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FRC developments

Institute response to FRC assessment

Under the new regime for independent regulation of audits of Public Interest Entities (PIE) the Financial Reporting Council (FRC) has been given responsibility for oversight of the Institute’s performance of specified functions, namely registration of PIE auditors, setting continuing professional development (CPD) requirements for PIE auditors and setting of standards on professional ethics, and auditing and assurance practices for PIE auditors.


The first FRC report on assessment of the Institute’s performance of specified functions was published on 11 December 2020. The report can be found on the FRC’s website.


The Institute and the FRC share a common public interest aim of enhancing the quality of audit of PIE in Hong Kong.  The Institute participated in the assessment in the spirit of collaboration and to achieve the common aim.  The findings of the assessment identify certain areas for improvement in our processes or operations, appropriate actions will be taken to address issues identified. We will continue to pursue a constructive and collaborative approach to refining the assessment process to maximize the efficiency and value of future assessments.


The Institute is committed to all its statutory regulatory responsibilities, including registration of PIE auditors, setting CPD requirements for PIE auditors and setting of standards on professional ethics, and auditing and assurance practices for PIE auditors and will continue to exercise those responsibilities in a rigorous and professional manner. 

The Institute and the FRC sign a Statement of Protocol on arrangement for the oversight of PIE auditors

On 27 September 2019 the Institute and the FRC signed a Statement of Protocol on oversight arrangements. 


Under the regulation of PIE auditors regime that came into effect on 1 October 2019, the FRC regulates auditors of listed entities through a registration and recognition mechanism, as well as through inspection, investigation and disciplinary sanctions. The Institute, on the other hand, deals with applications for registration of PIE auditors; and maintains the register of PIE auditors. The Institute continues to carry out its responsibilities in setting continuing professional development requirements, and auditing and ethical standards for PIE auditors. In respect of these specific functions, the Institute’s performance are overseen by the FRC.


The Institute and the FRC have entered into this Statement of Protocol to clearly set out the new oversight arrangements.


Effective dates of Financial Reporting Council (Amendment) Ordinance

On 6 May the government gazetted 1 October as the effective date of the Financial Reporting Council (Amendment) Ordinance 2019. This is the date when the responsibility for regulating the auditors of listed companies will pass from the Institute to the FRC. The Institute will continue to work with the FRC to ensure a smooth transition of powers. From 2022, the FRC will be funded by a levy on securities transactions, paid by both buyers and sellers, in addition to levies paid by listed companies and their auditors.

Media Coverage


Financial Reporting Council (Amendment) Bill gazetted

On 30 January, the Financial Reporting Council (Amendment) Bill 2018 was enacted by the Legislative Council and was gazette on 15 February. The Financial Reporting Council will assume full responsibility for the regulation of auditors of listed companies at a date yet to be determined. The reform caps over a decade of work from the Institute and government and transitions Hong Kong from self-regulation to independent oversight – bringing Hong Kong's regulatory regime for auditors in line with the international standard and practice. The development also further strengthens Hong Kong's reputation as an international financial centre.


Before the FRC takes over, the Institute will further discuss with the Financial Services and the Treasury Bureau and the FRC to resolve outstanding issues and to ensure smooth transition and effective operation under the new regime. We will also contribute the views of the profession to the process of establishing the FRC's oversight of some of the Institute's functions.

Media Coverage



Financial Reporting Council (Amendment) Bill 2018

In January 2018 the government gazetted the Financial Reporting Council (Amendment) Bill 2018, as its legislative approach to the regulation of the auditors of listed entities. You can find more details about the Bill on the Bills Committee page of the Legislative Council website.


The Institute published a media statement in response to the gazettal on 19 January: 



Media Coverage



Third Bills Committee Meeting (10 April)

The third meeting of the Bills Committee took place on 10 April. Before the meeting the Institute returned a written submission (English / Chinese translation) in response to the request by Committee members on four key issues raised at the second meeting, namely:

  1. Guidance on sanctions determination and application;
  2. Regulation of non-Hong Kong auditors;
  3. EU equivalence; and
  4. The scope of assurance engagements covered by the Bill.


The Chief Executive and Registrar Raphael Ding also submitted bylined articles about the FRC (Amendment) Bill to two media outlets.

Media Coverage



Second Bills Committee Meeting (20 March)

On 9 March the Institute submitted its detailed response to the Bill.



The second meeting of the Bills Committee took place on 20 March. The committee met with stakeholders including the Institute, accounting firms and other associations. Their submissions can be found on the meeting website.



At the meeting Chief Executive and Registrar Raphael Ding highlighted some key areas of concern for the Institute. You can view his speech in Chinese or in English. You can also read the speech here (in Chinese).


Media Coverage



Background and previous consultations

Institute press release before the FRC amendment bill was published (October 2016)

Late in 2016 and in anticipation of the release of the FRC Amendment Bill, the Institute published a press release reiterating its position on audit regulatory reform. The press release is available here:



Government consultation

After the Institute's consultation finished, the government consulted stakeholders and the public from June to September 2014. More details about this consultation are available here: 


Government consultation (2014)


Government consultation conclusions and the Institute's response (June 2015)


Institute consultation

The Institute conducted a consultation with its members regarding the reform of audit regulatory regime from October 2013 to January 2014. For more details about this consultation see: 


Institute consultation (October 2013 – January 2014)