Recognized PIE auditor to undertake or carry out any PIE engagement or hold out as a registered or Recognized PIE auditor.

Only a practice unit may apply to the AFRC for registration as a registered PIE auditor. Details registration criteria are set out in paragraph 3.2.1 of the AFRC’s "Guide for the Registration of PIE Auditors".

Applicants are required to complete and submit the application form “Application for the Registration of a PIE Auditor” (Form PIE-1) through the AFRC’s Online Application System, together with the application fee in the amount and way specified in the fee schedule published on the AFRC website.

The application form should be accompanied by the following supporting documents:

• the “Fit and Proper Declaration Form” (Form F&P) that is completed and signed by each nominated responsible person and other partners / directors of the practice unit, including an explanation where the answer to any of the questions set out in the form is “yes”; and
• where any nominated EQCR is not currently a CPA (practising):
  • the “Personal Details Form for a Non-CPA (Practising) Applying for Registration as an Engagement Quality Control Reviewer (“EQCR”)” (Form PIE-EQCR) that is completed and signed by the nominated EQCR;
  • a copy of the nominated EQCR’s identity document (for example, Hong Kong / China identity card or passport); and
  • a copy of his or her membership certificate issued by the accountancy body of which the nominated EQCR is a current member.

No, an applicant must be registered as a practice unit first before it can apply for the registration as a registered PIE auditor.
 

An engagement partner (“EP”) is a partner or other person authorized by a practice unit or a registered PIE auditor to be responsible for the PIE engagements carried out by the unit or auditor.

An engagement quality control reviewer (“EQCR”) is a person authorized by a practice unit or a registered PIE auditor to oversee the engagement quality control reviews carried out in relation to the PIE engagements carried out by the unit or auditor.

A quality control system responsible person (“QCSRP”) is a person authorized by a practice unit or a registered PIE auditor to be responsible for the quality control system of the unit or auditor.

To be registered as an EP, the person must be:

• where the applicant is a CPA (practising) practising accountancy in his or her own name – the applicant and a CPA (practising);
• where the applicant is a CPA firm – the sole practitioner, a partner or an authorized signatory of the CPA firm and a CPA (practising); or
• where the applicant is a corporate practice – a director of the corporate practice and a CPA (practising).

To be registered as an EQCR, the person must:

• be a certified public accountant¹ (“CPA”) or a member of an accountancy body between which and the HKICPA there is in force a recognition agreement²; and
• possess the required competence and capabilities, and appropriate authority, to enable him or her to perform the role in compliance with the "Hong Kong Standard on Quality Management 2 Engagement Quality Reviews" issued by the HKICPA.
   

Note:

¹ Certified public accountant means a person registered as a certified public accountant by virtue of section 22 of the Professional Accountants Ordinance (Cap. 50).

² Please refer to the list of accountancy bodies with which there is a recognition agreement in force between the accountancy body and the HKICPA. The list is available on the HKICPA website under the heading “Recognition of overseas bodies”.

To be registered as a QCSRP, the person must be:

• where the applicant is a CPA (practising) practising accountancy in his or her own 

name – the applicant and a CPA (practising);

• where the applicant is a CPA firm – the sole practitioner or a partner of the CPA firm and a CPA (practising); or
• where the applicant is a corporate practice – a director of the corporate practice and a CPA (practising).

In addition, the nominated QCSRP also needs to be the chief executive officer or a member of the managing board of partners of the practice unit, where the chief executive officer or the managing board of partners is responsible for implementing the general strategy and general management of the business of the practice unit.

Yes. Pursuant to section 20D and 20E of the AFRCO, a person must not carry out activity as an EP or EQCR of a PIE engagement unless the person is a registered EP or EQCR of the registered PIE auditor that undertakes the PIE engagement. It is an offence for a person to carry out any activity as an EP or an EQCR of a registered PIE auditor if the person is not respectively a registered EP or registered EQCR of the auditor.

Yes. A registered PIE auditor is required to have at least one person registered for each type of responsible persons and an applicant can nominate more than one person for each type of registered responsible persons.

Yes. A person may be nominated for one or more of the three roles (i.e. EP, EQCR or QCSRP). However, as the same person cannot act as both a registered EP and a registered EQCR in relation to the same PIE engagement, the applicant must nominate at least two different persons for registration as a registered EP and/or a registered EQCR.

Yes. The registered PIE auditor needs to ensure that person meets the requirements of an EQCR as explained in Q7 above and register him or her with the AFRC as a registered EQCR.

No. The same person cannot act as both a registered EP and a registered EQCR in relation to the same PIE engagement. Therefore, if the registered PIE auditor is a CPA (practising) practising in his/ her own name or a sole practitioner of a CPA firm/ corporate practice, it must register at least one person who is not the sole practitioner as the EQCR.

The AFRC may refuse the application if it is not satisfied that the nominated responsible person is a fit and proper person to be a CPA. If the AFRC considers that the he/she has fit and proper issue(s) that should be addressed, it may grant the application subject to any condition that the AFRC considers appropriate to impose, including but not limited to the completion of training in the form of relevant CPD programmes by the responsible person(s).

The AFRC will have regard to all relevant matters when determining whether to impose or amend a condition. These may include but not limited to:

• whether any issues of integrity, capability, competence or quality identified in past disciplinary records; if so, the nature, severity and frequency of the deficiencies; and
• whether any issues of capability, competence or quality resulted from the continued lack of PIE engagement over a certain period of time which need to be addressed.
   

The AFRC will generally focus on matters that are current and relevant, in particular disciplinary records resulted in the past 5 years and any uncompleted sanctions.

A registered PIE auditor must notify the AFRC if a registered responsible person of the auditor ceases to be a responsible person of the auditor within 14 days of the change. The notification should be made by completing and submitting the notification form “Cessation of Registration of Responsible Person of a Registered Public Interest Entity (“PIE”) Auditor” (Form PIE-4) to the AFRC. A person who fails to notify the AFRC as required without reasonable excuse commits an offence.

Yes. If a registered PIE auditor proposes to add the name of a person to its list of registered responsible persons, the auditor should first apply to the AFRC. This includes the addition of a new role for an existing registered responsible person.

A registered PIE auditor applying to add the name of a person to its list of registered responsible persons is required to complete and submit the application form “Application for Registration of Additional Responsible Person of a Registered Public Interest Entity (“PIE”) Auditor” (Form PIE-3) to the AFRC, together with the following supporting documents:

• the “Fit and Proper Declaration Form” (Form F&P) that is completed and signed by each nominated responsible person and other partners / directors of the practice unit, including an explanation where the answer to any of the questions set out in the form is “yes”; and
• where any nominated EQCR is not currently a CPA (practising):
  the “Personal Details Form for a Non-CPA (Practising) Applying for Registration as an Engagement Quality Control Reviewer (“EQCR”)” (Form PIE-EQCR) that is completed and signed by the nominated EQCR;
  • a copy of the nominated EQCR’s identity document (for example, Hong Kong / China identity card or passport); and
  • a copy of his or her membership certificate issued by the accountancy body of which the nominated EQCR is a current member.

When determining whether a person is fit and proper to be a CPA, the AFRC will have regard to the following matters:

• the person’s professional qualification, knowledge, skills and experience;
• the person’s reputation, character, reliability and integrity;
• the person’s financial status and solvency;
• whether any disciplinary action has been taken against the person under the AFRCO or the PA Ordinance; and
• whether the person has been convicted of any offence in Hong Kong or elsewhere.

The list above is not exhaustive. The AFRC will consider the fit and proper status of each person on a case-by-case basis, having regard to all relevant matters.

The AFRC maintains a register of registered PIE auditors (Hong Kong PIE auditors) and recognized PIE auditors (non-Hong Kong PIE auditors) on its website.

The following information is included in the register of registered PIE auditors:

• the full name of the auditor and each registered responsible person of the auditor;
• the business address of the auditor;
• the conditions imposed by the AFRC in relation to the registration of the auditor (including conditions relating to the registered responsible persons of the auditor), if any;
• the day on which the registration of the auditor expires;
• a record of:
  • the sanctions imposed or actions taken under Division 2 or 3 of Part 3B of the AFRCO (except a private reprimand); and
  • the orders made under section 35 of the Professional Accountants Ordinance (Cap.50) as in force before 1 October 2022
     

in relation to the auditor, or any registered responsible person of the auditor, within the last 5 years, if any.