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AFRC imposes HK$300 million fine and six-month practice limitation on PricewaterhouseCoopers and HK$10 million in fines on its two former registered responsible persons over the Evergrande Audits
PwC acted as the reporting accountant for the Company’s listing in 2009 and subsequently served as the Company’s group auditor from listing until early 2023. ... By doing so, the Auditor placed itself in a position where it would be auditing its own work. ... [1] PwC is registered as a firm and a public interest entity auditor with the AFRC (registration no. 0034). [2] Neither Cheung nor Chow is currently a registered responsible person of any registered PIE auditor. [3] In this document, the term “Auditor” refers to the engagement partner, the engagement team and/or PwC as the context requires, in line with their respective roles and responsibilities under the relevant law, regulations and auditing standards.
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 convertible note that contained contingent settlement provisions. The investigation revealed that the auditor and the engagement partner failed to perform the relevant audit, in relation to the convertible note, 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 and HKSA 500 (Clarified) Audit Evidence .
FRC welcomes the appointment of Chairman and Board Members
Starting from 1 October 2019, the FRC will become Hong Kong’s full-fledged independent auditor regulator, vested with direct powers of inspection, investigation, recognition of overseas auditors of listed entities as well as discipline concerning auditors of listed entities. The FRC will also be overseeing the performance of the Hong Kong Institute of Certified Public Accountants (HKICPA) of their functions in relation to auditors of listed entities including registration; setting of standards on professional ethics, auditing and assurance; and setting of continuing professional development requirements. ... The expanded powers and functions of the FRC are the fruition of the reform of Hong Kong’s auditor regulatory regime that aims at upholding the quality of financial reporting of listed entities in Hong Kong, strengthening investor protection and keeping Hong Kong’s status as a competitive international financial centre.
AFRC reprimands and fines Rongcheng (Hong Kong) CPA Limited, Lee Wai Chi and Chan Kin Wai over HK$1.18 million for contraventions of registration and notification requirements under the AFRCO
Mr Denis Cheng, Head of Investigation and Compliance, said, “PIE auditors and their responsible persons must adhere to the registration requirements in relation to PIE engagements. ... The AFRC will continue to take stringent enforcement actions against PIE auditors and practitioners who breach those requirements, to safeguard the standards and credibility of the profession.” The profession and stakeholders may inspect the PIE auditors register on the AFRC’s website to access up-to-date registration details and information on PIE auditors’ registered responsible persons.
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) impairment assessments on amounts due from subsidiaries; and (b) loss on extinguishment of financial liabilities and accounting of convertible notes. The investigation revealed that the auditor and the engagement partner failed to properly perform the relevant audit, 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 and HKSA 500 (Clarified) Audit Evidence .
Completed investigation
The FRC found that the auditor, the engagement partner and the engagement quality control reviewer for the relevant audit failed or neglected to observe, maintain or otherwise apply certain professional standards in relation to the Group’s investments in associates. The investigation revealed that the auditor and the engagement partner failed to perform the relevant audit, in relation to the Group’s investments in associates, 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 500 (Clarified) Audit Evidence , and HKSA 700 (Clarified) Forming an Opinion and Reporting on Financial Statements.
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 convertible note that contained contingent settlement provisions. In particular, the investigation revealed that the auditor and the engagement partner failed to perform the relevant audit, in relation to the convertible note, in accordance with 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 500 (Clarified) Audit Evidence ; and HKSA 510 (Clarified) Initial Audit Engagements – Opening Balances .
Our Role
On 1 October 2019, the Financial Reporting Council (Amendment) Ordinance came into effect, transforming the FRC into Hong Kong's independent auditor regulator. It was vested with direct powers of inspection and investigation, as well as the authority to recognise overseas auditors of listed entities and discipline PIE auditors. The AFRC is also responsible for overseeing the performance of the Hong Kong Institute of Certified Public Accountants (HKICPA) in relation to their functions concerning auditors of listed entities, including registration, setting standards on professional ethics, auditing and assurance, and setting continuing professional development requirements. ... Registration of accounting practice units and Public Interest Entities auditors. Inspection and enforcement of audit quality in the accounting profession.