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Financial Reporting Council publishes its 2018 Annual Report
Not only did we complete a record number of investigations and enquiries, but also we spared no efforts in preparing ourselves for the auditor regulatory reform and fostering regulatory collaboration with auditor regulators in Hong Kong, the Mainland and the international arena.” ... Preparing for auditor regulatory reform: Supported the Government in the seven Bill’s Committee meetings of the Financial Reporting Council (Amendment) Bill (the Bill) by preparing research and analysis papers. ... The FRC is on a strong foothold to take on the new challenges and our new roles to discharge our responsibilities faithfully, honourably, transparently and fairly as an internationally aligned independent auditor regulator of Hong Kong.’
FRC investigates Next Digital financial statements and audits
The FRC identified questions about the financial statements and audits of Next Digital through proactive monitoring of market developments (noting that there were late changes in auditor between the three financial years to 31 March 2019, 2020 and 2021), a referral by another regulator and a complaint from a member of the public. ... The investigation will also address CCTH’s audit work on management’s going concern assessment and the appropriateness of its auditor’s report in that respect. ... Auditor reporting requirements about going concern material uncertainties If a material uncertainty relating to going concern exists, an auditor is required to: Include a Going Concern Section in their report if adequate disclosure of the material uncertainty is made in the financial statements; and Modify their report by qualifying or expressing an adverse opinion if not.
FRC issues (i) Consultation Conclusions and (ii) the 2021 Annual Inspection Report
On 17 June 2022, the FRC published an External Auditor’s Guide to Performing Root Cause Analysis (the RCA Guide ). ... We expect auditors to learn from these key findings and make improvements where applicable. ... As audit committees assist the boards in discharging their responsibilities, we urge audit committees to challenge management as to whether they are providing the auditors with quality information and to consider our key findings when challenging their auditors as to whether and how the auditors have properly addressed the common deficiencies identified in the Inspection Report.”
FRC completes first investigation with working papers obtained under MoU with the Supervision and Evaluation Bureau of the PRC Ministry of Finance
FRC completes first investigation with working papers obtained under MoU with the Supervision and Evaluation Bureau of the PRC Ministry of Finance 2 July 2021 On 15 June 2021, the FRC adopted an investigation report in relation to a failure by the auditor ( the Auditor ) of a listed entity ( Listed Entity ) to identify a material misstatement in the earnings per share (EPS) presented in the consolidated financial statements of the listed entity. ... The audit quality failure of the Auditor 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 and the exercise of professional judgement by an auditor.
The importance of regulatory synergy in upholding financial reporting and audit quality
Of the newly initiated investigations related to PIE auditors, 20% of which are associated with late auditor resignations. A major issue identified relates to the incoming auditors' client acceptance and audit planning. The AFRC urges incoming auditors to place emphasis on analysing the audit implications of the circumstances leading to the outgoing auditors’ resignation and assessing their capabilities before undertaking the engagement.
Reports
Reports Inspection 2022 Annual Inspection Report Audit Corporate Governance Quality Management System 11 July 2023 Policy and Governance 2023 Survey Report on the Implementation of Guidelines for Effective Audit Committees – Selection, Appointment and Reappointment of Auditors Audit Auditor Changes Corporate Governance 24 March 2023 Policy and Governance Audit Fees Paid by Listed Companies in Hong Kong in 2020/2021 Audit Auditor Changes Corporate Governance Financial Reporting 24 March 2023 Inspection Follow-up Open Letter on Auditor Changes Audit Auditor Changes Corporate Governance 11 January 2023 Inspection Audit Focus: 2022 financial year-end audits reminders Audit Auditor Changes Quality Management System 22 December 2022 Oversight 2022 Oversight Report on HKICPA’s Performance of the Specified Functions Audit Financial Reporting 15 November 2022 Inspection 2022 Interim Inspection Report Audit Quality Management System 15 November 2022 Inspection New and revised quality management standards follow-up survey on implementation progress by PIE Auditors Quality Management System 10 November 2022 Inspection Open letter regarding late auditor resignations Auditor Changes 27 October 2022 Investigation and Compliance 2022 Annual Investigation and Compliance Report Audit Financial Reporting 20 October 2022 Inspection 2021 Annual Inspection Report Audit Quality Management System 23 June 2022 Inspection An External Auditor’s Guide to Performing Root Cause Analysis Audit Quality Management System 17 June 2022
Registration
Issuance of practising certificates Registration of firm names and firms Registration of corporate practices Registration of local auditors as public interest entity (PIE) auditors Recognition of non-Hong Kong auditors as PIE auditors For an understanding of the legal framework under the AFRCO and the registration function of the AFRC, please refer to the details set out in the following policy statements: Policy Statement for the Issuance of Practising Certificates Policy Statement for the Registration of Firm Names and Firms Policy Statement for the Registration of Corporate Practices Policy Statement for the Registration of Local PIE Auditors Policy Statement for the Recognition of Non-Hong Kong Auditors Workflow Workflow Assess your eligibility Read the relevant Registration Guide to understand the registration criteria Prepare certified copies of all supporting documents Submit your application Submit your application by completing your application form, uploading the certified copies of supporting documents and paying non-refundable application fees online Respond promptly to enquiries from the AFRC Update your practising information Obtain the AFRC’s approval before the following changes take effect: Addition of responsible persons to a registered PIE auditor Amendments to Articles of Association of a corporate practice Change of name of a CPA firm or corporate practice Update the AFRC by submitting change notification and certified copies of supporting documents within 14 days of any change in practising information such as: Name of practice Registered office address Email address Contact phone number Composition of CPA firms or corporate practices Renew your registration Renew registration annually during the following renewal periods, otherwise it will expire by 31 December: Practising certificate, CPA firm and corporate practice: 1 November to 15 December PIE auditor: 1 October to 16 November Cancel your registration Submit cancellation request with certified copies of supporting documents
Reports
Reports Policy and Governance Reminder to PIE auditors: Be Prepared for Undertaking PIE Engagements Audit Quality Management System 28 June 2024 Policy and Governance Setting and Reinforcing Tone at the Top to Achieve Quality Audits Audit Corporate Governance Quality Management System 27 June 2024 Policy and Governance Roundtable Discussion on Audit Quality and Climate-integrated Audits in Hong Kong Audit Auditor Changes Corporate Governance Financial Reporting Sustainability Assurance 13 June 2024 Policy and Governance The Importance of Audit Documentation Integrity Audit Quality Management System 29 May 2024 Policy and Governance Report on the Analysis of the Public Interest Entity Audit Market in Hong Kong Audit Corporate Governance Financial Reporting Quality Management System Technology 27 March 2024 Policy and Governance Continuing Professional Development as a Key to Improving Audit Quality in Hong Kong Audit 8 January 2024 Inspection Audit Focus: 2023 Financial Year-end Audit Reminder Audit Corporate Governance Quality Management System 22 December 2023 Inspection Inspection Insights Audit Quality Management System 30 November 2023 Oversight 2023 Oversight Report on HKICPA’s Performance of Specified Functions Audit Financial Reporting 20 November 2023 Policy and Governance AFRC Addresses Concerns Surrounding Auditor Changes Audit Auditor Changes 28 September 2023 Investigation and Compliance 2023 Annual Investigation and Compliance Report Audit Financial Reporting 4 September 2023 Inspection Audit Focus: Effective Planning - The Key to High-Quality Audits Audit Corporate Governance 31 July 2023