An effective regulatory regime of the accounting profession, including auditing, is crucial for the business community and is essential for maintaining Hong Kong’s status as an international financial centre and business hub.
In 2006, the Financial Reporting Council (FRC) was established as an independent regulatory body to investigate possible auditing and reporting irregularities of auditors of listed entities, and enquire into possible non-compliance with accounting requirements of listed entities in Hong Kong.
In order to further enhance the independence of the regulatory regime for auditors of listed entities from the audit profession so as to enhance investor protection and ensure that the regime is benchmarked against the international standard and practice, we launched the Public Interest Entities (“PIE”) auditor regulatory regime on 1 October 2019.
In the light of the positive experience of the FRC’s transition to the expanded role in auditor regulation, the Government pursued a further reform to enhance the independence of our regulatory regime of the accounting profession in line with international developments with increased coherence and efficiency. The new regulatory regime of the accounting profession has been in operation since 1 October 2022. Under the new regime, the FRC has been renamed as the Accounting and Financial Reporting Council (AFRC) and become a full-fledged independent regulatory and oversight body of the accounting profession. The AFRC is vested with expanded statutory functions to issue practising certificates to certified public accountants; register practice units and PIE auditors; and deal with matters regarding inspection, investigation and discipline of the accounting profession.
It is also tasked to promote the development of the accounting profession and oversee the Hong Kong Institute of Certified Public Accountants’ performance of its various statutory professional functions.
For more information, please visit the following websites/linked documents:
Accounting and Financial Reporting Council
https://www.afrc.org.hk/
Accounting and Financial Reporting Council Ordinance
https://www.elegislation.gov.hk/hk/cap588?_lang=en