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AFRC’s Response to PricewaterhouseCoopers Whistle-blower Allegations
AFRC’s Response to PricewaterhouseCoopers Whistle-blower Allegations 10 July 2024 Following the press release issued on 19 April 2024 concerning a whistle-blower report circulating in the media alleging deficiencies in PricewaterhouseCoopers’ systems of quality management and the quality of the audits of China Evergrande Group, the Accounting and Financial Reporting Council ( AFRC ) conducted a rigorous review of the internal investigation carried out by PricewaterhouseCoopers. ... The evidence gathered during our review process does not support the following three allegations regarding PricewaterhouseCoopers’ quality management systems: Failure to establish and maintain an effective system of quality control to ensure audit quality and compliance with professional standards and applicable legal and regulatory requirements; Failure to adhere to professional standards in respect of the acceptance and continuance of its client relationship with China Evergrande Group for the provision of audits and other professional services; and Failure to assign appropriate personnel to key positions responsible for the firm’s system of quality management which might have compromised the monitoring functions of the firm. Regarding the allegation on the quality of the audits of China Evergrande Group, it is under a separate investigation by the AFRC into the relevant audits carried out by PricewaterhouseCoopers which is still ongoing.
Reports
Reports Inspection Key Observations from the AFRC Survey 2025 Audit Quality Management System 2 June 2026 Inspection Anti-Money Laundering and Counter-Terrorist Financing - Frequently Asked Questions on Suspicious Transaction Reporting Anti-Money Laundering and Counter-Terrorist Financing 7 May 2026 Policy and Governance Transparency Reports: Building Trust and Unlocking Audit Excellence Audit Corporate Governance Quality Management System 16 February 2026 Inspection Checkpoint - Information Produced by the Entity for Use as Audit Evidence Audit 18 December 2025 Policy and Governance Global Developments in Audit Regulation: Key Insights for Hong Kong Audit Corporate Governance Quality Management System 7 November 2025 Inspection Audit Focus: 2025 Year-End Audits Audit Corporate Governance Quality Management System 3 October 2025 Inspection Audit Focus: 2025 Year-End Audits - Financial Services Sector Audit 3 October 2025 Oversight 2024-25 Oversight Report on HKICPA’s Performance of Specified Functions Audit Financial Reporting 20 August 2025 Policy and Governance Upholding Trust in Capital Markets: Maintain Healthy Practices in Auditor Appointments and Audit Fee Setting Audit Auditor Changes Corporate Governance 31 July 2025 Investigation and Compliance 2024-25 Annual Investigation and Compliance Report Audit Financial Reporting 1 July 2025 Inspection 2024-25 Annual Inspection Report Audit Corporate Governance Quality Management System 1 July 2025 Policy and Governance How Should Auditors Consider Tariff Disruptions in Audits? Audit 16 April 2025
AFRC Acts on PricewaterhouseCoopers Whistle-blower Allegations
The report expressed significant concerns regarding potential alleged deficiencies in PricewaterhouseCoopers’ systems of quality management and the quality of the audits of China Evergrande Group. The major allegations include the following claims: Failure to establish and maintain an effective system of quality control to ensure audit quality and compliance with professional standards and applicable legal and regulatory requirements; Failure to adhere to professional standards in respect of the acceptance and continuance of its client relationship with China Evergrande Group for the provision of audits and other professional services; Failure to assign appropriate personnel to key positions responsible for the firm’s system of quality management which might have compromised the monitoring functions of the firm; and Failure to perform adequate audit procedures for the audits of China Evergrande Group. Given the gravity of these allegations and the necessity to safeguard the interests of the investing public, the broader public interest in the auditing of listed entities, and to maintain public confidence in the integrity of the accounting profession, the AFRC is obliged to initiate an investigation.
AFRC issues 2022 Interim Inspection Report and Report on Oversight of HKICPA regulatory functions
It also sets out our expectations of the respective duty of PIE auditors, directors and audit committees in upholding audit quality ahead of the imminent busy audit season. PIE auditors are urged to make use of our findings and expectations in the Report to better plan and perform the upcoming year-end audits and strengthen their policies and procedures to improve audit quality. ... Dr Kelvin Wong, Chairman of the AFRC concluded, “The quality of the accounting profession, the quality of audit and the quality of financial reporting are intertwined in the financial reporting ecosystem.
AFRC presents key findings and insights from its Inspection and Investigation & Compliance Reports to strengthen Transparency, Regulation, and Development
The profession is making progress in improving audit quality, supported by a clear commitment from firms in enhancing the quality of their audit work. ... We aim to strengthen transparency and accountability, ensuring stakeholders have clear and reliable information regarding audit quality when engaging with audit service providers, while fostering a culture of high-quality reporting and auditing.” ... The report also flags continued challenges to audit quality, particularly in relation to first-year audits, audit fee pressures, and hasty client and engagement acceptance decisions.
FRC issues first regulatory reports
Although much of the work we inspected was of an appropriate standard, there is an evident need for the incidence of audit deficiencies to be reduced, so as to improve audit quality across the market for listed entity audits.” ... We urge audit committees to do their part in holding their auditors to account for performing their audits to a high quality. ... Our report also highlights that audit firms need to do more in promoting a culture that prioritizes and recognizes the quality of audit work.”
AFRC issues an open letter to express its growing concern over late auditor resignations
First, we question whether these incoming auditors possessed the necessary competence and adequate capabilities (including manpower, time and other resources) to perform quality audits within limited time frame. ... The AFRC will continue to monitor closely the late changes in auditor appointments and the audit quality of the relevant entities and will not hesitate to take follow-up actions when appropriate.” ... This will help ensure audit quality and protect the public interest.”
AFRC welcomes CSRC’s five measures on capital market cooperation with Hong Kong
As one of the leading international financial centres, the financial reporting and audit quality in Hong Kong is internationally recognised. Experienced accounting professionals can provide high-quality audits to listed companies, which can effectively protect the interests of investors and create a virtuous cycle for enterprises to continue listing in Hong Kong. AFRC will continue to play a regulatory role in safeguarding the quality of financial reporting, thereby ensuring the quality of audits of listed companies and promoting the sustainable development of the accounting profession.