News Centre

​Financial Reporting Council (FRC) today issues its first policy and governance report on the Overview of the Market for Listed Entity Audits in Hong Kong (the “Market Report”), which provides high level insights into how competition operates in the market for listed entity audits in Hong Kong (the “Market”).  It includes an analysis of the size and competitive structure of the Market, the relative significance of non-audit to audit services provided to listed entities by their auditors and how these factors have developed from 2010 to 2019.  The Market Report (click here​) can be accessed on the FRC’s official website – www.afrc.org.hk​.

Dr Kelvin Wong, Chairman of the FRC remarked, “As an effective auditor regulator, upholding the quality of financial reporting and protecting public interest is at the core of everything we do. Apart from our statutory functions, the FRC conducts research and studies that are conducive to enhancing audit quality, audit independence and the healthy development of the market for listed entity audits in Hong Kong.”

Introducing the Market Report, Mr Marek Grabowski, CEO of the FRC said, “The primary concern of the FRC is to understand whether the Market is functioning effectively in the interests of the investing public and the wider public interest.  The Market Report provides a basis for us to exercise our regulatory functions and to give directional observations to listed entity auditors and related guidance to key stakeholders concerned with listed entity governance, including their audit committees.”

The findings of the Market Report assist us in understanding how competition operates in the Market and therefore in identifying related factors, such as market concentration, auditor switching rates, audit firm resilience vulnerabilities, audit pricing and auditor provision of non-audit services, which may indicate risks to audit quality under the oligopolistic structure of the Market.  

Ms Florence Wong, Deputy CEO and Head of Oversight, Policy and Governance said, “Audit quality is one of the key elements of quality financial reporting.  The report highlights factors that may indicate risks to audit quality that audit firms, listed entities and audit committees should care about.  The Department of Oversight, Policy and Governance will conduct further research and develop guidance to drive audit quality.”

For details, please click here