The Government introduced the Financial Reporting Council (Amendment) Bill 2021 (the “Bill”) into the Legislative Council for scrutiny on 21 July 2021.

At present, the Financial Reporting Council (“FRC”, which according to the Bill will be renamed as the “Accounting and Financial Reporting Council”) serves as the independent regulator of auditors of public interest entities (“PIE”) and exercises powers of inspection, investigation and discipline over PIE auditors and their responsible persons in relation to their engagements for listed entities. Meanwhile, practice units and certified public accountants (“CPAs“) are, in general, regulated by the Hong Kong Institute of Certified Public Accountants (“HKICPA“) in all other respects.

The Bill seeks to extend the FRC’s regulatory functions to cover all practice units and CPAs by transferring certain regulatory powers currently exercised by the HKICPA to the FRC. These include proposals to:

• empower the FRC to issue practising certificates to CPAs and register CPA firms, corporate practices and local PIE auditors; and
• expand the FRC’s current powers of inspection, investigation and discipline over PIE auditors to cover practice units and CPAs.

Under the proposed regime, the HKICPA will continue to discharge various functions under the oversight of the FRC, including registering individuals as CPAs, ascertaining qualification for registration as CPAs by conducting examinations, arranging for mutual or reciprocal recognition of accountants, setting requirements for continuing professional development, setting accounting, auditing and ethical standards, and providing training.

The Bill is currently being considered by the Bills Committee of the Legislative Council, which is inviting interested parties to make submissions on their views regarding the Bill, with a closing date of 3 September 2021. For further information about the Bill, please refer to the Legislative Council website.