Hong Kong’s audit watchdog to start announcing investigations of ‘high public interest’, chairman says
- If we investigate a case that involves high public interest, then we should announce the investigation once we start the process, says FRC chairman
- The watchdog is investigating the financial reports and auditors of China Evergrande Group, Next Digital and Convoy Global Holdings
Hong Kong’s audit regulator will start announcing investigations in cases it views as of “high public interest”, its chairman said.
“If we are conducting an investigation in a case that involves high public interest, then we should keep the transparency high and announce the investigation once we start the process,” Kelvin Wong Tin-yau, the FRC’s chairman, said in an interview. “We did not have such disclosures previously, as most of the previous cases were not that high profile. We will keep this disclosure principle for our future investigations.”
The change in disclosure policy reflects the city’s efforts to step up the clean up any malpractice and to strengthen international investors’ confidence in what is Asia’s third-largest stock market.
Last month, the FRC said it was investigating China Evergrande’s 2020 accounts and their audit by PwC because it had concerns about the adequacy of reporting on whether it could continue operating as a going concern. The mainland Chinese developer faces more than US$300 billion in debt.
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In August, it said it would investigate whether Next Digital’s financial statements for the two-and-a-half years up to September 2020 contained any misleading public information. Next Digital is the publisher of the now-defunct newspaper Apple Daily. The regulator will also investigate its auditors – Deloitte Touche Tohmatsu in 2019 and CCTH CPA in 2020. Both gave a clean chit to Next Digital’s financial statements and later resigned.
