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Navigating economic uncertainty: Insights for 2024 year-end audits
As we enter the final quarter of 2024, the document provides guidance to auditors in effectively identifying and responding to the elevated risks in financial reporting and auditing created by the current uncertain economic conditions. Critical reminders to auditors are also provided to ensure that audit quality is upheld for the upcoming year-end audits. ... To that end, this Audit Focus outlines key milestones and essential actions for auditors, management and audit committees of listed entities during different phases of an audit.
Financial Reporting Council publishes its 2018 Annual Report
Not only did we complete a record number of investigations and enquiries, but also we spared no efforts in preparing ourselves for the auditor regulatory reform and fostering regulatory collaboration with auditor regulators in Hong Kong, the Mainland and the international arena.” ... Preparing for auditor regulatory reform: Supported the Government in the seven Bill’s Committee meetings of the Financial Reporting Council (Amendment) Bill (the Bill) by preparing research and analysis papers. ... The FRC is on a strong foothold to take on the new challenges and our new roles to discharge our responsibilities faithfully, honourably, transparently and fairly as an internationally aligned independent auditor regulator of Hong Kong.’
FRC investigates Next Digital financial statements and audits
The investigation will also address CCTH’s audit work on management’s going concern assessment and the appropriateness of its auditor’s report in that respect. ... CCTH did not include in its auditor’s report a separate section under the heading “Material uncertainty related to going concern” ( Going Concern Section ) even though management identified material uncertainties relating to going concern in the 2020 Annual Accounts. Auditor reporting requirements about going concern material uncertainties If a material uncertainty relating to going concern exists, an auditor is required to: Include a Going Concern Section in their report if adequate disclosure of the material uncertainty is made in the financial statements; and Modify their report by qualifying or expressing an adverse opinion if not.
AFRC calls for concerted efforts to improve the quality of financial reporting and audit in Hong Kong
Some companies not only equate it to the quality of service an auditor provides, but often prioritise it over audit quality when appointing auditors. ... However, this notion does not resonate deeply among auditor participants and requires ongoing emphasis. ... It may also force audit firms to rely on revenue from non-audit services, which may undermine the auditor’s independence. The threat to audit quality stemming from instances of opportunistic changes of auditors The report also discusses the phenomenon of companies changing auditors to save on audit fees and changes of auditors taking place late in the reporting period.
FRC issues (i) Consultation Conclusions and (ii) the 2021 Annual Inspection Report
On 17 June 2022, the FRC published an External Auditor’s Guide to Performing Root Cause Analysis (the RCA Guide ). ... We expect auditors to learn from these key findings and make improvements where applicable. ... As audit committees assist the boards in discharging their responsibilities, we urge audit committees to challenge management as to whether they are providing the auditors with quality information and to consider our key findings when challenging their auditors as to whether and how the auditors have properly addressed the common deficiencies identified in the Inspection Report.”
FRC completes first investigation with working papers obtained under MoU with the Supervision and Evaluation Bureau of the PRC Ministry of Finance
FRC completes first investigation with working papers obtained under MoU with the Supervision and Evaluation Bureau of the PRC Ministry of Finance 2 July 2021 On 15 June 2021, the FRC adopted an investigation report in relation to a failure by the auditor ( the Auditor ) of a listed entity ( Listed Entity ) to identify a material misstatement in the earnings per share (EPS) presented in the consolidated financial statements of the listed entity. ... The audit quality failure of the Auditor 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 and the exercise of professional judgement by an auditor.
The importance of regulatory synergy in upholding financial reporting and audit quality
Of the newly initiated investigations related to PIE auditors, 20% of which are associated with late auditor resignations. A major issue identified relates to the incoming auditors' client acceptance and audit planning. The AFRC urges incoming auditors to place emphasis on analysing the audit implications of the circumstances leading to the outgoing auditors’ resignation and assessing their capabilities before undertaking the engagement.
Press Releases
Press Releases AFRC welcomes the Government’s reappointment/appointment of Non-Executive Directors and an Executive Director to act as the CEO 29 September 2023 Appointments to Accounting and Financial Reporting Review Tribunal 29 September 2023 Appointments to Accounting and Financial Reporting Council 29 September 2023 AFRC urges auditors and audit committees to follow Guidance Notes on Change of Auditors 28 September 2023 AFRC holds Briefing on its 2022 Annual Inspection Report to urge Quality Control System Responsible Persons of registered PIE auditors to enhance audit quality 27 September 2023 AFRC Investigation Report shows auditors’ inadequate response to increasing incidence of fraud in financial statements 4 September 2023