Policy and Governance
The AFRC conducts research on policy issues relating to the quality of financial reporting and auditing. This includes obtaining and analysing market information, and monitoring local and international developments of professional standards for financial reporting, auditing and ethics. Such information provides broader insights for our risk assessments, which inform our monitoring activities (e.g. inspection and financial statements review programme) and the development of guidelines for the performance of key governance roles, in particular the audit committees who oversee the financial reporting processes.
The AFRC has issued the following guidelines and reports:
The report provides high level insights into the competitive landscape in the market for listed entity audits in Hong Kong. It includes an analysis of the size and competitive structure of the market, the relative significance of non-audit to audit services provided to listed entities by their auditors and how these factors have developed from 2010 to 2019.
While the auditor has primary responsibility for the quality of an audit, audit committees can help ensure audit quality through performing their various duties effectively. Those duties include being primarily responsible for making recommendations to the board on the appointment, reappointment and removal of auditors, to approve the remuneration and terms of engagement of the auditors, and on any questions of resignation or removal of the auditors.
The Guidelines provide specific and practical guidelines for audit committees to establish a robust process in addressing the above important areas.
The AFRC published the following articles in collaboration with the Investor and Financial Education Council, which is a strategic partner of the AFRC, to urge and help retail investors and the public to understand how to read financial statements in conjunction with the related auditor’s report:
