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FRC Initiates Investigation into Audits of Convoy for 2017 to 2019
FRC Initiates Investigation into Audits of Convoy for 2017 to 2019 23 February 2021 The FRC today initiated an investigation into the audits of the financial statements of Convoy Global Holdings Limited ( Convoy ) for 2017, 2018 and 2019. ... An auditor is not permitted to qualify the audit opinion if the unknown effects of such exceptions could be both material and pervasive. ... Maintaining justified public confidence in the quality of listed entity audits requires transparency in relation to our regulatory actions in such circumstances.
Completed investigation
Completed investigation 26 September 2019 On 20 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 March 2014. ... In particular, it was found that the auditor and the engagement partner were in breach of Hong Kong Standard on Auditing ( HKSA ) 500 (Clarified) Audit Evidence and HKSA 540 (Clarified) Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures . It was also found that the engagement quality control reviewer of the relevant audit failed to comply with the relevant provisions of HKSA 220 (Clarified) Quality Control for an Audit of Financial Statements in relation to the quality control review .
Completed investigation
Completed investigation 15 March 2019 On 13 March 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 2014. ... The investigation revealed that the auditor and the engagement partner failed to plan and perform the relevant audit, in relation to the above matters, in accordance with the relevant provisions of HKSA 200 (Clarified) Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Hong Kong Standards on Auditing ; HKSA 220 (Clarified) Quality Control for an Audit of Financial Statements ; HKSA 300 (Clarified) Planning an Audit of Financial Statement s; HKSA 315 (Revised) Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment ; HKSA 330 (Clarified) The Auditor’s Responses to Assessed Risks ; HKSA 500 (Clarified) Audit Evidence ; and HKSA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures . The failure to comply with the above auditing standards also demonstrated that the engagement partner failed to adequately direct and supervise the audit team and adequately review the performance of the audit in accordance with the relevant provisions of HKSA 220.
Completed investigation
Completed investigation 14 April 2020 On 7 April 2020, the FRC adopted the investigation report on the audit of the consolidated financial statements of a listed entity and its subsidiaries ( the Group ) for the year ended 30 June 2012. ... The investigation revealed that the auditor and the engagement partner failed to perform the relevant audit, in relation to the Group’s investments in associates, 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 500 (Clarified) Audit Evidence , and HKSA 700 (Clarified) Forming an Opinion and Reporting on Financial Statements. 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 (Clarified) Quality Control for an Audit of Financial Statements .
Completed investigation
Completed investigation 18 January 2019 On 16 January 2019, the FRC adopted the investigation report on the audit of the consolidated financial statements of a listed entity for the year ended 31 March 2012. ... In particular, it was found that the auditor and the engagement partner were in breach of Hong Kong Standard on Auditing ( HKSA ) 500 (Clarified) Audit Evidence and HKSA 540 (Clarified) Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures . It was also found that the engagement quality control reviewer of the relevant audit failed to comply with the relevant provisions of HKSA 220 (Clarified) Quality Control for an Audit of Financial Statements in relation to the quality control review .
Completed investigation
Completed investigation 7 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 31 March 2017. ... The investigation revealed that the auditor and the engagement partner failed to properly perform the relevant audit in relation to the estimation of the recoverable amount of the interest in an associate 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 500 (Clarified) Audit Evidence , and HKSA 540 (Clarified) Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures . It was also found that the engagement quality control reviewer of the relevant audit failed to properly perform the quality control review in accordance with the relevant provisions of HKSA 220 (Clarified) Quality Control for an Audit of Financial Statements .
Completed investigation
Completed investigation 8 July 2019 On 3 July 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 2015. ... The investigation revealed that the auditor and the engagement partner failed to properly plan and perform the relevant audit, in relation to the above matters, 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 315 (Revised) Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment , 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 , HKSA 620 Using the Work of an Auditor’s Expert and HKSA 700 Forming an Opinion and Reporting on Financial Statements . 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 .
FRC issues Guidelines for Effective Audit Committee and Report on Assessment of the HKICPA’s Performance of the Specified Functions
Highlights of the Guidelines The Guidelines highlight two key factors that audit committees should consider in selecting and appointing auditors – audit quality and audit fees. ... They should also challenge audit firms charging lower audit fees compared to the incumbent auditor or competing firms and be satisfied that the audit firm does not intend to rely on obtaining additional or higher margin non-audit services to subsidise their costs of the audit. ... Therefore, the FRC recommends that audit committees consider conducting audit tenders periodically.