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FAQs - Non-Hong Kong PIE Auditor

FAQs - Non-Hong Kong PIE Auditor Recognized PIE auditor 1. If an overseas entity intends to appoint an overseas auditor to carry out a PIE engagement for it, is the overseas auditor required to be recognized as a PIE auditor under the AFRCO? ... If an overseas entity intends to appoint joint auditors (e.g. a Hong Kong auditor registered by the AFRC and an overseas auditor or two overseas auditors) to carry out a PIE engagement for it, is (are) the overseas auditor(s) required to be recognized as a PIE auditor under the AFRCO?

FRC completes second investigation with working papers obtained under MoU with the Supervision and Evaluation Bureau of the PRC Ministry of Finance

Deficiency in the audit 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 in the exercise of professional judgement by an auditor. ... It also requires the auditor to obtain an understanding of the applicable financial reporting framework.

FRC finds that auditor failed to appropriately address an identified misstatement and to appropriately exercise professional judgement in determining overall materiality

FRC finds that auditor failed to appropriately address an identified misstatement and to appropriately exercise professional judgement in determining overall materiality 23 December 2021 The FRC adopted an investigation report finding that the auditor ( the Auditor ) of a listed entity ( Listed Entity ) failed to: (a) appropriately address an identified misstatement in the measurement of consideration payable for the acquisition of a subsidiary in the consolidated financial statements of a Listed Entity for the year ended 31 March 2017 ( the Relevant Financial Statements ); and (b) appropriately exercise professional judgement in determining materiality for the financial statements as a whole. ... The audit quality failure of the Auditor The Auditor identified the misstatement relating to the measurement of the Consideration Payable. The Auditor considered that the effect of the misstatement was not material and therefore did not request an adjustment to the financial statements and issued an auditor’s report with an unmodified opinion.

FRC completes an investigation relating to an auditor’s failure to obtain necessary evidence to conclude that an associate was not impaired

FRC completes an investigation relating to an auditor’s failure to obtain necessary evidence to conclude that an associate was not impaired 14 December 2021 The FRC adopted an investigation report finding that the auditor ( the Auditor ) of a listed entity (Listed Entity) failed to obtain sufficient appropriate audit evidence in relation to the impairment assessment of the Listed Entity’s investment in an associate ( the Investment ). ... 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 in the exercise of professional judgement by an auditor. ... HKSA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures deals with the auditor’s responsibilities relating to accounting estimates, including fair value accounting estimates, and related disclosures in an audit of financial statements.

FRC finds that an auditor failed to obtain the evidence needed to evaluate the measurement and impairment assessment of goodwill arising from an acquisition

FRC finds that an auditor failed to obtain the evidence needed to evaluate the measurement and impairment assessment of goodwill arising from an acquisition 20 April 2022 On 14 April 2022, the FRC adopted an investigation report finding that the auditor ( the Auditor ) of a listed entity ( Listed Entity ) failed to obtain sufficient appropriate evidence to evaluate the measurement and impairment assessment of goodwill arising from an acquisition (Acquisition) , which was included in the consolidated financial statements of the Listed Entity for the year ended 31 December 2016 (2016 Financial Statements) . ... The audit quality failure of the Auditor The Auditor appointed a valuer (Auditor’s Expert) to conduct a review of the Acquiree’s Fair Value. ... The Auditor also did not identify these deficiencies in the work of the Auditor’s Expert.

AFRC Study Advocates for Improved Sustainability Assurance Practices and Urges Auditors to Incorporate Climate Risks in Financial Audits

Similarly, 40% reported moderate to high exposure to transition risks from policy, technological, and market changes aimed at mitigating or adapting to climate change. ... Ms Janey Lai, CEO of the AFRC, said, “Sustainable finance plays a pivotal role in addressing climate change by channelling capital into environmentally responsible projects and businesses. ... "The AFRC is committed to building a resilient and forward-thinking accounting profession that not only adapts to change but also drives and thrives on change.

FRC publishes survey of implementation progress by PIE Auditors for new and revised quality management standards

FRC publishes survey of implementation progress by PIE Auditors for new and revised quality management standards 31 March 2022 The Financial Reporting Council (the FRC ) today publishes the results of its survey ( Survey ) on implementation progress by Public Interest Entity ( PIE ) Auditors (the PIE Auditors ) for the new and revised quality management standards (the new QMSs ). ... Mr Marek Grabowksi, CEO of the FRC, said, “As the regulator of PIE Auditors in Hong Kong, the FRC will have the duty to evaluate whether PIE Auditors implemented the new quality management standards by the fast approaching deadline of 15 December 2022. ... A self-assessment questionnaire was sent to all Registered PIE Auditors and Recognised PIE Auditors to understand their readiness for implementation of the new QMSs.

AFRC calls on auditors and audit committees to strengthen independence safeguards around procurement and purchases from audit clients

AFRC calls on auditors and audit committees to strengthen independence safeguards around procurement and purchases from audit clients 4 October 2024 The AFRC has today published an article titled Safeguarding Auditor Independence: Concerns Surrounding Procurement and Purchases from Audit Clients . The article highlights the AFRC’s concerns regarding potential threats to auditor independence that may arise from procurement and purchases involving audit clients. ... Any breaches to independence requirements can undermine an auditor’s professionalism and jeopardise audit quality.

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