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The Financial Reporting Council e-newsletter (February 2020) issue gives insights and advice to the audit profession amidst challenging financial and socio-economic situations
This is the first e-newsletter of the FRC since the commencement of the new auditor regulatory regime on 1 October 2019. Ms Florence Wong, Acting CEO said, ‘In the face of challenging financial and socioeconomic situations including the lingering economic outlook, the threat of the novel coronavirus and the resignation trend of audit firms as auditors of listed companies, it is all the more important to maintain audit quality and audit independence. ... An audit committee should focus its efforts on emerging risks and challenge management’s judgements and assumptions which may have significant impact on financial reporting, such as changes in internal control; challenges, risks and opportunities facing the entity; key judgements and estimates made in preparing the financial statements (e.g. forecasts and underlying assumptions used in impairment and going concern assessments); and significant subsequent events.
Press Releases
Press Releases Completed investigation 8 July 2019 Financial Reporting Council publishes consultation conclusions on Proposed Sanctions Guidelines 31 May 2019 Financial Reporting Council welcomes the consultation conclusions on proposed rule changes relating to disclaimer or adverse audit opinion on issuer’s financial statements published by The Stock Exchange of Hong Kong Limited 24 May 2019 The Supervision and Evaluation Bureau of the Ministry of Finance and the Financial Reporting Council of the Hong Kong Special Administrative Region sign a Memorandum of Understanding to promote cross-boundary cooperation and enhance audit quality 22 May 2019 Completed investigation 22 May 2019 FRC Welcomes the Gazettal of the Commencement Notice of Financial Reporting Council (Amendment) Ordinance 2019 17 May 2019
Speeches and Presentations
Speeches and Presentations CEO Ms Janey Lai’s Keynote Speech at “Sustainable Finance: Driving Strategy and Market Change” seminar 28 January 2026 AFRC Chairman Dr David Sun’s Keynote Speech at HKCGI Annual Cocktail Reception 16 January 2026 AFRC Chairman Dr David Sun’s Opening Remarks at HKiNEDA Conference 2025 6 December 2025 AFRC Chairman Dr David Sun’s Keynote Speech at CIMA HK 60th Anniversary Annual Dinner 2025 24 November 2025 Chairman Dr David Sun’s welcome and opening remarks at AFRC’s Regional Regulatory Forum 2025 10 November 2025 Chairman Dr David Sun’s opening remarks at HKICPA X IFAC SMP Conference 2025 1 November 2025
AFRC emphasises the importance of leadership setting the right tone at the top
Through their persistent communication and vigorous action to drive behavioural change in audit, it will undoubtedly nurture a quality-focused culture within their firm.” ... We urge them to request their auditors to share the AFRC’s inspection results and findings, which helps them leverage our insights for enhancing their effective oversight and driving continual improvement of the auditors. ... Create an open and constructive relationship with auditors and welcome challenges from them where auditors’ insight may help to improve the financial reporting quality.
Completed enquiry and investigations
In relation to the above accounting issue, the FRC had also adopted two investigation reports on the respective audits of the Relevant Financial Statements by two auditors on 8 November 2018 and 4 February 2020. ... During the year ended 31 March 2013, the Group changed the useful life of the Sales Contract to indefinite because the Group reassessed that it had become probable that the business relationship with the customer would continue indefinitely in the foreseeable future. ... Auditing irregularities As a result of the investigations, in relation to the above issues, it was found that: the auditor of the 2012 Financial Statements was in breach 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 200 ); HKSA 230 (Clarified) Audit Documentation ( HKSA 230 ); HKSA 500 (Clarified) Audit Evidence ( HKSA 500 ); HKSA 540 (Clarified) Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures ( HKSA 540 ); and HKSA 560 (Clarified) Subsequent Events .
FRC issues Annual Investigation and Compliance Report and Interim Inspection Report
Dr Kelvin Wong, Chairman of the FRC remarked, “As the independent auditor regulator of Hong Kong, the FRC is held accountable to the protection of public interest. ... These are often required in areas such as fair value measurement and impairment assessment, which are commonly encountered in accounting for business combinations, financial instruments or changes in their terms, exchanges involving non-financial assets and contracts for the provision of goods or services to customers. ... Our aim is to enable auditors and audit committees to take action ahead of the next audit cycle.”
AFRC Concludes Successful First Day of the Regional Regulatory Forum 2025, Fostering Dialogue on Accounting's Future
Panel discussions on corporate governance and culture, audit quality, artificial intelligence, and sustainability assurance underscored the need of the profession to be purposeful, progressive, and resilient amid changing regulatory, environmental, and technological landscapes, so as to secure the long-term integrity and competitiveness of capital markets. ... We look forward to continuing these vital discussions with participants to foster meaningful and lasting change across the profession.”
FRC Investigates Going Concern Reporting of China Evergrande
The FRC identified questions about the adequacy of reporting on going concern in China Evergrande’s 2020 Annual Accounts and 2021 Interim Accounts and PwC’s auditor’s report for the 2020 Audit through our market surveillance activities. ... Alternative plans to mitigate potential cash flow impacts if there are significant adverse changes in the economic environment. ... The FRC publicly announces the initiation of enquiries and investigations when considered necessary in the circumstances in order to protect the interests of shareholders and the investing public so as to maintain public confidence in our financial markets and independent auditor regulation.