金融服务业2025年年终审计焦点

Inspection About the Accounting and Financial Reporting Council The Accounting and Financial Reporting Council (AFRC) is an independentbody established under the Accounting and Financial Reporting CouncilOrdinance. As an independent regulator, the AFRC leads the accountingprofession by upholding professional standards, safeguarding the publicinterest, and promoting the profession’s healthy development. For more information about the statutory functions of the AFRC, please visitwww.afrc.org.hk Introduction Importance of the financial services sector and quality audits The financial services (FS) sector is one of Hong Kong’s key pillar industries, contributingto 24.9% of Gross Domestic Product in 2023 and reinforcing Hong Kong's position as aleadinginternational financial centre.Thissector consists of various sub-sectors,including Banking, Insurance, Asset and Wealth Management and Broker-dealers.Theyplay a critical role in facilitating capital flows, managing risks, and providing investmentopportunities.In doing so, they support economic growth, employment, foster investorconfidence, and contribute to financial stability.1 High-quality audits are the foundation upon which trust in financial reporting is built.Theyenhance the reliability of financial statements and regulatory disclosures,strengthen accountability, and safeguard the public interest.In the FS sector, theseresponsibilitiescarry added significance:the scale,complexity,and systemicimportanceof financial institutions demand heightened professional scepticism,judgement, and deep technical expertise to effectively address sector-specific risks. Market and macroeconomic developments As auditors head into their 2025 year-end audits, they face an increasingly complexlandscape as market volatility, fluctuating interest and exchange rates, and ongoinggeopolitical uncertainties and regulatory shifts are creating uncertainties for all kinds,including financial institutions.Against this backdrop, liquidity pressures, heightenedcredit risk, valuation uncertainty, and the rapid growth of alternative investments areincreasing the risks of material misstatements — whether due to error or fraud. Purpose of this publication Markettrends and macroeconomic development vary across the FS sub-sectors.Drawing on our inspection experience, Section 2 of this publication highlights sector-specific risks and audit considerations relevant to the 2025 environment. Auditing financial institutions presents unique challenges due to the complexity andscale of the businesses involved, as well as the specialised expertise required.In thisregard, firms intending to provide audit services to such entities should critically assesstheir competence and capabilities to deliver high-quality audits before accepting a clientor an engagement.Section 3 of this publication outlines considerations for firms togauge their readiness to undertake FS audit and assurance engagements and provideguidance on meeting the high expectations associated with this sector. Recognising the significance of these entities to the Hong Kong economy, the AFRC willcontinue to place a strong focus on this sector to promote audit quality and safeguardthe investing public. Page 1Key macroeconomic and market development 2Section 2Industry-specific focus areas I.II.III.IV.BankingInsuranceAsset and wealth managementBroker-dealers3456 Section 3Firm-specific key considerations7 I.II.III.IV.V.Competence and capabilities in specific FS sectorsUnderstand the business, industry, and regulatory environmentTest of internal controlsAccounting estimates and use of auditor’s expertsRegulatory reporting78899 10 Glossary Section 1 Key macroeconomic and market development Challengingmarket and economic conditions create an environmentwhere companies may experience extended financial pressures, increasingtheir susceptibility to management bias or fraud.This section highlightskey factors that can considerably impact financial institutions. Geopolitical and economic uncertainties Ongoing geopolitical and economic uncertainties not only shape business and marketsentimentof retail and institutional customers,but also directly impact financialinstitutions themselves, influencing capital flows, cross-border investment activities,market volatility, and elevating credit, liquidity, and operational risks. Volatility in interest rates and exchange rates Volatility in interest and exchange rates poses challenges for banks and insurers inmanagingbalance sheet exposures,as well as for funds and broker-dealers inmaintaining stable returns.In Hong Kong, the linked exchange rate system anchorsstability, however, continued shifts in US monetary policy exerts significant pressure onfunding costs and exchange rate movements. Liquidity pressures Liquidity remains a key concern despite the general decline in interest rates. The 1-monthHIBOR, which stood at 4.2% at the start of 2025, has eased to around 3.6% at the end of Q3202