Business
Rising Complaints and Late Resignations Undermine Hong Kong Auditors’ Reputation: AFRC Report Reveals
A surge in last-minute resignations and a deficiency of scrutiny have damaged the reputation of Hong Kong's auditors, says the regulatory body. The regulator reported an unprecedented 190 grievances for the fiscal year that concluded on March 31, and conducted 77 probes.
Sudden departures and an inability to identify possible issues are the main factors impacting the reliability of auditors in Hong Kong, says the Accounting and Financial Reporting Council (AFRC).
Approximately 20% of the inquiries carried out on auditors pertained to their delayed resignations, as per the yearly report of the audit regulator released on Wednesday.
The delayed stepping down of auditors poses a problem because publicly traded companies might not have enough time to secure a substitute, or the new auditors might be chosen just moments before the reporting deadline, said Janey Lai, Chief Executive Officer of the AFRC. She made this comment during a press conference to disclose the results of the yearly inspection and compliance report.
"The AFRC strongly recommends that new auditors prioritize examining the audit-related consequences of the events that led to the previous auditors' departure, and evaluate their own abilities before taking on the commitment."
This is the fourth analysis since 2019, which examined financial records, underscored the deficiencies of auditors, and offered recommendations for enhancements.
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