The Accounting and Financial Reporting Council (AFRC) has penalised Norton Rowland CPA, over shortcomings in audit and assurance work for two occupational retirement schemes registered under the Occupational Retirement Schemes Ordinance (ORSO).
AFRC has reprimanded Norton Rowland and its engagement director, Hung Chi Yuen, Andrew and imposed penalties totalling HK$196,000 ($24,984), with HK$98,000 payable by each.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Norton Rowland and Hung are also barred from accepting, carrying out or participating in audit or assurance engagements for Mandatory Provident Fund schemes and occupational retirement schemes registered with the Mandatory Provident Fund Schemes Authority for 18 months.
The AFRC further directed Hung to complete additional verifiable continuing professional development hours in specified areas before taking part in any relevant engagements.
The action followed an inspection of Norton Rowland’s 2023 audits of the financial statements, and assurance work on compliance matters, for two ORSO schemes: one defined benefit scheme and one defined contribution scheme.
At the time, the schemes had net assets available for benefits of about HK$1.4bn and HK$59m respectively.
The AFRC found significant and widespread deficiencies in both engagements.
In key areas, including investments, benefits paid or payable to members, and liabilities, the firm and Hung did not carry out sufficient procedures to obtain appropriate audit evidence to support their opinions.
They also relied heavily on information from those responsible for preparing the financial statements, including the trustee and actuary, without independently checking key information underlying the accounts.
The regulator said the shortcomings reflected a broader failure to understand the specialised requirements for auditing occupational retirement schemes, rather than isolated errors.
The deficiencies also affected the assurance work. The firm and Hung concluded that the schemes met prescribed ORSO requirements without carrying out adequate procedures to support those conclusions.
AFRC CEO Janey Lai said: “Assurance engagements in respect of regulated entities play an important role in supporting effective regulation, maintaining public confidence and protecting the public interest.
“Auditors carrying out such engagements must therefore exercise the necessary rigour and possess the requisite competence and expertise. “The AFRC will engage with other regulators where appropriate to ensure matters affecting the public interest are promptly identified and addressed.”
