FRC Initiates Investigation into Audits of Convoy for 2017 to 2019

23 Feb, 2021

The FRC today initiated an investigation into the audits of the financial statements of Convoy Global Holdings Limited (Convoy) for 2017, 2018 and 2019.

The financial statements for each year and the auditor’s reports issued by Zhonghui Anda CPA Limited (Zhonghui) were published by Convoy on 18 February 2021.

The audit opinion for each year is qualified, meaning that Zhonghui affirms, subject to specified exceptions, that the relevant year’s financial statements have been properly prepared in accordance with the applicable financial reporting requirements. Each opinion is subject to multiple exceptions, in relation to which Zhonghui indicates that it was unable to obtain the evidence necessary to form an unqualified opinion.

An auditor is not permitted to qualify the audit opinion if the unknown effects of such exceptions could be both material and pervasive. Instead they are required to withdraw from the audit or to state in the auditor’s report that they do not express an opinion on the Financial Statements (i.e. to disclaim their opinion). This is because a qualification would be inadequate to communicate the gravity of the situation, in those circumstances.

Effects of exceptions that are not confined to specific elements, accounts or items of the financial statements or that nonetheless represent or could represent a substantial proportion of the financial statements are by definition pervasive.

Having considered the nature and extent of the exceptions described by Zhonghui, the FRC considers that they give reason to inquire into whether each of Zhonghui, the engagement partner and the engagement quality control reviewer has or may have failed to express an appropriate audit opinion on the Convoy financial statements for 2017, 2018 and 2019.

For details, please click here

News Centre