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Offences Relating to Contents of Auditor's Reports

(I) Introduction

 
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The new Companies Ordinance ("the new CO") introduces a new offence relating to omissions in an auditor's report under section 408.

 
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If the auditor is of the opinion that the financial statements of a company are not in agreement with its accounting records in any material respect, or the auditor has failed to obtain all the information or explanations that are necessary and material for the purpose of the audit ("the specified statements"), the auditor must state that fact in the auditor's report pursuant to section 407 of the new CO. There are similar requirements in section 141 of the old Companies Ordinance (Cap. 32) but there is no sanction for contravention of the requirement.

 
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Under the new CO, an auditor who knowingly or recklessly causes any of the specified statements to be omitted from an auditor's report commits an offence under section 408 and is liable to a fine not exceeding $150,000.

 
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The offence in section 408 will safeguard the reliability and integrity of auditor's reports and enhance enforcement.

 

(II) Relevant Provisions of the new CO

 
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Sections 407 and 408

 

(III) Transitional Arrangements

 
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Not applicable

 

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