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FRC investigates Next Digital financial statements and audits
FRC investigates Next Digital financial statements and audits 18 August 2021 The FRC today announces the initiation of: (1) An enquiry into the financial statements of Next Digital Limited ( Next Digital ) for the year ended 31 March 2019 ( 2019 Annual Accounts ), year ended 31 March 2020 ( 2020 Annual Accounts ) and six months to 30 September 2020 ( 2021 Interim Accounts ); (2) An investigation into the audit of the 2019 Annual Accounts by Deloitte Touche Tohmatsu ( Deloitte ); and (3) An investigation into the audit of the 2020 Annual Accounts by CCTH CPA Limited ( CCTH ). ... The investigation into Deloitte’s audit of the 2019 Annual Accounts will address their audit work on management’s impairment assessments and the appropriateness of the resulting impairment provisions in those financial statements. ... The investigation into CCTH’s audit of the 2020 Annual Accounts will address their audit work on management’s impairment assessments and the appropriateness of the resulting impairment provisions in those financial statements.
Press statement on cross-border collaboration on audit regulation among PRC’s Ministry of Finance, China Securities Regulatory Commission and the Public Company Accounting Oversight Board
Press statement on cross-border collaboration on audit regulation among PRC’s Ministry of Finance, China Securities Regulatory Commission and the Public Company Accounting Oversight Board 26 August 2022 Financial Reporting Council (FRC) notes that the PRC’s Ministry of Finance (MoF), China Securities Regulatory Commission (CSRC) and the Public Company Accounting Oversight Board (PCAOB) have reached an agreement on cross-border collaboration on audit regulation (“cross-border collaboration”). As the independent auditor regulator of Hong Kong acting in the public interest, FRC has a statutory duty to improve the quality of audit reports of Hong Kong audit firms so as to protect investor interest and help promote public trust in the audit process and investor confidence in Hong Kong and other global capital markets.
Maintaining the Quality of Cross-Border Audit Services
Maintaining the Quality of Cross-Border Audit Services 13 September 2024 The Accounting and Financial Reporting Council ( AFRC ) has been closely collaborating with the Supervision and Evaluation Bureau of the Ministry of Finance of the People’s Republic of China ( MoF ) in maintaining the standards and quality of cross-border audit services. In an announcement published today, the MoF has imposed administrative sanctions against Mainland audit firm PricewaterhouseCoopers Zhong Tian LLP for its serious infractions in the audit work on Hengda Real Estate Group Co Ltd ( Hengda ). ... Maintaining a high level of audit quality remains the AFRC’s foremost priority.
Regulatory Collaboration Enhances Effectiveness in Audit Regulation
Regulatory Collaboration Enhances Effectiveness in Audit Regulation 2 August 2024 Recent cross-border regulatory collaboration between the Accounting and Financial Reporting Council ( AFRC ) and the Supervision and Evaluation Bureau of the Ministry of Finance of the People’s Republic of China ( MoF ) has led to the detection of contravention of Mainland laws and regulations by a Hong Kong audit firm and followup regulatory actions by the MoF. In an announcement published today, the MoF has found that between 2022 and 2023, in respect of the annual audits of 5 Mainland enterprises listed in Hong Kong, Elite Partners CPA Limited, a Hong Kong registered PIE auditor, failed to comply with various reporting obligations under the Mainland’s “Interim Provisions on Accounting Firms’ Provision of Auditing Services for the Overseas Listing of Enterprises in Mainland China” ( Interim Provisions ) which have, since July 2015, governed the provision of audit services in the Mainland by non-Mainland (including Hong Kong) audit firms and their audit quality. ... The AFRC will adopt a coordinated approach with the MoF in strengthening the supervision and management of cross-border audit services and Hong Kong audit firms’ compliance with the relevant regulatory requirements including reporting obligations, cooperation with Mainland audit firms and the safekeeping of audit working papers under the Interim Provisions and other legislation, as announced by the MoF today.
AFRC highlights the importance of continuous professional development in ensuring audit quality and managing talent
AFRC highlights the importance of continuous professional development in ensuring audit quality and managing talent 8 January 2024 The Accounting and Financial Reporting Council ( AFRC ) today publishes an article titled Continuing Professional Development as a Key to Improving Audit Quality in Hong Kong to highlight the importance of continuing professional development ( CPD ) in ensuring audit quality and improving staff retention. The article, referencing relevant empirical research and analysing the current trends in the accounting profession, highlights the link between CPD and audit quality in the context of the need for auditors to acquire new skills and the ongoing transformation of the audit profession. ... Such deficiencies adversely impact firms’ ability to deliver quality audits and negatively affect staff morale.
FRC Investigates Victory City Financial Statements and Deloitte Audit
FRC Investigates Victory City Financial Statements and Deloitte Audit 19 March 2021 The FRC today announces the initiation of: (i) An enquiry into the financial statements of Victory City International Holdings Limited ( Victory City ) for the year to 31 March 2020 ( Annual Accounts ) and six months to 30 September 2020 ( Interim Accounts ); and (ii) An investigation into the audit of the Annual Accounts by Deloitte Touche Tohmatsu ( Deloitte ). ... Deloitte was the auditor of the Victory City Annual Accounts and expressed an unmodified audit opinion on them. Deloitte also expressed an unmodified review conclusion on the Interim Accounts. ... The FRC has initiated the enquiry into the Annual Accounts and Interim Accounts and the investigation into the audit of the Annual Accounts, taking into account that trading in Victory City’s shares is continuing, because it is in the interest of the shareholders of Victory City and of the investing public to address public questions and uncertainty about: Whether and if so to what extent the Annual Accounts and Interim Accounts are materially misstated with respect to unrecorded borrowings; and Whether the audit of the Annual Accounts has been conducted in accordance with the relevant auditing standards.
AFRC calls on auditors and audit committees to strengthen independence safeguards around procurement and purchases from audit clients
AFRC calls on auditors and audit committees to strengthen independence safeguards around procurement and purchases from audit clients 4 October 2024 The AFRC has today published an article titled Safeguarding Auditor Independence: Concerns Surrounding Procurement and Purchases from Audit Clients . ... Upholding auditor independence goes beyond just following procedures and compliance; it necessitates committed efforts from both audit firms and audit committees. ... Audit firms should actively identify and mitigate independence threats from procurement and purchases from audit clients.
AFRC reprimands PricewaterhouseCoopers and two others for multiple audit deficiencies and imposes fines totalling HK$1.6 million
AFRC reprimands PricewaterhouseCoopers and two others for multiple audit deficiencies and imposes fines totalling HK$1.6 million 16 October 2025 The Accounting and Financial Reporting Council ( AFRC ) has sanctioned the following PIE audit firm and two individuals who held partner roles during the relevant audits for multiple audit deficiencies related to revenue recognition involving a Hong Kong listed company, Dynasty Fine Wines Group Limited ( Company ) 1 and its subsidiaries (together, Group ), for the years ended 31 December 2010 and 31 December 2011 ( 2010 Audit and 2011 Audit respectively): PricewaterhouseCoopers ( PwC ); 2 Mr Cheng Kwong On ( Cheng ), 3 engagement partner for the 2010 and 2011 Audits (together with PwC, Auditor ); and Mr Kong Ling Yin, Raymond ( Kong ), 4 engagement quality control reviewer for the 2010 and 2011 Audits. ... In both years, the Auditor performed deficient audit work on revenue recognition and failed to obtain sufficient appropriate audit evidence of the Group’s recorded revenues, resulting in the incorrect issuance of an unmodified audit opinion. ... We have seen multiple cases involving auditors’ failures to obtain sufficient appropriate audit evidence in this critical aspect, often resulting from poor audit planning and inadequate risk assessment, and deficiencies in the design or execution of audit procedures.