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Inspection
Inspection Overview The AFRC performs inspections to promote audit quality and oversee compliance with anti-money laundering and counter-terrorist financing regulations. Under the Accounting and Financial Reporting Council Ordinance (AFRCO), the AFRC has the power to direct an inspector to carry out an inspection in relation to: PIE engagements completed by a PIE auditor A practice unit For an understanding of the legal framework under the AFRCO and the inspection function of the AFRC, please refer to the details set out in the following policy statements: Policy Statement for Inspection of PIE Auditors with respect to PIE Engagements Policy Statement for Inspection of Practice Units with respect to engagements other than PIE Engagements Policy Statement for Inspection of Practice Units with respect to compliance with Anti-Money Laundering and Counter-Terrorist Financing Requirements Outline of the AFRC’s Inspection Process for PIE Auditors Outline of the AFRC’s Inspection Process for practice units that are not PIE auditors Featured 【Report Digest】Navigating the 2025 Year-End Audit - Key Reminders for Auditors In October 2025, the AFRC released the report “Audit Focus: 2025 Year-end Audit”, providing essential reminders for auditors to ensure the quality of year-end audits. 【AFRC Connect】EP1: How Important is Audit Risk Assessment? Risk assessment is the cornerstone of effective audit planning, which underpins quality audits.
FRC Press Statement on New Inspection Regime of the Companies Register
Under both Hong Kong and international standards on auditing, in performing an audit engagement including one for a listed entity, an auditor must obtain sufficient appropriate audit evidence to reduce audit risk to an acceptably low level, thereby enabling the auditor to draw a reasonable conclusion on which to base the auditor’s opinion. Whether sufficient appropriate audit evidence has been obtained for the auditor to do so is a matter of professional judgment. In any audit process concerning transactions with directors, it should not be assumed that a director’s URA and IDN alone would be sufficient appropriate audit evidence, and an auditor must take note of other corroborative or contradictory information before reaching an audit conclusion.
Press Releases
Press Releases Navigating economic uncertainty: Insights for 2024 year-end audits 9 October 2024 AFRC calls on auditors and audit committees to strengthen independence safeguards around procurement and purchases from audit clients 4 October 2024 AFRC 2024 Oversight Report identifies improvement areas for the HKICPA to support the development of the accounting profession 16 September 2024 Maintaining the Quality of Cross-Border Audit Services 13 September 2024 AFRC welcomes the Government’s appointment and reappointment of Non-Executive Directors 12 September 2024 AFRC reprimands Ting Ho Kwan & Chan and three others for serious audit breaches and imposes fines over HK$1.7 million 9 September 2024
Associate Director / Manager (Policy Research and Development)
Policy, Registration and Oversight Associate Director / Manager (Policy Research and Development) Responsibilities Track and analyse the audit and financial reporting environment in Hong Kong and the Chinese Mainland, including the structure and dynamics of the PIE audit market, the audit workforce, and cross-border audit linkages. ... Develop AFRC policy positions on audit quality and emerging topics including AI in audit, virtual assets and other novel themes. ... Strong interest in audit, financial reporting and capital markets, with openness to adopting modern analytical tools including AI.
AFRC reprimands Centurion ZD CPA Limited, Chan Kam Fuk and Ling Chun Kwok for serious breaches of professional standards, imposes pecuniary penalties totalling HK$700,000 and cancels the practising certificate of Chan Kam Fuk for 12 months
Centurion and Chan identified five key audit matters in the Audit Engagement, including (i) the Company’s accounting for the business combination (i.e. the Acquisition) and (ii) the Impairment Assessment. ... An engagement partner is responsible for the overall quality of the audit engagement, including taking responsibility for the performance of the audit engagement in compliance with professional standards. ... As set out in the Statement of Disciplinary Action , the AFRC found multiple deficiencies in the audit relating to the two key audit matters.
Press Releases
Press Releases AFRC welcomes and supports the Government consultation on proposal for legislation under Article 23 of the Basic Law 5 February 2024 AFRC highlights the importance of continuous professional development in ensuring audit quality and managing talent 8 January 2024 Audit Focus for 2023 year-end audit 22 December 2023 AFRC starts inspecting engagements involving audit working papers located on the Mainland 15 December 2023 AFRC expects active cooperation and full compliance by PIE auditors with the AFRC Ordinance and their self-reporting of critical incidents in a timely manner 7 December 2023 AFRC publishes Inspection Insights and an explanatory video on the inspection of non-PIE practice units to drive continuous improvements in audit quality 30 November 2023
FAQs - Inspection
PIE auditors that audit more than 100 PIEs will be inspected annually. ... Yes. The audit working papers of Hong Kong audit firms located in Chinese Mainland are subject to the AFRC’s inspection. ... We use Audit Quality Rating (AQR) to describe our overall assessment of the quality of the audit work we inspected.
AFRC Acts on PricewaterhouseCoopers Whistle-blower Allegations
The report expressed significant concerns regarding potential alleged deficiencies in PricewaterhouseCoopers’ systems of quality management and the quality of the audits of China Evergrande Group. The major allegations include the following claims: Failure to establish and maintain an effective system of quality control to ensure audit quality and compliance with professional standards and applicable legal and regulatory requirements; Failure to adhere to professional standards in respect of the acceptance and continuance of its client relationship with China Evergrande Group for the provision of audits and other professional services; Failure to assign appropriate personnel to key positions responsible for the firm’s system of quality management which might have compromised the monitoring functions of the firm; and Failure to perform adequate audit procedures for the audits of China Evergrande Group. Given the gravity of these allegations and the necessity to safeguard the interests of the investing public, the broader public interest in the auditing of listed entities, and to maintain public confidence in the integrity of the accounting profession, the AFRC is obliged to initiate an investigation.