The industry watchdog has warned that a race to the bottom could lead to a rushed job, compromising auditing standards and opening the door to fraud
AFRC carried out random checks on 16 auditing firms, 13 of which were found to have offered lower fees than the previous auditors, and 12 of them were identified as having quality issues. That is a worryingly high number. The council said 17 per cent of 2,631 Hong Kong-listed companies changed auditors last year. All 16 firms audited by AFRC were replacements.
While established auditors usually won’t compromise on fees, some smaller ones competing for clients might be willing to do so. But if standards are being compromised, keeping the client happy in the short term may not be in the long-term interest of these companies.
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