Financial Reporting Council welcomes the consultation conclusions on proposed rule changes relating to disclaimer or adverse audit opinion on issuer’s financial statements published by The Stock Exchange of Hong Kong Limited

The Financial Reporting Council (FRC) welcomes the consultation conclusions on the proposed rule changes relating to disclaimer or adverse audit opinion on issuer’s financial statements published by the The Stock Exchange of Hong Kong Limited (the Exchange) today.

The FRC firmly believes that high quality auditing by auditors and reliable financial reporting by issuers combined play a pivotal role in protecting investor’s interest. In response to the Consultation, the FRC expressed its full support of the Exchange’s objective of encouraging issuers to maintain appropriate and effective risk management and internal control systems, and of requiring issuers to act promptly to resolve audit issues with their auditors. This will in essence enhance the effectiveness of communication between listed issuers and their auditors.

Dr Kelvin Wong, Chairman of the FRC remarked, “The FRC is pleased to note from the consultation conclusions that the Exchange has considered, among others, our comments. We believe that the revised proposal by the Exchange will foster a constructive and proactive working relationship between PIE auditors and their clients where auditors can duly, fairly, and independently discharge their statutory duty in relation to financial reports prepared by the issuers. At the same time, listed issuers are encouraged to resolve audit issues on a timely basis.”

Ms Wincey Lam, Acting CEO of the FRC added, “It is encouraging to see that the financial regulatory environment of Hong Kong keeps improving. We believe that the quality of financial reporting of listed entities in Hong Kong would be further enhanced when the Financial Reporting Council (Amendment) Ordinance and the proposed amendments of the listing rules by the Exchange take effect.”