Public Interest Entity ("PIE") Auditor
Last update on 1 October 2019
Q1. What are the roles of the Financial Reporting Council ("FRC") and the Hong Kong Institute of Certified Public Accountants ("the Institute"/ "HKICPA") after the Financial Reporting Council (Amendment) Ordinance 2019 came into operation on 1 October 2019?
Under the new r egime, FRC will assume full r esponsibility for the r egulation of Public Interest Entity (" PIE") auditors, and has inspection, investigation and disciplinary functions with r egar d to PIE auditors. FRC is also r esponsible for r ecognition of overseas auditors who wish to undertake any PIE engagement for an overseas entity.
HKICP A will be r esponsible for r egistering, and setting continuing pr ofessional development r equir ements and standar ds on pr ofessional ethics, auditing and assurance for local PIE auditors, subject to oversight by the FRC.
Q2. What is a Public Interest Entity?
Under section 3(1) of the amended Financial Reporting Council Or dinance (Cap. 588) ("FRCO"), a PIE means a listed corporation with listed shar es or stocks or a listed collective investment scheme in Hong Kong.
Q3. What is a Public Interest Entity Engagement?
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 r eport on the PIE' s annual financial statements r equir ed by the Companies Or dinance (Cap. 622), the Listing Rules or any r elevantr es Commission; An accountant' s r eport r equir ed to be included in a pr ospectus or other listing documents for the listing of a corporation's shar es or stocks or for An accountant' s r eport r equir ed under the Listing Rules to be included in a cir cular for a r everse takeover or a very substantial acquisition.
Q4. Who can perform a PIE engagement?
With effect from 1 October 2019, under the FRCO, only local auditors which ar e r egister ed with HKICP A as R egister ed PIE Auditors, or overseas auditors r ecognized as PIE auditors by FRC may carry out PIE engagements.f fence for any person who is not a R egister ed or R ecognized PIE Auditor to undertake or carry out any PIE engagement or to hold out as a R egister ed or R ecognized PIE Auditor .
Q5. To whom shall an auditor apply for registration as a Registered PIE Auditor 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.contact FRC
Q6. What is a practice unit?
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
Q7. What do "local auditor" and "overseas auditor" mean?
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.
Registration as a Registered PIE Auditor by practice units registered with HKICPA
Q8. What are the requirements for registration as a Registered PIE Auditor?
Only practising certificate holders (i.e. CPA (practising) practising in his/ her own name), firms and corporate practices registered with HKICPA may apply to the HKICPA Council for registration as a Registered PIE Auditor.
The CPA (practising), partners of the firm or directors of the corporate practice (as the case may be) are fit and proper persons to be a certified public accountant ("CPA"), i.e. HKICPA member.
The applicant must nominate individuals who meet the qualification requirements as Responsible Persons of the PIE Auditor, namely: Each Responsible Person of the applicant is a fit and proper person to be a CPA.
Q9. How can we apply for registration as a Registered PIE Auditor?
Applicant s may apply onlin e via th e HKICPA websit e 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.click for full information.
Q10. May I apply for registration as a practice unit and registration as a Registered PIE Auditor at the same time?
No, the applicant must be registered as a practice unit first before they can apply for registration as a Registered PIE Auditor.
Responsible Persons and Fit & Proper Requirements
Q11. What are the responsibilities for the three types of Responsible Persons?
(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 thecarried out by the PIE auditor; and(c) Quality Control System Responsible Person(s) - responsible for the quality control system of the PIE auditor.
Q12. What are the qualification requirements for registration as an Engagement Partner?
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 dir ector of the practice, or an authorised person (applicable to a sole practising corporate practice only).
Q13. What are the qualification requirements for registration as an Engagement Quality Control Reviewer?
The Engagement Quality Contr ol Reviewer must be a CP A (i.e. a HKICPA member) or a member of an accountancy body* which has enter ed into a r ecognition agr eement with the Institute, and possesses r elevant auditing experience enabling him to perform the r ole in compliance with the Hong Kong Standar d on Quality Contr ol 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 exter nal person.
* Members of the following 12 recognized bodies are eligible for registration as EQCR:(ii) Chartered Accountants Australia & New Zealand ("CA ANZ")Chartered Institute of Management Accountants ("CIMA")Institute of Chartered Accountants in England & Wales ("ICAEW")
Q14. What are the qualification requirements for registration as a Quality Control System Responsible Person?
A Quality Contr ol System Responsible Person must be a practising partner of the firm or practising member dir ector of the corporate practice AND the chief executive of ficer or a member of the managing boar d 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 pr oprietor of a firm/ corporate practice, he/ she can assume the r ole.
Q15. For each of the three types of Responsible Person, can we register more than one person?
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.
Q16. Can a person be registered for more than one type of Responsible Person?
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.
Q17. If the Engagement Quality Control Reviewer ("EQCR") is from an overseas firm, do we need to register him with HKICPA?
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) .
Q18. I am the sole practitioner practising under the name of a corporate practice. May I take up all the three roles without nominating other individual(s) as Responsible Persons for the PIE auditor application?
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.
Fit and Proper Requirement
Q19. What does being a fit and proper person to be a CPA mean?
Q20. For the Fit and Proper Declaration Form signed by Responsible Person, will you accept e-signature on the form?
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.
Q21. What will be the outcome of a PIE auditor application if a nominated Responsible Person(s) fails to satisfy the HKICPA Council that he/she is a fit and proper person to be a CPA?
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).
Q22. Under what circumstances does Council impose a condition in relation to the registration of a PIE Auditor, requiring a Responsible Person to complete CPD training? What are the procedures?
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 .
Maintain the registration of Registered PIE Auditors
Q23. Is there any deadline to inform the Institute of the cessation of registration of Responsible Person(s)?
A Registered PIE Auditor should inform the Institute when the cessation of Responsible Person occurs, and the name of the respective Responsible Person will be removed from the register of PIE auditors accordingly.
Q24. If the admission of a practising partner occurs after the registration of our firm as a Registered PIE Auditor, do we need to apply to HKICPA for registration of this new partner as a Responsible Person?
If the newly admitted practising partner will also be nominated to register as a Responsible Person for your PIE Auditor registration, you should:Form RF-3 Form PIE-3A click to check the application submission deadline for this purpose.
Q25. How can we remove a Responsible Person from our PIE auditor registration?
Please complete and return a Form PIE-3B , which is downloadable from the Institute's website, to the Institute's Admission Department for processing.
Q26. Is practice review (i.e. inspection) on PIE engagements completed after 1 October 2019 conducted by the Financial Reporting Council ("FRC")?
All regulatory functions including inspection, investigation and disciplinary functions on PIE engagements completed after 1 October 2019 will be performed by FRC.
Q27. Where can I obtain a full list of PIE Auditors?
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
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.
Q28. What are the provisional registers of Registered/ Recognized PIE Auditors?
The Institute maintains the registers of Registered PIE Auditors (Provisional) and Recognized PIE Auditors (Provisional) for a 3-month transitional period from 1 October to 31 December 2019. These are Registered/ Recognised PIE Auditors which have undertaken but not completed PIE engagements before 1 October 2019 and have notified HKICPA/FRC respectively. They will need to apply for formal registration/ recognition to HKICPA/ FRC by 16 November 2019. Otherwise their registration/ recognition will expire on 31 December 2019.
Q29. Who shall I contact for questions relating to the regulation of PIE Auditors?
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
