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AFRC reminds auditors of the importance of audit documentation integrity
AFRC reminds auditors of the importance of audit documentation integrity 29 May 2024 The Accounting and Financial Reporting Council ( AFRC ) today publishes an article titled The Importance of Audit Documentation Integrity . It aims to remind auditors of the key standards relating to audit documentation integrity and to emphasise the importance of improving audit quality through the development of an effective system of audit documentation policies, procedures, and controls. Audit documentation is the primary means by which auditors demonstrate their compliance with auditing standards.
FRC finds that an auditor failed to identify a material misstatement and to express an appropriate audit opinion
FRC finds that an auditor failed to identify a material misstatement and to express an appropriate audit opinion 18 February 2022 On 17 February 2022, the FRC adopted an investigation report finding that the auditor ( the Auditor ) of a listed entity ( Listed Entity ) failed to: (a) identify that an impairment loss on a receivable which had been fully impaired in 2014 was duplicated in the Listed Entity’s consolidated financial statements for the year ended 31 December 2016 ( 2016 Financial Statements ); and (b) express an appropriate modified opinion on the 2016 Financial Statements given the misstatement set out in item (a) above. ... The Auditor also failed to express an appropriate modified opinion on the 2016 Financial Statements. ... Relevant technical standards HKSA 330 The Auditor’s Responses to Assessed Risks deals with the auditor’s responsibility to design and implement responses to the risks of material misstatement identified and assessed by the auditor.
AFRC advocates healthy practices in auditor appointments and audit fee setting to safeguard public trust
AFRC advocates healthy practices in auditor appointments and audit fee setting to safeguard public trust 31 July 2025 The Accounting and Financial Reporting Council ( AFRC ) today releases an article titled “ Upholding trust in capital markets: Maintain healthy practices in auditor ” appointments and audit fee setting . ... Annual reports from 2020 to 2024 showed that 73% of auditor changes resulted in fee reductions. ... Ensure timely payment of audit fees to support auditor independence. Auditors should: Set fees that match the audit’s scope and complexity.
AFRC expects full compliance by auditors with relevant laws and regulations
AFRC expects full compliance by auditors with relevant laws and regulations 16 July 2024 The Accounting and Financial Reporting Council ( AFRC ) stresses that as the independent regulator of the accounting profession in Hong Kong, it expects all audit firms and their personnel to fulfil the fundamental principle of professional behaviour to comply with all relevant laws and regulations under paragraphs 110.1 A1(e) and R115.1(a) of the Code of Ethics for Professional Accountants. It has come to the attention of the AFRC that in a recent decision notice, the Supervision and Evaluation Bureau of the Ministry of Finance of the People’s Republic of China has imposed a sanction on an individual certified public accountant in the Mainland for having accepted audit work from a Hong Kong PIE auditor in respect of certain audits of Mainland enterprises listed in Hong Kong on his own account rather than through the Mainland public accounting firm to which he belonged as required under Mainland law. ... In addition, under the AFRC regime, in considering the applications of registration of PIE auditors and their renewals, the AFRC may have regard to all information in its possession, including the compliance records of an applicant.
AFRC reminds PIE auditors to be prepared for undertaking PIE engagements
AFRC reminds PIE auditors to be prepared for undertaking PIE engagements 28 June 2024 The AFRC today has published an article titled Reminder to PIE auditors: Be prepared for undertaking PIE engagements . It is primarily targeted at registered public interest entity ( PIE ) auditors without PIE engagement and practice units which are considering registration as PIE auditors with the AFRC. ... Our reminder equally applies to those PIE auditors with PIE engagement.
AFRC expects active cooperation and full compliance by PIE auditors with the AFRC Ordinance and their self-reporting of critical incidents in a timely manner
AFRC expects active cooperation and full compliance by PIE auditors with the AFRC Ordinance and their self-reporting of critical incidents in a timely manner 7 December 2023 The Accounting and Financial Reporting Council ( AFRC ) reiterates, as the independent regulator of the accounting profession in Hong Kong, that it expects all PIE auditors and registered responsible persons to fully comply with the Accounting and Financial Reporting Council Ordinance ( AFRCO ) and report to the AFRC in a timely manner any critical incidents in relation to audit quality and the firms’ systems of quality management.
AFRC Investigation Report shows auditors’ inadequate response to increasing incidence of fraud in financial statements
AFRC Investigation Report shows auditors’ inadequate response to increasing incidence of fraud in financial statements 4 September 2023 The Accounting and Financial Reporting Council ( AFRC ) today issues its 2023 Annual Investigation and Compliance Report ( Annual I&C Report ), covering the 12 months from 1 April 2022 to 31 March 2023. ... Ms Wong continued, “Auditors have a clear responsibility to identify, assess and appropriately address fraud risks during audits of financial statements. The AFRC expects auditors to carry out their audits in strict compliance with relevant auditing standards, be familiar with the types of fraud that are relevant to financial reporting non-compliance and the conditions that may indicate they have occurred, and design audit procedures that are adequate to enable them to address identified fraud risks.”
AFRC sets out its position on documentation of an auditor’s work on “other information” included in the annual report of a listed entity
AFRC sets out its position on documentation of an auditor’s work on “other information” included in the annual report of a listed entity 28 April 2023 In a recently completed investigation referred from the Stock Exchange of Hong Kong Limited, the Accounting and Financial Reporting Council ( AFRC ) identified an improper practice regarding audit documentation relating to the work carried out by the auditor ( the Auditor ) of a listed entity ( the Listed Entity ) on other information 1 included in the Listed Entity’s annual report. ... The practice adopted by the Auditor The Auditor had obtained from management a version of documents containing other information before the date of the auditor’s report and performed the procedures on the other information. ... Accordingly, a statement included in the “Other Information” section of the auditor's report that the auditor has nothing to report might be misleading to investors reading the auditor's report.