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Non-Hong Kong PIE Auditor
Non-Hong Kong PIE Auditor Recognition of non-Hong Kong auditors as PIE auditors A non-Hong Kong auditor intending to undertake (i.e. accept an appointment for carrying out) or carry out any PIE engagement for a non-Hong Kong entity, is required to be recognised as a recognized PIE auditor. Chinese Mainland auditors An auditor who has been endorsed as being qualified to act as the auditor for a corporation incorporated in Chinese Mainland and listed in Hong Kong under the mutual recognition agreement between Chinese Mainland and the Hong Kong SAR (the Mutual Recognition Agreement), will be recognised as a PIE auditor without a recognition application being made to the AFRC. ... Other non-Hong Kong auditors An application for recognition of a non-Hong Kong auditor should be made by the non-Hong Kong entity intending to appoint a non-Hong Kong auditor to carry out its PIE engagement.
FAQs - Non-Hong Kong PIE Auditor
If an overseas entity intends to appoint an overseas auditor to carry out a PIE engagement for it, is the overseas auditor required to be recognized as a PIE auditor under the AFRCO? ... Another overseas entity, Entity Y, intends to appoint Auditor B to carry out a PIE engagement. Can Entity Y appoint Auditor B without making an application to the AFRC for the recognition of Auditor B as its PIE auditor?
Completed investigation
The FRC found that the auditor and the engagement partner failed or neglected to observe, maintain or otherwise apply certain professional standards in respect of the audit of the impairment assessment of goodwill as at 31 March 2014 arising from an acquisition of a subsidiary. In particular, it was found that the auditor and the engagement partner were in breach of Hong Kong Standard on Auditing ( HKSA ) 500 (Clarified) Audit Evidence and HKSA 540 (Clarified) Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures .
FRC collaborates with IFEC to promote financial literacy on audit related topics to retail investors
The purpose of an audit is to enhance user confidence in the credibility of financial statements or to raise red flags when appropriate. The auditor’s report is the auditor’s communication channel to users and enables that purpose to be met when the auditor’s report is read in conjunction with the financial statements by investors who have the necessary financial literacy. ... Whereas the auditor’s opinion is about the financial statements, KAMs are about the audit. They address those matters that the auditor considers to have been of most significance in the audit.
FRC finds that an auditor failed to obtain the necessary evidence to support the measurement and recognition of a gain on extinguishment of a financial liability
FRC finds that an auditor failed to obtain the necessary evidence to support the measurement and recognition of a gain on extinguishment of a financial liability 30 December 2021 The FRC adopted an investigation report finding that the auditor ( the Auditor ) of a listed entity ( Listed Entity ) failed to obtain sufficient appropriate audit evidence to support the measurement and recognition of a gain on extinguishment of a promissory note ( the Promissory Note ) included in the consolidated financial statements of a Listed Entity for the year ended 31 March 2013. ... The audit quality failure of the Auditor The Auditor failed to adequately evaluate the validity of the qualitative factors to support that the change of terms of the Promissory Note was a substantial modification of the terms of an existing financial liability in accordance with the requirements of HKAS 39. ... The Auditor used the valuation report as part of the audit evidence and engaged a valuer to review the valuation report during the audit.
FRC finds that an auditor failed to obtain the evidence needed to evaluate the measurement and impairment assessment of goodwill arising from an acquisition
FRC finds that an auditor failed to obtain the evidence needed to evaluate the measurement and impairment assessment of goodwill arising from an acquisition 20 April 2022 On 14 April 2022, the FRC adopted an investigation report finding that the auditor ( the Auditor ) of a listed entity ( Listed Entity ) failed to obtain sufficient appropriate evidence to evaluate the measurement and impairment assessment of goodwill arising from an acquisition (Acquisition) , which was included in the consolidated financial statements of the Listed Entity for the year ended 31 December 2016 (2016 Financial Statements) . ... The audit quality failure of the Auditor The Auditor appointed a valuer (Auditor’s Expert) to conduct a review of the Acquiree’s Fair Value. ... The Auditor also did not identify these deficiencies in the work of the Auditor’s Expert.
FRC completes second investigation with working papers obtained under MoU with the Supervision and Evaluation Bureau of the PRC Ministry of Finance
Deficiency in the audit The Auditor failed to identify the above material misstatement and therefore issued an inappropriate audit opinion. ... Hong Kong Standard on Auditing (HKSA) 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Hong Kong Standards on Auditing prescribes the application of a competent understanding of the applicable financial reporting framework in the exercise of professional judgement by an auditor. ... It also requires the auditor to obtain an understanding of the applicable financial reporting framework.
FRC finds that auditor failed to appropriately address an identified misstatement and to appropriately exercise professional judgement in determining overall materiality
FRC finds that auditor failed to appropriately address an identified misstatement and to appropriately exercise professional judgement in determining overall materiality 23 December 2021 The FRC adopted an investigation report finding that the auditor ( the Auditor ) of a listed entity ( Listed Entity ) failed to: (a) appropriately address an identified misstatement in the measurement of consideration payable for the acquisition of a subsidiary in the consolidated financial statements of a Listed Entity for the year ended 31 March 2017 ( the Relevant Financial Statements ); and (b) appropriately exercise professional judgement in determining materiality for the financial statements as a whole. ... The audit quality failure of the Auditor The Auditor identified the misstatement relating to the measurement of the Consideration Payable. The Auditor considered that the effect of the misstatement was not material and therefore did not request an adjustment to the financial statements and issued an auditor’s report with an unmodified opinion.