Under the new regime, FRC will assume full responsibility for the regulation of Public Interest Entity ("PIE") auditors, and has inspection, investigation and disciplinary functions with regard to PIE auditors. FRC is also responsible for recognition of overseas auditors who wish to undertake any PIE engagement for an overseas entity.
HKICPA will be responsible for registering, and setting continuing professional development requirements and standards on professional ethics, auditing and assurance for local PIE auditors, subject to oversight by the FRC.
Under section 3(1) of the amended Financial Reporting Council Ordinance (Cap. 588) ("FRCO"), a PIE means a listed corporation with listed shares or stocks or a listed collective investment scheme in Hong Kong.
Under Part 1 of Schedule 1A of the FRCO, any of the following types of engagement carried out by an auditor for a PIE is a PIE engagement: • An auditor's report on the PIE's annual financial statements required by the Companies Ordinance (Cap. 622), the Listing Rules or any relevant code issued by the Securities and Futures Commission; • An accountant's report required to be included in a prospectus or other listing documents for the listing of a corporation's shares or stocks or for the listing of a collective investment scheme; • An accountant's report required under the Listing Rules to be included in a circular for a reverse takeover or a very substantial acquisition.
With effect from 1 October 2019, under the FRCO, only local auditors which are registered with HKICPA as Registered PIE Auditors, or overseas auditors recognized as PIE auditors by FRC may carry out PIE engagements. It is an offence for any person who is not a Registered or Recognized PIE Auditor to undertake or carry out any PIE engagement or to hold out as a Registered or Recognized PIE Auditor.
Local auditors should apply to HKICPA for registration as a Registered PIE Auditor. Overseas auditors should apply to FRC for recognition as a Recognized PIE Auditor. For enquiries on the application procedures for recognition of an overseas auditor as a Recognized PIE Auditor, please contact FRC.
Under section 2 of the Professional Accountants Ordinance (Cap. 50), "Practice Unit" means –
a certified public accountant (practising) practising accountancy on his own account (i.e. a practising certificate holder practising in his/ her own name)
a firm of certified public accountants (practising) (i.e. a CPA firm)
a corporate practice
A local auditor means a practice unit registered with HKICPA. An overseas auditor refers to an audit practice outside Hong Kong, including China and Macau.
Applicants may apply online via the HKICPA website at: www.hkicpa.org.hk and submit the application by reference to the deadlines for submission of applications announced by the Institute from time to time. HKICPA's Registration and Practising Committee will examine the applications and submit their recommendations to the HKICPA Council for approval. Please click for full information.
(a) Engagement Partner(s) - responsible for the PIE engagements carried out by the PIE auditor; (b) Engagement Quality Control Reviewer(s) - oversees the engagement quality control reviews carried out in relation to the PIE engagements carried out by the PIE auditor; and (c) Quality Control System Responsible Person(s) - responsible for the quality control system of the PIE auditor.
An Engagement Partner of the PIE auditor must be a CPA (practising) (i.e. a HKICPA member holding a valid practising certificate). In the case of a firm, he/she must be a practising partner or authorised signatory. If the applicant is a corporate practice, he/she must be a practising member director of the practice, or an authorised person (applicable to a sole practising corporate practice only).
The Engagement Quality Control Reviewer must be a CPA (i.e. a HKICPA member) or a member of an accountancy body* which has entered into a recognition agreement with the Institute, and possesses relevant auditing experience enabling him to perform the role in compliance with the Hong Kong Standard on Quality Control 1 - Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements. He/ She can be an employee of the PIE auditor applicant or an external person.
* Members of the following 12 recognized bodies are eligible for registration as EQCR: (i) Association of Chartered Certified Accountants ("ACCA") (ii) Chartered Accountants Australia & New Zealand ("CA ANZ") (iii) Chartered Accountants Ireland ("CAI") (iv) Chartered Institute of Management Accountants ("CIMA") (v) Chartered Professional Accountants Canada ("CPA Canada") (vi) Chinese Institute of Certified Public Accountants ("CICPA") (vii) CPA Australia (viii) Institute of Chartered Accountants in England & Wales ("ICAEW") (ix) Institute of Chartered Accountants of Scotland ("ICAS") (x) Institute of Chartered Accountants of Zimbabwe ("ICAZ") (xi) South African Institute of Chartered Accountants ("SAICA") (xii) U.S. State Boards of Accountancy ("U.S. CPA")
A Quality Control System Responsible Person must be a practising partner of the firm or practising member director of the corporate practice AND the chief executive officer or a member of the managing board of partners of the firm/ corporate practice. If the PIE auditor applicant is a practising certificate holder practising in his/ her own name or a sole proprietor of a firm/ corporate practice, he/ she can assume the role.
A Registered PIE Auditor is required to have at least one person registered for each type of Responsible Persons. It can register more than one person for each type of Responsible Persons.
Yes, a person can be registered for any or all three types of Responsible Persons. However, for a practising certificate holder practising in own name, or a sole proprietorship firm/ corporate practice, the Engagement Quality Control Reviewer ("EQCR") cannot be the same person as the Engagement Partner of a PIE engagement. Therefore, they must register at least one person who is not the sole practitioner as the EQCR.
If it is the intention of a local auditor to nominate an employee from its overseas firm as an EQCR, it will need to register him/ her with HKICPA. The EQCR must be a CPA, i.e. a member of HKICPA, or a member of one of the 12 accountancy bodies and possess relevant auditing experience (see Q13).
No. The Engagement Quality Control Reviewer ("EQCR") cannot be the same person as the Engagement Partner of a PIE engagement. Therefore, if the PIE auditor is a practising certificate holder practising in his/ her own name or a sole proprietorship firm/ corporate practice, it must register at least one person who is not the sole practitioner as the EQCR.
A PIE auditor applicant needs to satisfy the HKICPA Council that its Responsible Persons are fit and proper persons to be a CPA, i.e. an HKICPA member, in order to qualify for registration. The latest fit and proper criteria are accessible from the HKICPA website at: https://www.hkicpa.org.hk/en/Membership/Registration-and-licensing/Members-and-Affiliates/Register-as-a-CPA/fit-person
Currently the declaration form is available in hardcopy format only. Each nominated Responsible Person should sign on the form which must be submitted by the PIE auditor applicant online to the Institute as part of the application. No e-signature on the form is accepted.
The HKICPA Council may refuse the application or grant the application subject to any condition that the Council considers appropriate to impose, including but not limited to the completion of training in the form of relevant CPD programmes by the Responsible Person(s).
Upon reviewing the disciplinary record, FRC sanction and other fit and proper issues, if any, of a nominated Responsible Person, Council may, after taking into account relevant factors, require the individual to complete additional training in the form of relevant CPD programmes before he/ she can undertake (i.e. accept the appointment of) any PIE engagement or carry out any activity as a Responsible Person of the Registered PIE Auditor. The aim of requiring the individual to complete additional training in the areas of deficiencies is to ensure that he/ she improve his/ her professional competence in order to protect public interest.
Regarding the procedures for imposing CPD requirements in relation to the registration of a PIE Auditor, please refer to the Flowchart.
A Registered PIE Auditor should inform the Institute when the cessation of Responsible Person occurs. Under the FRCO, if any of the registered Responsible Persons no longer meets the qualification requirements for registration as a Responsible Person of the respective role(s) or ceases to be a Responsible Person, you are required to notify the Institute by submitting a completed application Form PIE-3B as soon as practicable and in any event within 14 days thereof.
If the newly admitted practising partner will also be nominated to register as a Responsible Person for your PIE Auditor registration, you should: Step 1 – complete and return a Form RF-3 along with appropriate firm annual fee for registration of this practising certificate holder as a practicing partner of your firm Step 2 – complete and return a Form PIE-3A along with his/her duly signed Fit and Proper Declaration Form to apply for registration of this new practising partner as a Responsible Person.
HKICPA maintains registers of Registered PIE Auditors (local PIE auditors) and Recognized PIE Auditors (overseas PIE auditors) on its website at www.hkicpa.org.hk These registers are also available for public inspection during office hours at the Institute's service counter at 27th floor, Wu Chung House, 213 Queen's Road East, Wan Chai, Hong Kong.
A person may obtain from the Institute a copy of an entry in, or an extract of, the PIE Auditors register upon payment of HK$50 per copy. For the provision of a certified true copy of the document, the charge is HK$150 per copy.
Please call FRC at: 2810 6321; or email general@frc.org.hk for questions on inspection, investigation and sanctioning of PIE Auditors and recognition of overseas auditors. Click here for other contact details.
