A new MOU establishes a collaborative framework which will ultimately provide better investor protection through high quality financial reporting.
The SEHK (Stock Exchange of Hong Kong) and the FRC (Financial Reporting Council) have signed a new MOU to further strengthen collaboration to uphold the quality of financial reporting by listed entities and their auditors, HKEX (Hong Kong Exchanges and Clearing) has said in a statement.
“The MOU establishes a joint, complementary, and collaborative framework for the FRC and the Exchange under which our collective regulatory efforts can better provide investor protection through high quality financial reporting,” said Marek Grabowski, CEO of the FRC.
The FRC is an independent body established in December 2006 under the Financial Reporting Council Ordinance (FRCO) and entrusted with the statutory duty to regulate auditors of listed entities through a system of registration and recognition, and through inspection, investigation and disciplinary action.
The new MOU replaces the one signed in 2007 and facilitates efficient and effective collaboration between the SEHK and the FRC in respect of the FRCO’s regulation of public interest entity auditors and the compliance by listed entities with regulatory requirements in financial reporting.
Key modes of collaboration include liaison, coordination and cooperation in cases of mutual interest, mutual referral of complaints and cases, exchange and use of information and mutual assistance.
To ensure proper coordination of their regulatory efforts, the SEHK and the FRC have also agreed to notify each other when preparing and issuing policies or guidelines that may have a significant impact on their respective regulatory functions.
“Audit, along with financial reporting, plays a critical role in driving good corporate governance within listed companies,” said Calvin Tai, HKEX Co-President and Chief Operating Officer. “The signing of this new MOU signals our closer cooperation between the Exchange and the FRC, and underscores our commitment to ensure the quality of financial reporting and audits of listed companies, helping to reinforce Hong Kong’s status as an international financial centre.”