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AFRC publishes global audit regulation study, reinforcing dedication to world‑class standards

AFRC publishes global audit regulation study, reinforcing dedication to world‑class standards 7 November 2025 The Accounting and Financial Reporting Council ( AFRC ) today releases a study titled “ Global Developments in Audit Regulation: Key Insights for Hong Kong ”. ... • Inspections: Emphasising firm culture and transparency There is a growing recognition among audit regulators that audit quality is influenced by firm culture and governance. ... Later in the same year, the US PCAOB published insights on firm culture and audit quality across six largest audit firms.

AFRC reprimands BDO Limited and two others for breaches of multiple auditing standards, imposes fines totalling HK$455,000 and gives directions for additional CPD

AFRC reprimands BDO Limited and two others for breaches of multiple auditing standards, imposes fines totalling HK$455,000 and gives directions for additional CPD 21 August 2025 The Accounting and Financial Reporting Council ( AFRC ) has sanctioned the following PIE auditor and two individuals for multiple breaches of auditing standards in relation to the audit of a former Hong Kong listed company, Vestate Group Holdings Limited (in Liquidation) ( Company ), 1 and its subsidiaries (collectively, Group ) for the year ended 31 March 2018 ( 2018 Audit ): BDO Limited (registration number: M0200) ( BDO ); Mr Alfred Lee ( Lee ), engagement partner for the 2018 Audit (together with BDO, Auditor ); and Mr Pak Tak Lun Amos ( Pak ), engagement quality control reviewer for the 2018 Audit. ... This case primarily involved deficient audit work on the impairment assessment of the Group’s point-of-sale and e-commerce payment processing business ( E-Business ) in the 2018 Audit. ... As a result, the AFRC determined that the Auditor had failed to properly carry out the 2018 Audit to obtain sufficient and appropriate audit evidence to support the reasonableness of the impairment assessment.

AFRC reprimands BOFA CPA Limited for improperly backdating audit working papers and imposes a pecuniary penalty

AFRC reprimands BOFA CPA Limited for improperly backdating audit working papers and imposes a pecuniary penalty 16 December 2025 The Accounting and Financial Reporting Council ( AFRC ) has sanctioned BOFA CPA Limited ( BOFA ) 1 for improperly backdating audit working papers in two audit engagements, amounting to CPA misconduct and FR misconduct. ... Among other issues identified during the inspection, the AFRC observed that the audit working papers for both audit engagements included audit programmes related to audit planning – specifically, risk assessment and audit strategy – that were sourced from the 2022 edition of the Audit Practice Manual issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ) in September 2022, after the respective audit report issuance and file assembly dates. ... It is undisputed that these audit programmes were created after the audit file assembly dates, but were backdated (and signed) to various dates prior to the issuance of the respective audit reports.

AFRC advocates healthy practices in auditor appointments and audit fee setting to safeguard public trust

As part of its ongoing efforts to ensure high quality of audit in Hong Kong, the AFRC sets out further steps needed to strengthen practices in auditor appointments and audit fee setting. ... This heightens the risk of biased audit opinions. The Code of Ethics therefore generally expects overdue audit fees to be fully settled before the audit opinion is issued. ... Scrutinise audit bids with unusually low fees.

AFRC urges auditors and audit committees to follow Guidance Notes on Change of Auditors

AFRC urges auditors and audit committees to follow Guidance Notes on Change of Auditors 28 September 2023 The Accounting and Financial Reporting Council ( AFRC ) has been closely monitoring the phenomenon of late auditor resignations and its adverse impact on audit quality. ... The AFRC urges auditors and audit committees of listed companies to remain vigilant about the remaining issues raised in the Paper and to follow the Guidance Notes so as to uphold audit quality. ... To help PIE auditors and audit committees navigate such situations, the AFRC publishes the Guidance Notes which articulate our expectations of PIE auditors and audit committees when changing auditors.

AFRC starts inspecting engagements involving audit working papers located on the Mainland

AFRC starts inspecting engagements involving audit working papers located on the Mainland 15 December 2023 The AFRC is pleased to announce that it has reached a consensus with the Bureau of Supervision and Evaluation ( SEB ) of the Ministry of Finance of the People’s Republic of China. Under the agreed mechanism, the SEB has assisted the AFRC in obtaining audit working papers of PIE auditors located on the Mainland ( AWP-C ) for inspection in Hong Kong. ... The consensus and the agreed mechanism are a testament to the strategic intent between the SEB and the AFRC to collaborate seamlessly to ensure audit quality. The arrangement not only facilitates AFRC’s inspection of engagements involving AWP-C but also sends a strong message to PIE auditors that their audit engagements are subject to the AFRC’s quality review no matter where they keep their audit working papers.

With audit fees at less than 0.03% of market capitalisation, the AFRC warns that fee suppression puts market confidence at risk.

Chairman and CEO's opinion piece: When Audit Fails, Capital Markets Suffer (Chinese version only)

Chairman and CEO's opinion piece: When Audit Fails, Capital Markets Suffer (Chinese version only) 30 April 2026 審計一旦失守金融體系遭殃在現今資本市場，信任從來不是單純的情感感受，而是透過完善機制建構而成的成果。

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