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On 14 April 2022, the FRC adopted an investigation report finding that the auditor (the Auditor) of a listed entity (Listed Entity) failed to obtain sufficient appropriate evidence to evaluate the measurement and impairment assessment of goodwill arising from an acquisition (Acquisition), which was included in the consolidated financial statements of the Listed Entity for the year ended 31 December 2016 (2016 Financial Statements).  The Listed Entity fully impaired the concerned goodwill in the year ended 31 December 2017.

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.

The investigation was initiated on 12 July 2018, following referrals by other regulators in December 2017 and May 2019.

For details, please click here.