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FAQs - Inspection
Is the quality of audit work being graded? ... We use Audit Quality Rating (AQR) to describe our overall assessment of the quality of the audit work we inspected. ... How will the AFRC ensure the consistency of the engagement audit quality rating? The quality rating for each engagement and the deficiencies identified in an auditor’s system of quality management are compared and calibrated to inspections conducted at the same and other firms to ensure their consistency.
Completed investigation
The FRC found that the auditor, the engagement director and the engagement quality control reviewer failed or neglected to observe, maintain or otherwise apply certain professional standards in the relevant audit in relation to impairment assessment of the exploration and evaluation assets and the intangible assets relating to the drilling, exploration, exploitation and production of oil and/or natural gas. The investigation revealed that the auditor and the engagement director failed to properly 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 ) 330 The Auditor’s Responses to Assessed Risks; HKSA 500 Audit Evidence; HKSA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures ; and HKSA 620 Using the Work of an Auditor’s Expert . 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 Quality Control for an Audit of Financial Statements in relation to the quality control review.
AFRC issues a follow-up open letter to reiterate expectations on auditor changes
In view of the above issues, the follow-up letter sets out specific expectations for incoming auditors, outgoing auditors and audit committees, all of which have their important roles to play and are accountable for ensuring the quality of financial reporting and audits. Ms Janey Lai, Head of Inspection, said, “Auditors have a pivotal role to safeguard the quality of the financial reporting through conducting quality audits. ... Notwithstanding this, there are emerging signs of other malpractice, which will adversely impact the audit quality and the quality of financial reporting.
AFRC Hosts Landmark Regional Regulatory Forum 2025
AFRC Hosts Landmark Regional Regulatory Forum 2025 10 November 2025 AFRC Hosts Landmark Regional Regulatory Forum 2025 Accounting For The Future The RRF 2025 fostered high-level discussions on global issues affecting financial reporting and auditing, such as governance, audit quality, sustainability disclosures and assurance, and AI transformation. ... At the same time, as Mr Mohamed Kande emphasised, audit quality cannot be compromised. ... Panel 3 Addressing Audit Quality Challenges for Long-Term Sustainability The panel highlighted that audit quality is a collective effort and a shared responsibility of stakeholders in the financial reporting and auditing ecosystem.
AFRC reprimands and fines Forvis Mazars CPA Limited HK$1.4 million and Grant Thornton Hong Kong Limited HK$2.32 million for widespread and systemic failures to archive files on a timely basis
Proper and complete documentation has a dual role in enhancing audit quality and reducing the risk of non-compliance with standards. ... Timely archiving of audit documentation is a fundamental duty of auditors and an essential element of audit quality. ... For details of the decision relating to Grant Thornton, please refer to the Statement of Disciplinary Action . 1 Registration number: M0257. 2 Registration number: M0446. 3 For further reading, refer to the AFRC’s publication titled “ The Importance of Audit Documentation Integrity ” published on 29 May 2024. 4 Hong Kong Standard on Auditing 230 Audit Documentation. 5 Hong Kong Standard on Quality Control 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements. 6 Hong Kong Standard on Quality Management 1 Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements.
AFRC Reinforces Commitment to Financial Reporting Integrity in Hong Kong
Some unscrupulous practicing accountants are taking on large volumes of audit projects through intermediaries, indiscriminately signing audit reports and grossly disregarding audit quality and professional standards. ... While 'bogus' accountants may not be apparent, it is alarming that practicing accountants are signing off on audit projects indiscriminately without ensuring due diligence on audit quality. The quality and credibility of financial reporting are paramount, and these must not be compromised by audit firms that recklessly sign off on projects in massive volumes.”
Completed investigation
The FRC found that the auditor, the engagement partner and the engagement quality control reviewer failed or neglected to observe, maintain or otherwise apply certain professional standards in the relevant audits in relation to (a) assets and liabilities held for distribution to owners and discontinued operations; (b) impairment assessments of available-for-sale investments; (c) accounting for convertible notes; and (d) impairment assessment of loans and accounts receivable and finance leases receivable held for distribution to owners. The investigation revealed that the auditor and the engagement partner failed to properly perform the relevant audits, 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 260 (Clarified) Communication with Those Charged with Governance , HKSA 500 (Clarified) Audit Evidence , and HKSA 705 (Clarified) Modifications to the Opinion in the Independent Auditor's Report . It was also found that the engagement quality control reviewer of the relevant audits failed to fully comply with the relevant provisions of HKSA 220 (Clarified) Quality Control for an Audit of Financial Statements .
Manager
Meet and interview firm personnel to understand the firm’s quality control system and the related impact on quality audit. ... Solid technical background, with at least 3-years post-qualification audit experience. Extensive professional knowledge in financial reporting and auditing. Experience in quality assurance will be an advantage.