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FRC issues its Annual Inspection Report
During the period, the FRC completed 37 engagement inspections and 18 inspections of the quality control systems of listed entity audit firms. ... 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.
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. ... Maintaining a high level of audit quality remains the AFRC’s foremost priority. ... We are confident that upholding high audit quality will protect the interests of the investing public on both sides of the border and maintain Hong Kong’s reputation as an international financial centre.
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.
The importance of regulatory synergy in upholding financial reporting and audit quality
The findings underscore a lack of basic professionalism and compliance awareness by the audit profession. The root cause appears to be a lack of a culture that emphasises a commitment to quality and compliance. ... Fostering a culture of quality in financial reporting and auditing The AFRC administers an effective investigation and enquiry regime that deters misconduct and non-compliance, fosters high standards of professional conduct in the accounting profession, and leads the accounting profession to enhance the quality of financial reporting and auditing. ... Dr Kelvin Wong, Chairman of AFRC, said, “With our persistent effort since 2019, we are encouraged to observe initial signs of improvement in the quality of financial reporting and auditing.
AFRC calls for concerted efforts to improve the quality of financial reporting and audit in Hong Kong
AFRC calls for concerted efforts to improve the quality of financial reporting and audit in Hong Kong 13 June 2024 The Accounting and Financial Reporting Council ( AFRC ) today publishes its report Roundtable Discussion on Audit Quality and Climate-integrated Audits in Hong Kong . ... Audit quality: its importance, definition and determinants The report notes that although all participants agree on the importance of high-quality audit, the understanding of what audit quality is varies. ... The report points out the need for thorough understanding of the benefits of high-quality audits and what audit quality entails among audit committees and auditors.
FRC publishes survey of implementation progress by PIE Auditors for new and revised quality management standards
They require more proactive audit quality management at the firm and engagement levels and aim to enhance the effectiveness of the engagement quality control reviews and monitoring and remediation activities performed at the firm level to assure the quality of the audits performed. ... Dr Kelvin Wong, Chairman of the FRC remarked, “The accounting and auditing profession is facing challenges under the current market uncertainties, which might impose further risks to audit quality. ... PIE Auditors’ proactive response to our report findings is crucial to the audit quality in the market as a whole.
AFRC’s follow-up survey on the implementation progress of the new and revised quality management standards
AFRC’s follow-up survey on the implementation progress of the new and revised quality management standards 10 November 2022 The Accounting Financial Reporting Council ( AFRC ) today publishes the results of its follow-up survey ( Survey ) on the implementation progress by Public Interest Entity Auditors ( PIE Auditors ) for the new and revised quality management standards ( the new QMSs ) which require the firms to design a system of quality management ( SoQM ) to manage the quality of engagements performed by the firms. ... We urge those auditors who are lagging behind schedule to take swift actions to ensure the timely implementation of the SoQM such that audit quality would not be compromised.” ... By publishing upto-date surveys in relation to the latest accounting and auditing standards, we caution the profession of the ‘dos and don’ts’ necessary in upholding the quality of audit and financial reporting.
AFRC issues open letter to PIE auditors on upholding audit quality and professional integrity amid rising IPO engagements
The letter reminds PIE auditors of their critical responsibilities, which include safeguarding audit quality, upholding professional independence and integrity, and reinforcing public trust in Hong Kong’s capital markets. ... The key expectations include: (i) Placing Audit Quality and Integrity Above All Other Considerations (ii) Ensuring Sufficient Expertise and Resources for IPO Engagements (iii) Committing to Sustainable Resources Management to Protect Audit Quality (iv) Fulfilling the Critical Role of the Engagement Partner and Engagement Quality Reviewer (v) Other Specific Expectations for IPO Engagements Call for Immediate Action PIE auditors are strongly urged to immediately undertake a thorough evaluation of their resources and critically assess whether they possess the necessary competencies and capabilities to deliver high-quality audits for both their existing and new IPO engagements. ... Our Actions To ensure that audit quality remains uncompromised, the AFRC will closely monitor how PIE auditors are managing their growing portfolios while maintaining audit quality, independence, integrity and professionalism.