The move aims to bring the region’s auditory regulatory regime in line with international standards.
In an effort to keep up with international regulatory standards and practice, Hong Kong is aiming for a stricter regulation of the auditors of listed entities with the legislative proposal for the Financial Reporting Council Amendment Bill 2018.
"The Bill will enhance the existing regulatory regime for auditors of listed entities, allowing it to be independent from the audit profession, thereby providing better protection to investors. This is crucial to strengthening Hong Kong's status as an international financial centre and capital market,” said Secretary for Financial Services and the Treasury James Lau.
According to a government press release, the Financial Reporting Council (FRC) will then become an independent oversight body regulating auditors of listed entities which are regarded as public interest entities.
The FRC will also be vested with direct powers of inspection, investigation and discipline.
“The introduction of this legislation is in the best interest of the investing public. This much awaited reform for auditors of publicly listed entities, i.e. from self-regulation to independent oversight, will bring Hong Kong’s auditor regulatory regime in line with other major capital markets worldwide, such as New York and London,” said FRC Chairman Dr John Poon.
Under the new regime, the Hong Kong Institute of Certified Public Accountants (HKICPA) will continue to perform the statutory functions of registration and setting the requirements for continuing professional development, as well as setting standards on professional ethics, auditing and assurance, subject to oversight by the FRC.
The bill will be introduced into the Legislative Council for first reading on January 24.
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