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AFRC imposes HK$300 million fine and six-month practice limitation on PricewaterhouseCoopers and HK$10 million in fines on its two former registered responsible persons over the Evergrande Audits
It conducted each of the Evergrande Audits and expressed unmodified audit opinions on the consolidated financial statements. ... Following investigations and relevant enquiries, the AFRC found that there were numerous serious audit deficiencies by the Auditor 3 in the Evergrande Audits, particularly the Evergrande Group Audits. ... Among these, the audit deficiencies in the Evergrande Group Audits were particularly egregious.
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 for the year ended 31 March 2015. ... The investigation revealed that the auditor and the engagement partner failed to properly perform the relevant audit, 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 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 fully comply with the relevant provisions of HKSA 220 (Clarified) Quality Control for an Audit of Financial Statements .
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 December 2014. ... The investigation revealed that the auditor and the engagement partner failed to properly perform the relevant audit, 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 and HKSA 500 (Clarified) Audit Evidence . 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 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 2015. ... The investigation revealed that the auditor and the engagement partner failed to perform the relevant audit, in relation to the Option, 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 500 (Clarified) Audit Evidence ; HKSA 540 (Clarified) Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures and HKSA 550 (Clarified) Related Parties . 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 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 2014 ( the 2014 Financial Statements ). ... The investigation revealed that the auditor and the engagement partner failed to 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 ) 200 (Clarified) Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Hong Kong Standards on Auditing , HKSA 300 (Clarified) Planning an Audit of Financial Statements , HKSA 330 (Clarified) The Auditor’s Responses to Assessed Risks , 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 Quality Control for an Audit of Financial Statements in relation to the engagement quality control review.
FRC issues its Annual Inspection Report
We continue to urge audit committee members of listed entities to think through our findings on audit quality in this report and to challenge their auditor as to whether they have appropriately addressed these issues and how in their ongoing audits.” ... The results demonstrate that the quality of the audits performed by these firms, which audit 90% of the market capitalisation of listed entities, needs to be raised. ... In 57% (21 out of 37) of audits inspected, deficiencies in testing journal entries were identified. 32% (12 out of 37) of the audits inspected showed deficiencies relating to Key Audit Matters (KAMs).
FRC issues Overview of the Market for Listed Entity Audits in Hong Kong
FRC issues Overview of the Market for Listed Entity Audits in Hong Kong 11 March 2021 Financial Reporting Council (FRC) today issues its first policy and governance report on the Overview of the Market for Listed Entity Audits in Hong Kong (the “Market Report”), which provides high level insights into how competition operates in the market for listed entity audits in Hong Kong (the “Market”). ... Apart from our statutory functions, the FRC conducts research and studies that are conducive to enhancing audit quality, audit independence and the healthy development of the market for listed entity audits in Hong Kong.” ... The report highlights factors that may indicate risks to audit quality that audit firms, listed entities and audit committees should care about.
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 March 2014. ... In particular, the investigation revealed that the auditor and the engagement partner failed to perform the relevant audit, in relation to the convertible note, in accordance with 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 510 (Clarified) Initial Audit Engagements – Opening Balances . 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 .