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AFRC reprimands MnO CPA Limited and its two directors for audit deficiencies and imposes fines of HK$600,000
The Auditor instead relied on management representations and poorly-designed analytical procedures. ... Ms Hester Leung, Head of Discipline, said, “Valuations often involve specialised knowledge, and may require an auditor to engage their own expert for assistance. However, the responsibility for exercising an appropriate level of professional scepticism always remains with the auditor – this cannot be simply delegated to the auditor's expert.”
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Speeches and Presentations
Speeches and Presentations Presentation on a webinar delivered to members of the Society of Chinese Accountants and Auditors (SCAA) relating to Guidelines on selecting auditors and setting audit fees 19 June 2023 Chairman Dr Kelvin Wong’s presentation at Hong Kong Chartered Governance Institute (HKCGI)’s Annual Corporate and Regulatory Update 9 June 2023 Presentation for members of the Hong Kong Securities and Investment Institute (HKSI) relating to Best Practices in Corporate Governance in Selecting Auditors and Setting Audit Fees 24 May 2023 Presentation on a webinar delivered to members of the Hong Kong Chartered Governance Institute (HKCGI) 18 May 2023 Presentation on a webinar delivered to members of the CPA Australia relating to Guidelines on auditor selection and audit fees 16 May 2023 Presentation on common valuation-related audit deficiencies at HKICPA discussion forum 28 April 2023
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 audit in relation to (a) an option to issue convertible bonds and (b) impairment assessments of certain production facilities. The investigation revealed that the auditor and the engagement partner failed to properly plan and perform the relevant audit, in relation to the above matters, in accordance with the relevant provisions of 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 , HKSA 315 (Revised) Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment , 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 , HKSA 620 Using the Work of an Auditor’s Expert and HKSA 700 Forming an Opinion and Reporting on Financial Statements .
AFRC issues 2022 Interim Inspection Report and Report on Oversight of HKICPA regulatory functions
AFRC issues 2022 Interim Inspection Report and Report on Oversight of HKICPA regulatory functions 15 November 2022 The Accounting and Financial Reporting Council ( AFRC ) today issues its: (a) 2022 Interim Inspection Report on its inspections of public interest entity ( PIE ) auditors completed from 1 April 2022 to 30 September 2022; and (b) 2022 Oversight Report on its oversight of the performance by the Hong Kong Institute of Certified Public Accountants ( HKICPA ) of specified regulatory functions relating to PIEs and their auditors ( Specified Functions ) from 1 April 2021 to 31 March 2022. ... 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. ... We are also concerned about the instances where we identified auditor violations of the independence rule under the Code of Ethics for Professional Accountants.”
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 audit in relation to (a) the Group’s investment in an available-for-sale investment; (b) the issuance of convertible notes for future management services; (c) impairment assessment of the Company’s interests in subsidiaries; and (d) revenue recognition. The investigation revealed that the auditor and the engagement partner failed to plan and/or perform the relevant audit, in relation to the above matters, in accordance with the relevant provisions of HKSA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in accordance with Hong Kong Standards on Auditings; HKSA 300 Planning an Audit of Financial Statements; HKSA 330 The Auditor’s Responses to Assessed Risks; HKSA 500 Audit Evidence; HKSA 510 Initial Audit Engagements – Opening Balances; HKSA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures; HKSA 620 Using the Work of an Auditor’s Expert; HKSA 700 Forming an Opinion and Reporting on Financial Statements .
FRC signs Memorandum of Understanding with HKICPA
The FRC is the independent regulator of public interest entity auditors (PIE auditors). It exercises direct powers of inspection, investigation and discipline over PIE auditors in relation to their engagements for listed entities. The HKICPA is responsible for dealing with applications for registration of Hong Kong PIE auditors, as well as setting continuing professional development requirements and auditing and ethical standards for PIE auditors, under the oversight of the FRC. ... The FRC and the HKICPA share a common goal in improving audit quality and the standards of professional conduct of PIE auditors and of the accountancy profession in general.
Inspection
Under the Accounting and Financial Reporting Council Ordinance (AFRCO), the AFRC has the power to direct an inspector to carry out an inspection in relation to: PIE engagements completed by a PIE auditor A practice unit For an understanding of the legal framework under the AFRCO and the inspection function of the AFRC, please refer to the details set out in the following policy statements: Policy Statement for Inspection of PIE Auditors with respect to PIE Engagements Policy Statement for Inspection of Practice Units with respect to engagements other than PIE Engagements Policy Statement for Inspection of Practice Units with respect to compliance with Anti-Money Laundering and Counter-Terrorist Financing Requirements Outline of the AFRC’s Inspection Process for PIE Auditors Outline of the AFRC’s Inspection Process for practice units that are not PIE auditors Featured 【Report Digest】Navigating the 2025 Year-End Audit - Key Reminders for Auditors In October 2025, the AFRC released the report “Audit Focus: 2025 Year-end Audit”, providing essential reminders for auditors to ensure the quality of year-end audits.