Bills committee comment letter on FRC Sept 05

LC Paper No. CB(1)2288/04-05(13) Clerk to the Bills Committee Our ref CT/20 (Attn: Ms May Leung) Your ref CB1/BC/13/04 Legislative Council Secretariat rd3 floor Citibank Tower 3 Garden Road Central Hong Kong 5 September 2005 Dear Madam Financial Reporting Council Bill (“the Bill”) We refer to your invitation to give views on the above Bill for submission to the Bills Committee and thank you for this opportunity to comment. We are generally supportive of the proposals contained in the Bill. In our view, these proposals will enhance the regulatory regime governing the quality of financial reporting by listed issuers, as well as the accountability of their auditors. We have the following specific comments in respect of the above proposals: • Referral of cases to specified bodies We support the establishment of the FRC and its subsidiary bodies, the Audit Investigation Board and the Financial Reporting Review Panel and its Committee(s) (“FRRC”). We further support the proposed functions of the FRC as set out in section 9 of the Bill, of investigating instances of irregularities and non-compliance and then referring cases or complaints on to the relevant specified bodies. We note the comments made in paragraph 15 of the Legislative Council Brief, which highlight that under such a model, the FRC would refer cases of auditors’ irregularities to the HKICPA for disciplinary proceedings where appropriate. We would, however, recommend that the ...