The Quality Assurance Department selects practices for review primarily based on risk factors including the public interest profile of audit clients. The selection of practices is identified from a review of practices' responses in the practice review self-assessment questionnaire and other relevant information. Practices with regulated or significant public interest entity clients (but not listed entities) are given priority for site visit reviews. A number of practices are selected for site visit reviews on a random basis to ensure that all practices will have a reasonable chance of being selected.
As a general policy, Quality Assurance Department will inform the practice of the engagements selected for practice review 7 working days prior to the commencement of the practice review site visit. The 7 working day notification period is conditional on the Quality Assurance Department receiving a client list from the practice no less than 3 weeks before the scheduled visit.
The Drug Trafficking (Recovery of Proceeds) (Amendment) Ordinance; Organized and Serious Crimes (Amendment) Ordinance; and United Nations (Anti-Terrorism Measures) Ordinance all have requirements to report suspicious transactions, which apply to everybody in Hong Kong. Under the law, employees may disclose their knowledge or suspicion that certain activities may relate to money laundering and terrorist financing to a person designated to receive such reports by their employer. By making appropriate disclosures to the designated person, in accordance with procedures laid down by their employer, employees are regarded as having discharged their obligations under the law. As indicated in Section 2 of the Guidelines on Anti-Money Laundering and Counter-Terrorist Financing for Professional Accountants, practices must appoint an MLRO as a central reference point for reporting suspicious transactions. Therefore, each practice should designate a person of sufficient seniority and authority within the practice as an MLRO in order to discharge its responsibilities. In case of a sole proprietorship or an own name practice, the sole proprietor or sole practitioner can be the MLRO but such designation should be communicated to all staff members, if any, in order to draw their awareness.(Posted on 16 January 2019)
