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Completed investigation
Completed investigation 12 September 2019 On 4 September 2019, the FRC adopted the investigation report on the audits of the consolidated financial statements of a listed entity for the years ended 30 April 2014 and 2015. ... The investigation revealed that the auditor and the engagement partner failed to properly perform the relevant audits, in relation to the above matters, in accordance with the relevant provisions of Hong Kong Standard on Auditing (HKSA) 200 (Clarified) Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Hong Kong Standards on Auditing , HKSA 260 (Clarified) Communication with Those Charged with Governance , HKSA 500 (Clarified) Audit Evidence , and HKSA 705 (Clarified) Modifications to the Opinion in the Independent Auditor's Report . It was also found that the engagement quality control reviewer of the relevant audits failed to fully comply with the relevant provisions of HKSA 220 (Clarified) Quality Control for an Audit of Financial Statements .
AFRC expects full compliance by auditors with relevant laws and regulations
It has come to the attention of the AFRC that in a recent decision notice, the Supervision and Evaluation Bureau of the Ministry of Finance of the People’s Republic of China has imposed a sanction on an individual certified public accountant in the Mainland for having accepted audit work from a Hong Kong PIE auditor in respect of certain audits of Mainland enterprises listed in Hong Kong on his own account rather than through the Mainland public accounting firm to which he belonged as required under Mainland law. Audit firms in Hong Kong are reminded that the fundamental principle of professional behaviour requires them to have a thorough understanding of, and strictly comply with, the applicable laws and regulations of any jurisdictions in which they practise or provide audit services, including those in the Mainland and all requirements under the “Interim Provisions on Accounting Firms' Provision of Auditing Services for the Overseas Listing of Enterprises in Mainland China” promulgated by the Ministry of Finance ( Interim Provisions ) which govern the provision of audit services by Hong Kong audit firms in respect of Mainland enterprises listed in Hong Kong. Under the Interim Provisions, a Hong Kong audit firm which has been engaged to perform an audit engagement of a Mainland enterprise listed in Hong Kong is required to enter into a cooperation agreement with a Mainland public accounting firm in respect of such audit services.
AFRC issues an open letter to express its growing concern over late auditor resignations
AFRC issues an open letter to express its growing concern over late auditor resignations 27 October 2022 The Accounting and Financial Reporting Council ( AFRC ) today issues an open letter to all public interest entity ( PIE ) auditors to express its growing concern over the surge in number of PIE auditors resigning just one month before or even after the end of the reporting period of a listed entity. Audit quality may be compromised by late auditor resignations because the incoming auditor will have limited time to plan and conduct a proper audit in order to meet the listed entity’s deadline to announce their audited results. ... In around 60% of these cases, the listed entity made a generic statement that the resignation was due to the outgoing auditor’s inability to agree the audit fee with the listed entity, and around 30% were due to unresolved audit issues. ... This will help ensure audit quality and protect the public interest.”
Completed investigation
Completed investigation 12 September 2019 On 4 September 2019, the FRC adopted the investigation report on the audit of the consolidated financial statements of a listed entity for the year ended 31 December 2013. ... The investigation revealed that the auditor and the engagement director failed to properly plan and/or perform the relevant audit, in relation to the above matters, in accordance with the relevant provisions of Hong Kong Standard on Auditing ( HKSA ) 330 The Auditor’s Responses to Assessed Risks; HKSA 500 Audit Evidence; HKSA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures ; and HKSA 620 Using the Work of an Auditor’s Expert . It was also found that the engagement quality control reviewer of the relevant audit failed to fully comply with the relevant provisions of HKSA 220 Quality Control for an Audit of Financial Statements in relation to the quality control review.
Completed investigation
Completed investigation 4 February 2020 On 4 February 2020, the FRC adopted the investigation report on the audit of the consolidated financial statements of a listed entity for the year ended 30 June 2015. The FRC found that the auditor and the engagement partner failed or neglected to observe, maintain or otherwise apply certain professional standards in the relevant audit in respect of the impairment assessment of the amount due to the listed entity from its subsidiary. The investigation revealed that the auditor and the engagement partner failed to properly perform the relevant impairment assessment in accordance with the relevant provisions of 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 , HKSA 500 Audit Evidence , and HKSA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures.
AFRC Reinforces Commitment to Financial Reporting Integrity in Hong Kong
Some unscrupulous practicing accountants are taking on large volumes of audit projects through intermediaries, indiscriminately signing audit reports and grossly disregarding audit quality and professional standards. ... While 'bogus' accountants may not be apparent, it is alarming that practicing accountants are signing off on audit projects indiscriminately without ensuring due diligence on audit quality. The quality and credibility of financial reporting are paramount, and these must not be compromised by audit firms that recklessly sign off on projects in massive volumes.”
Bogus Accountants
Hong Kong’s law may require audited accounts to be prepared under different circumstances. The most common is the requirement for a company to submit annual audited accounts for tax purposes. ... Who can provide audit services to the public?
AFRC reprimands and fines Forvis Mazars CPA Limited HK$1.4 million and Grant Thornton Hong Kong Limited HK$2.32 million for widespread and systemic failures to archive files on a timely basis
Accordingly, audit documentation is of paramount importance for audits of all companies – PIE or otherwise. It is not a purely administrative task. Archiving audit documentation on a timely basis is critical, as this ensures that audit documentation will not be improperly altered or tampered with after archiving, thereby preserving the integrity of audit documentation. ... Timely archiving of audit documentation is a fundamental duty of auditors and an essential element of audit quality.