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FRC finds that auditor failed to appropriately address an identified misstatement and to appropriately exercise professional judgement in determining overall materiality
Hong Kong Standard on Auditing (HKSA) 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Hong Kong Standards on Auditing prescribes the application of a competent understanding of the applicable financial reporting framework in the exercise of professional judgement by an auditor. ... HKSA 320 Materiality in Planning and Performing an Audit deals with the auditor’s responsibility to apply the concept of materiality in planning and performing an audit of financial statements. ... Our purpose in reporting publicly The FRC announces the adoption of reports on audit investigations and enquiries into financial reporting of listed entities: (a) to promote continuous improvement in the quality of auditing and financial reporting by all our regulatees; (b) to encourage audit committee members to consider the implications of our findings for the financial reporting and audits of their own listed entities; and (c) to maintain public confidence in the system for independent auditor regulation.
Events
AFRC x Cyberport: AI Applications for the Accounting & Audit Profession Regional Regulatory Forum 2025 Regional Regulatory Forum 2024 AFRC x Cyberport: AI Applications for the Accounting & Audit Profession Explore More Regional Regulatory Forum 2025 Explore More Regional Regulatory Forum 2024 Explore More
FRC completes second investigation with working papers obtained under MoU with the Supervision and Evaluation Bureau of the PRC Ministry of Finance
Deficiency in the audit The Auditor failed to identify the above material misstatement and therefore issued an inappropriate audit opinion. ... Hong Kong Standard on Auditing (HKSA) 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Hong Kong Standards on Auditing prescribes the application of a competent understanding of the applicable financial reporting framework in the exercise of professional judgement by an auditor. ... Our purpose in reporting publicly The FRC announces the adoption of reports on audit investigations and enquiries into financial reporting of listed entities: (a) to promote continuous improvement in the quality of auditing and financial reporting by all our regulatees; (b) to encourage audit committee members to consider the implications of our findings for the financial reporting and audits of their own listed entities; and (c) to maintain public confidence in the system for independent auditor regulation.
FRC concludes that a listed entity failed to recognise an impairment loss on equity investments and its auditor failed to identify the misstatements
The Listed Entity also failed to provide disclosure about the judgement it made in determining the existence of objective evidence in the 2016 Financial Statements in accordance with HKAS 1 and HKFRS 7 (see below). The audit quality failure of the Auditor The Auditor failed to identify the above material misstatement and therefore issued an inappropriate unmodified audit opinion. ... Hong Kong Standard on Auditing (HKSA) 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Hong Kong Standards on Auditing prescribes the application of a competent understanding of the applicable financial reporting framework in the exercise of professional judgement by an auditor. ... Our purpose in reporting publicly The FRC announces the adoption of reports on audit investigations and enquiries into financial reporting of listed entities: to promote continuous improvement in the quality of auditing and financial reporting by all our regulatees; to encourage audit committee members to consider the implications of our findings for the financial reporting and audits of their own listed entities; and to maintain public confidence in the system for independent auditor regulation.
FRC concludes that a listed entity failed to properly account for the interests in two investees and its auditor failed to identify the misstatements
Under the transitional provisions of the amended FRC Ordinance, since the relevant audits were completed before 1 October 2019, the investigation report has been referred to the Hong Kong Institute of Certified Public Accountants to determine if any disciplinary actions are warranted. ... As a result of the above failures, the Auditor issued an inappropriate unmodified audit opinion on each of the 2013 Financial Statements and the 2014 Financial Statements. ... Our purpose in reporting publicly The FRC announces the adoption of reports on audit investigations and enquiries into financial reporting of listed entities: (a) to promote continuous improvement in the quality of auditing and financial reporting by all our regulatees; (b) to encourage audit committee members to consider the implications of our findings for the financial reporting and audits of their own listed entities; and (c) to maintain public confidence in the system for independent auditor regulation.
FRC Investigates Going Concern Reporting of China Evergrande
FRC Investigates Going Concern Reporting of China Evergrande 15 October 2021 The FRC has today initiated: (1) An enquiry into the financial statements of China Evergrande Group ( China Evergrande ) for both the year ended 31 December 2020 ( 2020 Annual Accounts ) and the six months ended 30 June 2021 ( 2021 Interim Accounts ); and (2) An investigation of the audit carried out by PricewaterhouseCoopers ( PwC ) on the 2020 Annual Accounts ( 2020 Audit ). ... We also received a complaint from a member of the public on these matters in relation to the 2020 Annual Accounts and 2020 Audit. 2020 Annual Accounts In the 2020 Annual Accounts, China Evergrande referred to: (i). ... Made no explicit statement in the 2020 Annual Accounts as to whether material going concern uncertainties existed before or after the effects of implementing the mitigating plans. 2020 Audit PwC expressed an unmodified audit opinion in its auditor’s report on the 2020 Annual Accounts but made no reference to going concern material uncertainties. 2021 Interim Accounts In the 2021 Interim Accounts, China Evergrande: (i).
FRC finds that an auditor failed to obtain the evidence needed to evaluate the measurement and impairment assessment of goodwill arising from an acquisition
Our purpose in reporting publicly The FRC announces the adoption of reports on audit investigations and enquiries into financial reporting of listed entities: (a) to promote continuous improvement in the quality of auditing and financial reporting by all our regulatees; (b) to encourage audit committee members to consider the implications of our findings for the financial reporting and audits of their own listed entities; and (c) to maintain public confidence in the system for independent auditor regulation. ... Hong Kong Standard on Auditing (HKSA) 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Hong Kong Standards on Auditing prescribes the application of a competent understanding of the applicable financial reporting framework in the exercise of professional judgement by an auditor. HKSA 500 (Clarified) Audit Evidence explains what constitutes audit evidence in an audit of financial statements, and deals with the auditor's responsibility to design and perform audit procedures to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor's opinion.
Reports
Reports Policy and Governance Reminder to PIE auditors: Be Prepared for Undertaking PIE Engagements Audit Quality Management System 28 June 2024 Policy and Governance Setting and Reinforcing Tone at the Top to Achieve Quality Audits Audit Corporate Governance Quality Management System 27 June 2024 Policy and Governance Roundtable Discussion on Audit Quality and Climate-integrated Audits in Hong Kong Audit Auditor Changes Corporate Governance Financial Reporting Sustainability Assurance 13 June 2024 Policy and Governance The Importance of Audit Documentation Integrity Audit Quality Management System 29 May 2024 Policy and Governance Report on the Analysis of the Public Interest Entity Audit Market in Hong Kong Audit Corporate Governance Financial Reporting Quality Management System Technology 27 March 2024 Policy and Governance Continuing Professional Development as a Key to Improving Audit Quality in Hong Kong Audit 8 January 2024 Inspection Audit Focus: 2023 Financial Year-end Audit Reminder Audit Corporate Governance Quality Management System 22 December 2023 Inspection Inspection Insights Audit Quality Management System 30 November 2023 Oversight 2023 Oversight Report on HKICPA’s Performance of Specified Functions Audit Financial Reporting 20 November 2023 Policy and Governance AFRC Addresses Concerns Surrounding Auditor Changes Audit Auditor Changes 28 September 2023 Investigation and Compliance 2023 Annual Investigation and Compliance Report Audit Financial Reporting 4 September 2023 Inspection Audit Focus: Effective Planning - The Key to High-Quality Audits Audit Corporate Governance 31 July 2023