Audit implications of current economic conditions for Hong Kong-listed companies

The Report examines how current economic conditions are impacting financial reporting and audit practices for Hong Kong-listed companies. It also provides relevant insights for company management, audit committees, and auditors.

Auditors should assess how economic conditions impact financial statements and audit practices.  They need to scrutinise accounting estimates such as expected credit loss, asset impairment, and going concern assessment, as these areas could carry higher audit risks due to their subjectivity.

To deliver high-quality audits, auditors must ensure that they:

1. Understand the audited entity and its environment;
2. Plan an effective audit based on evolving economic conditions;
3. Maintain professional scepticism when obtaining sufficient audit evidence for accounting estimates; and
4. Evaluate the competence, capabilities, and objectivity of experts, and the adequacy of their work when engaging them in testing accounting estimates.