Image Source : China Visual

BEIJING, October 21 (TMTPOST) — Hong Kong was communicating with the Ministry of Finance of China to streamline the process and speed up cross-border delivery of audit working papers from the Mainland to Hong Kong, Chairman of the Financial Reporting Council (FRC) Kelvin Wong Tin-yau said on Thursday.

In May 2019, the FRC signed a Memorandum of Understanding with the Supervisory and Evaluation Bureau of the Ministry of Finance, granting it access to audit working papers deposited in mainland China by Hong Kong accounting firms.

As the statutory regulator of the accounting profession in Hong Kong, the FRC has acquired several powers from the Hong Kong Institute of Certified Public Accountants from October 1, 2022, such as issuing practicing certificates to accountants, conducting inspections, investigations, and disciplinary actions on the accounting profession in Hong Kong. To perform these functions, the FRC will need frequent access to the audit working papers of the companies concerned.

According to Marek Grabowski, the CEO of the FRC, it is a common practice internationally to conduct cross-border cooperation between accounting authorities and regulatory auditing authorities. As Hong Kong is an international financial center with frequent cross-border investments and business activities and investors from all over the world, it is necessary for the FRC to perform its regulatory duties more smoothly.

In addition, most companies listed in Hong Kong are from mainland China, and the FRC has prioritized further establishing regulatory cooperation with the mainland.

The current cross-border collaboration between regulators is time-consuming. For example, the FRC obtained the second batch of five audit working papers from the mainland in September 2022, which took an average of about one year from applying to the final acquisition. The average time to get the first batch of seven audit working papers was nine months.