T K Lo & Co

Hong Kong CPA Firm

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Audit - Quality Assurance

Responsibilities of Three Parties to Audited Financial Statements under HKFRS  
  • Directors
  • Governance
  • Auditor

Responsibilities of Directors

The directors are responsible for preparation of the financial statements that give a true and fair view in accordance with HKFRS issued by the HKICPA and in compliance with the HKCO, and for maintaining internal control necessary to enable the financial statements free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing any matters related to going concern and using the going concern basis of accounting unless the directors have intention to cease the Company’s operations or have no realistic alternative but to do so.

Responsibilities of Those Charged with Governance

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Responsibilities of Auditor

Auditor's objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSA will always detect a material misstatement or misconduct when it exists. Misstatements or misconducts can arise from fraud or error and are considered material if they individually or in the aggregate could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with HKSA, auditor exercises professional judgment and maintain professional skepticism throughout the audit. Auditor also:

l   Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control.

l   Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

l   Evaluate the appropriateness of accounting policies used, the reasonableness of accounting estimates and the related disclosures made by the directors.

l   Conclude on the appropriateness of the directors' use of the going concern basis of accounting and whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If auditor concludes that a material uncertainty exists, auditor is required to draw attention in auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify opinion. Conclusions are based on the audit evidence obtained up to the date of auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

l   Evaluate the overall presentation, disclosures, structure and content of the financial statements and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.