Hong Kong proposes legislation giving its Financial Reporting Council responsibility to investigate and discipline auditors

Interesting article in Accounting Today regarding proposed legislation to be introduced in Hong Kong’s Legislative Council on January 24 giving the Financial Reporting Council the responsibility to investigate and discipline auditors. It will also empower the FRC to oversee ethics and standards in the industry. The 11-year-old FRC currently investigates public company audits and passes findings to a self-regulated body, the Hong Kong Institute of Certified Public Accountants. If passed and implemented, it would also make it easier for the FRC to work with overseas regulators, such as the PCAOB, to have an oversight over foreign auditing firms working in Hong Kong. For years, the PCAOB has been hindered in its quest for access to work papers and inspection of Chinese companies. In July of 2017, the PCAOB revoked the registration of Hong Kong-based audit firm Crowe Horwath (HK) CPA Limited for refusing to cooperate with a Board investigation of the firm’s audits of a China-based issuer. The firm refused to produce documents in response to a formal demand for documents, including work papers.

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