The FRC is charged with the statutory responsibilities to investigate into possible auditing and reporting irregularities and to enquire into possible non-compliances with financial reporting requirements. In this way, it aims to enhance the quality of auditing and financial reporting in relation to listed entities. Investors in listed entities will find the financial reports of listed entities more reliable and more useful for investment decision purposes.

Auditing and reporting irregularities are termed in law as “relevant irregularity”. These encompass the irregularities of auditors or reporting accountants in relation to the audit or financial reporting of listed entities, including falsifying documents, making untrue statements, being professionally negligent, etc. For details, please refer to the “relevant irregularities” section.

Relevant non-compliances exist if listed entities do not comply with financial reporting requirements in their financial reports. These requirements include those stated under the Companies Ordinance, financial reporting standards and Listing Rules. For details, please refer to the “relevant non-compliance” section.

You are encouraged to make a complaint to the FRC.

A complaint can be made in writing and sent to the FRC. If there is any difficulty in making a written complaint, you may approach the staff of the FRC for assistance. Complainants are encouraged to disclose their identities and leave a means of contact. Otherwise, it will prevent the FRC from being able to contact the complainants in order to obtain necessary information. This may make it impossible for the FRC to pursue a complaint further. For details, please see the section on “Complaints Procedure”.

The time required to process a complaint depends on the circumstances of individual cases. If there is sufficient information and evidence provided by the complainant, it will take not more than four weeks on average for the FRC staff to review the complaint and make a recommendation to the FRC. Upon the submission of a complaint, the FRC may take an instant decision at the FRC meeting after reviewing the complaint, or may in some circumstances, require more information to be collected before a decision is taken.

The time taken to complete an investigation depends on the circumstances and complexity of individual cases. Documents, explanations and information from related persons have to be obtained, all of which takes time.

The time taken to complete an enquiry not including the action needed to remove any non-compliance is around four to six months depending on the circumstances and complexity of individual cases.

In terms of auditing and reporting irregularities, the function of the FRC is confined to investigation and reporting. It does not have the power to take disciplinary action or prosecution. If the FRC finds that there are irregularities, the case in question will be referred to other regulatory bodies for follow-up action. If there are auditing and reporting irregularities in relation to an auditor/accountant who is a member of the Hong Kong Institute of Certified Public Accountants (“HKICPA”), the case will be referred to the HKICPA for it to take actions as they considered appropriate. This may include disciplinary action on the auditor/accountant concerned. If the auditor/accountant is a member of another professional body, the case will be referred to that professional body. If there is an irregularity relevant to the Listing Rules, the case will be referred to The Stock Exchange of Hong Kong Limited and/or the Securities and Futures Commission for follow-up action.

If a Financial Reporting Review Committee (the “Review Committee”) finds in an enquiry that there is a non-compliance with financial reporting requirements, the Review Committee may require the listed entity concerned to remove the non-compliance identified. If the listed entity fails to comply with such a requirement, in some circumstances, an application may be made to the Court for an order to remove the non-compliance. Alternatively, any failure to remove a non-compliance may be referred to The Stock Exchange of Hong Kong Limited and/or the Securities and Futures Commission for follow-up action. If any accountants involved in the non-compliance are found not to have complied with professional standards in the preparation of financial statements, the case will be referred to their relevant professional bodies for follow-up action.

The FRC shall acknowledge receipt of all complaints if possible. If the FRC decides not to pursue a complaint further, the complainant will be informed in writing. If the FRC initiates an investigation or enquiry, it is required under the Financial Reporting Council Ordinance to maintain confidentiality. No information concerning any investigation or enquiry can be disclosed.

Once an investigation or enquiry has been initiated, details will not be disclosed to the complainant or the public. At the conclusion of an investigation or enquiry, a report will be adopted by the FRC. In the event that the FRC, in accordance with the Financial Reporting Council Ordinance, decides to publish a report, that report will be accessible on the FRC’s website.