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Press statement on cross-border collaboration on audit regulation among PRC’s Ministry of Finance, China Securities Regulatory Commission and the Public Company Accounting Oversight Board

As the independent auditor regulator of Hong Kong acting in the public interest, FRC has a statutory duty to improve the quality of audit reports of Hong Kong audit firms so as to protect investor interest and help promote public trust in the audit process and investor confidence in Hong Kong and other global capital markets.

AFRC reprimands BDO Limited and two others for serious audit breaches, imposes fines totalling HK$1.456 million and gives its first direction for additional CPD in disciplinary case

AFRC reprimands BDO Limited and two others for serious audit breaches, imposes fines totalling HK$1.456 million and gives its first direction for additional CPD in disciplinary case 20 December 2024 The Accounting and Financial Reporting Council ( AFRC ) has sanctioned the following PIE auditor and its practising directors for multiple breaches of auditing standards in relation to the audits of China Water Affairs Group Limited ( Company ), a Hong Kong listed company, and its subsidiaries (collectively, Group ) for six consecutive years ended 31 March 2011 to 31 March 2016 ( 2011 to 2016 Audits respectively): BDO Limited (registration number M0200) ( BDO ); Mr Lo Ngai Hang ( Lo ), engagement partner for the 2011 and 2012 Audits; and Mr Lam Hung Yun Andrew ( Lam ), engagement partner for the 2013 to 2016 Audits. ... Besides, the Regulatees failed to critically evaluate the accounting of some of the relevant water supply arrangements in forming the unmodified auditor’s opinions. Further, BDO and Lam also failed to critically assess whether various legal opinions obtained were relevant or sufficient in the 2015 and 2016 Audits. ... Ms Janey Lai, CEO, remarked, “This marks the AFRC’s first settlement case concerning audit deficiencies by a listed entity auditor, and our first direction for additional CPD in a disciplinary case.

Consultations and Studies

Consultation on the Proposed Regulatory Framework for Sustainability Assurance in Hong Kong 30 December 2025 Consultation Conclusions in relation to FRC’s / AFRC’s Disciplinary Process and Sanctions Approach 23 June 2022 Engagement and Consultation on FRC’s / AFRC’s Regulatory Regime (English version only) 9 March 2022 Consultation Paper in relation to FRC’s / AFRC’s Disciplinary Process and Sanctions Approach 9 March 2022 Comparative Study on Audit Oversight Functions 5 June 2017 Consultation paper: Proposal to improve the regulatory regime for listed entity auditors 30 June 2014

FRC launches new Whistleblowing Policy

Mr Marek Grabowski, CEO of FRC said, “Whistleblowers are typically individuals with an insider’s view of listed entities or their auditors. They are therefore an important and highly valued source of intelligence to the FRC.

Discipline

Under the Accounting and Financial Reporting Council Ordinance (AFRCO), the AFRC has disciplinary powers over: PIE auditors Registered responsible persons Professional persons (i.e. CPAs and practice units) For an understanding of the legal framework under the AFRCO, the objectives of discipline and the sanction powers of the AFRC, please refer to the Discipline Policy Statement for PIE Auditors and Registered Responsible Persons and the Discipline Policy Statement for Professional Persons .

FRC welcomes the appointment of Mr Christopher Hui as Secretary for Financial Services and the Treasury

Dr Wong also conveyed his heartfelt thanks to Mr James Lau, “On behalf of the FRC, I would like to convey my gratitude to Mr Lau for his support to the FRC over the years, in particular, in the passage of the Financial Reporting Council (Amendment) Ordinance 2019 and our smooth transition to the new auditor regulatory regime. We wish him all the best in his retirement.”

Statement of Protocol & MoU

Statement of Protocol & MoU Statement of Protocol In order to enable the AFRC to fulfil its statutory oversight duties effectively as the independent auditor regulator in Hong Kong, the AFRC signed a revised statement of protocol on oversight arrangements with the Hong Kong Institute of Certified Public Accountants.

FRC welcomes the Government’s appointment of the Chief Executive Officer and Executive Director of the FRC

A veteran in the accounting profession, Mr Grabowski was the Director of Audit Policy of the Financial Reporting Council of the United Kingdom (UK FRC) whereby he led the development and maintenance of the standards for auditing, assurance and professional ethics for auditors and reporting accountants.

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