FRC finds that an auditor failed to identify a material misstatement and to express an appropriate audit opinion

18 Feb, 2022

On 17 February 2022, the FRC adopted an investigation report finding that the auditor (the Auditor) of a listed entity (Listed Entity) failed to:

(a) identify that an impairment loss on a receivable which had been fully impaired in 2014 was duplicated in the Listed Entity's consolidated financial statements for the year ended 31 December 2016 (2016 Financial Statements); and

(b) express an appropriate modified opinion on the 2016 Financial Statements given the misstatement set out in item (a) above.

Under the transitional provisions of the amended FRC Ordinance, since the relevant audit was completed before 1 October 2019, the investigation report has been referred to the Hong Kong Institute of Certified Public Accountants to determine if any disciplinary actions are warranted. Names of the relevant parties are being withheld at this time to avoid prejudicing any related disciplinary proceedings.

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