Hong Kong audit watchdog targets idle firms to boost capacity

Hong Kong’s accounting regulator has signaled stricter monitoring of weak auditing firms, encouraging underutilized firms to play a role in supporting the country’s capital markets.

Administrative Matters

The Auditing Council may require audit firms with ineffective services to reduce their workload during license renewal, the Chief Executive Officer said. Janey Lai said Tuesday on the sidelines of the press conference. At the same time, the regulator sees room for expansion among auditors who currently handle few or no company accounts, opening up more capacity to meet growing demand.

The comments come after the market regulator and the stock exchange raised the alarm over the quality of the application at the same time as the initial public offering in the Asian financial center is progressing. The Security and Safety Commission has placed a cap on the bank’s guidance to work on no more five deals at the same time. It also began a review of 13 investment banks in January to deal with unemployment.

In the coming year, it will focus on how companies identify and address quality risks arising from the IPO boom, according to annual monitoring. inspection report released Tuesday. The announcement was made by AFRC an open letter In February, a warning of insufficient equipment and skills could put pressure on the quality of the IPO.

About 64 companies are listed on AFRC registration as auditors of the “public partnership” who can sign the financial accounts of the listed company. At least nine were not named as lead auditors for any listed company, according to data compiled by Bloomberg News. Lai added that the AFRC has no immediate plans to impose an industry ban on the deal’s ratings because the audits vary in size, Lai said.

Most of the new companies listed in Hong Kong are large Chinese companies that work primarily with investment banks and auditors, leaving a few players, said Andrew Fan, director and shareholder of Fan, Mitchell & Co., one of the so-called PIE auditors without major responsibility for auditors and listed companies.

The accounting market has also suffered from audit fees, making it difficult to justify the cost of retaining a professional team, said Fan, who is also an entrepreneur. Member of Parliament in the regional parliament.

Calvin Tse, partner of Sinno International CPA Ltd., a PIE firm that does not perform primary audit work for companies. He said price wars and limited resources limit their ability to take on large companies even when customers reach out to smaller companies.

Both Fan and Tse’s companies work on internal control projects for listed companies, they said. These functions, unlike the appointment of an auditor general, do not require the status of a PIE auditor.

“Small companies should be in a better position to provide valuable services, but the challenges are many,” said Tse.