In its recent annual report, Hong Kong's Accounting and Financial Reporting Council (AFRC) highlighted late auditor resignations and a lack of professional skepticism as major issues tarnishing auditors' credibility.
Nearly 20% of the AFRC's investigations were linked to last-minute auditor resignations, which can leave companies struggling to find replacements before reporting deadlines. "Late resignation of auditors is an issue, as listed companies may not have sufficient time to find a replacement, or the incoming auditors may be appointed at the last minutes before the reporting deadline," said Janey Lai, CEO of the AFRC. The regulator urged incoming auditors to thoroughly analyze the reasons behind outgoing auditors' resignations and assess their capabilities before taking on new engagements.
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