Late resignations, lack of scepticism tarnish Hong Kong auditors’ credibility: regulator
The regulator received a record 190 complaints for the financial year ended March 31 and carried out 77 investigations
Last-minute resignations and failure to recognise potential problems are the two major issues affecting auditors’ credibility in Hong Kong, according to the Accounting and Financial Reporting Council (AFRC).
Nearly a fifth of the investigations conducted on auditors were related to their late resignations, according to the audit regulator annual report on Wednesday.
“Late resignation of auditors is an issue, as listed companies may not have sufficient time to find a replacement, or the incoming auditors may be appointed at the last minutes before the reporting deadline,” Janey Lai, CEO of the AFRC, said at a media briefing to share the findings of the annual investigation and compliance report.
“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.”
The report, the fourth since 2019, reviewed financial statements, highlighted the shortcoming of auditors and provided suggestions on making improvements.
The council received a record 190 complaints against auditors or on accounting issues for the financial year ended March 31 and carried out 77 investigations. Complaints numbered 185 in the previous year, 101 in 2022 and 67 in 2019.
Florence Wong, head of investigation and compliance of AFRC, said the number of complaints rose last year because of the council’s expanded power and scope of investigations.
