Session 1 Quality Auditing Why It Matters - Fall 2019 W HK Framework - Final

Session 1
Hong Kong Auditing Framework / Quality

Auditing: Why it Matters
*** Material comes from Textbook (Ch1) and HKICPA QP study material
1
Learning Objectives
LO 1 Describe decision makers’ needs for reliable financial
and internal control information, and discuss how a
financial statement audit helps meet those needs.
LO 2 Hong Kong Framework for Assurance Engagement
(HKICPA)
LO 3 Define audit quality and list drivers of audit quality
provided in the Financial Reporting Council’s Audit
Quality Framework.
Johnstone, Auditing: A Risk-Based Approach, 11th Edition. ©2019 Cengage. All Rights Reserved. May
2
not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Financial Statement Users
● Decision makers need information that is transparent and
unbiased
● Exhibit 1.1 identifies potential financial statement users
and the decisions they make based on financial and
internal control information
3
Exhibit 1.1
4
Shareholder Value Is No Longer Everything, Top
C.E.O.s Say
● https://www.nytimes.com/2019/08/19/business/busines
s-roundtable-ceos-corporations.html
5
Need for Independent Assurance
● The need for independent assurance arises from several
factors:
● Potential bias
● Remoteness
● Complexity
● Consequences
6
Overall Objective of an Audit
● Obtain reasonable assurance about whether the financial statements are
free from material misstatement
● Report on the financial statements based on the auditor’s findings
● To accomplish these objectives, the auditor:
● Complies with relevant ethical and professional conduct requirements
● Conducts the audit in accordance with professional auditing standards
● Exercises professional judgment, professional skepticism, and critical
thinking
● Obtains sufficient appropriate evidence, via a structured process, on
which to base the auditor’s opinion
7
What Is a Financial Statement Audit?
● A systematic process of objectively obtaining and evaluating evidence
regarding assertions about economic actions and events to ascertain the
degree of correspondence between those assertions and established
criteria; and communicating the results to interested users
● Prompt for Thinking - What are the qualities you need to perform this
process?
8
Parties Involved in Preparing and Auditing Financial
Statements
● Management
● Internal audit function
● Audit committee
● External auditor
9
Exhibit 1.4
10
Providers of External Auditing Services
● Sole-practitioner firms
● Local and regional firms
● Large multinational professional services firms such as
the Big 4
● KPMG
● Deloitte Touche Tohmatsu (Deloitte in the United States)
● PricewaterhouseCoopers (PwC)
● EY
11
The Hong Kong Framework for Assurance
Engagements
● HKICPA is the statutory licensing body of CPAs in Hong Kong. lt is
recognised globally and is in a position to strengthen the accountancy
profession and to contribute to the development of strong international
economies by establishing and promoting adherence to high-quality
professional standards, furthering the international convergence of such
standards and speaking out on public interest issues where the profession's
expertise is most relevant.
● The Hong Kong Institute of CPAs (HKICPA) is pursuing a policy of achieving

convergence with International Standards issued by the International
Auditing and Assurance Standards Board (IAASB).
● Refer to Hong Kong Standards on Quality Control, Auditing, Assurance and

Related Services
12
Hong Kong Framework for Assurance Engagements
● This Framework is issued solely to facilitate understanding of the elements and
objectives of an assurance engagement and the engagements to which Hong Kong
Standards on Auditing and Assurance (HKSAAs) apply.
● HKSAAs cover Hong Kong Standards on Auditing (HKSAs), Hong Kong Standards on
Review Engagements (HKSREs), Hong Kong Standards on Investment Circular
Reporting Engagements (HKSIRs) and Hong Kong Standards on Assurance
Engagements (HKSAEs). This Framework is not a Standard.
● https://www.hkicpa.org.hk/en/Standards-and-regulation
This Framework provides a frame of reference for

(a) Assurance practitioners;
(b) Others involved with assurance engagements, including the intended users of an
assurance report and those engaging a practitioner (the 'engaging party'); and
(c) The HKICPA in its development of HKSAAs, Practice Notes and other papers.
13
Adherence to professional standards and guidance
● It is important for professional accountants to adhere to professional

standards and guidance such as the Code of Ethics for Professional
Accountants ('the Code (Revised)'), the Hong Kong Standards on Auditing
('HKSAs') or the Hong Kong Standards of Quality Control ('HKSQC1') as
professional accountants are seen to serve in the public interest.
● Professional accountants are governed by the Code of Ethics and HKSQCs.
14
Adherence to professional standards and guidance
Professional accountants are obliged to adhere to the Code of Ethics
(Revised).
By complying with professional standards, professional accountants

contribute to the efficient functioning of the economy by:
● Improving confidence in the quality and reliability of financial reporting;
● Encouraging the provision of high quality performance information
(financial and nonfinancial) within entities;
● Promoting the provision of high quality services by all members of the
accountancy profession; and
● Promoting the importance of adherence to the Code by all members of the
accountancy profession, including members in industry, commerce, the
public sector, the not-for-profit sector, academia, and public practice.
15
Assurance engagements
The purposes of an assurance engagement can be defined as to:
a) Express a conclusion that provides an intended user with a
level of assurance about the subject matter
b) Enhance credibility of information about a subject matter by
evaluating whether the subject matter conforms in all
material aspects with suitable criteria
c) Improve likelihood that information will meet the needs of
an intended user
Assurance engagements may give reasonable assurance or limited assurance
16
What Do You Think? (p. 11)
External auditing is a “special function” as described by Chief
Justice Warren Burger in a 1984 Supreme Court decision:
● By certifying the public reports that collectively depict a
corporation’s financial status, the independent auditor assumes a
public responsibility transcending any employment relationship with
the client. The independent public accountant performing this
special function owes ultimate allegiance to the corporation’s
creditors and stockholders, as well as to the investing public. This
“public watchdog” function demands . . . complete fidelity to the
public trust.
Auditors serve a number of parties. Which party is the most
important?
Do you agree with Chief Justice Burger’s characterization of the
auditor as a public watchdog?
17
Assurance Engagement
An assurance engagement is an engagement in which a practitioner aims to
obtain sufficient appropriate evidence in order to express a conclusion
designed to enhance the degree of confidence of the intended users other
than the responsible party about the outcome of the measurement or
evaluation of an underlying subject matter against criteria (Framework para
10).
An assurance engagement must involve a three party relationship and they

are: practitioner, responsible party and intended users. For example, in an
audit, it involves:
● PRACTITIONER (Auditor)
● INTENDED USERS (Shareholders)
● RESPONSIBLE PARTY (Board of Directors)
18
A three party relationship
● Auditors (the practitioners) provide assurance to
intended users (shareholders) about a subject matter (the
financial statements) that is the responsibility of a
responsible party (the board of directors).
● The intended user is the person for whom the auditors
prepare a report for a specific use or purpose- usually the
shareholders and others users that can be established by
law.
● The 'responsible party' is the person (or persons) who is
responsible for the subject matter or subject matter
information of the assurance engagement.
19
Subject matter should be:
● Identified
● Located in a point in time or covering a period of time
● In the form of either data, systems and processes or behaviour
● In respect of financial or non-financial performance, systems or behaviour
Suitable criteria
Criteria should have the following characteristics:
(a) Relevance: relevant criteria contribute to conclusions that assist decision-making by the
intended users.
(b) Completeness: criteria are sufficiently complete when relevant factors that could affect the
conclusions in the context of the engagement circumstances are not omitted. Complete
criteria include, where relevant, benchmarks for presentation and disclosure.
(c) Reliability: reliable criteria allow reasonably consistent evaluation or measurement of the
subject matter including, where relevant, presentation and disclosure, when used in similar
circumstances by similarly qualified practitioners.
(d) Neutrality: neutral criteria contribute to conclusions that are free from bias.
(e) Understandability: understandable criteria contribute to conclusions that are clear,
comprehensive, and not subject to significantly different interpretations.
20
Types of assurance engagements
In accordance with the amended Framework and HKSAE 3000
(Revised) Assurance Engagements other than Audits of Historical
Financial Information an assurance engagement will be classified on
two dimensions:
● An assurance engagement will be either a reasonable assurance
engagement or a limited assurance engagement (Framework paras
14 -15).
● An assurance engagement will be either an attestation engagement
or a direct engagement (Framework paras 12- 13).
'Assurance' here means the professional accountants' satisfaction as
to the reliability of the assertion made by one party for use by
another party.
21
Reasonable level of assurance
● Reasonable assurance is accumulating evidence for the practitioner to
conclude in relation to the subject matter information taken as a whole.
● Reasonable assurance in the context of an audit of financial statements is
a high, but not an absolute, level of assurance.
● Professional accountants have gained sufficient appropriate evidence to
conclude the subject matter conforms in all material aspects with
identified suitable criteria.
● Professional accountants should design the engagement so that the risk of
expressing an inappropriate conclusion that the subject to reduce risk of
inappropriate conclusion respects with suitable criteria is reduced to an
acceptably low level. Reasonable assurance relates to the whole audit
process.
● For example, an audit provides a reasonable assurance level but not
absolute assurance and the report contains a positive assurance on
assertions for example, 'the financial statements give a true and fair view
of ... '.
22
Assurance engagement risk
This risk is defined as 'risk that the practitioner expresses an inappropriate
conclusion when the subject matter information is materially misstated’. The
components of assurance engagement risk are:
Inherent Risk+ Control Risk+ Detection Risk
Inherent risk: the susceptibility of the subject matter information to a

material misstatement, assuming that there are no related controls.
Control risk: the risk that a material misstatement that could occur will
not be prevented, or detected and corrected, on a timely basis by related
internal controls. When control risk is relevant to the subject matter,
some control risk will always exist because of the inherent limitations
of the design and operation of internal control.
Detection risk: the risk that the practitioner will not detect a material
misstatement that exists.
23
Limited level of assurance
● Engagement risk must be reduced to an acceptable level under
the circumstances but that risk will be greater than for a
reasonable assurance engagement.
● For example: A review performed in accordance with HKSRE
2400 (Revised) Engagements to Review Historical Financial
Statements is a limited assurance engagement.
● The conclusion is expressed in 'negative terms', for example:
● 'Based on the procedures performed and evidence obtained,
nothing has come to our attention that causes us to believe
that the entity has not complied, in all material respects with
XYZ law’ (Framework para 86).
24
No level of assurance
The professional accountant is giving no assurance at all for the
engagement.
(a) Agreed-upon procedures (HKSRS 4400)- the professional

accountant and the entity determine the procedures to be
performed and professional accountants will provide a report of
factual findings as a result of undertaking those procedures.
(b) Compilation (HKSRS 4410 (Revised)) of financial or other
information- professional accountants use their accounting
expertise to collect, classify and summarise financial information,
users of the compiled information will gain some benefits because
professional accountants carry out their work with professional
competence and due care.
(c) Preparation of tax returns.
(d) Management consulting and advisory services.
25
The purpose of external audit engagements
An external audit is a type of assurance engagement that is carried out by a
professional accountant to give an independent opinion on a set of financial
statements.
Objective of external audit

The objectives of external audit are laid out in HKSA 200 Overall Objectives of the
Independent Auditor and the Conduct of an Audit in Accordance with Hong Kong
Standards on Auditing.
The objectives of an audit are:

(a) to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error,
thereby enabling the auditor to express an opinion on whether the financial
statements are prepared, in all material respects, in accordance with an
applicable financial reporting framework: and
(b) to report on the financial statements, and communicate as required by HKSAs,
in accordance with the auditor's findings. An audit of financial statements is an
example of an assurance engagement.
26
Statutory audit
● Professional accountants will provide a reasonable level of assurance to the 'user', after
examination of a certain subject matter required by the entity.
● The most common example of an audit is where an independent professional accountant is
engaged by the board of directors of an entity to examine the financial statements of the entity
and issue an audit opinion to the shareholders ('the users') of the entity in accordance with
Hong Kong Companies Ordinance (CO) and the Hong Kong Auditing Standards.
HKSA 200 sets out the following requirements for an audit. The firm must:
(a) Comply with ethical requirements
(b) Conduct the audit in accordance with HKSAs and determine the audit procedures
(c) Exercise professional judgment in planning and performing an audit of financial statements
(d) Obtain sufficient appropriate audit evidence to reduce audit risk to an acceptably low level
that is consistent with the objective
(e) Plan and perform the audit with an attitude of professional scepticism
(f) Not represent compliance with HKSAs unless it has really complied fully
27
Overview of the Audit Opinion Formulation Process
Phase I Making Client Acceptance and Continuance Decisions
Phase II Performing Risk Assessment e.g.

● Determine audit approach as required by legislation and auditing standards.
● Ascertain the accounting system and internal controls by fact finding and recording
the system in operation.
● Assess the accounting system and internal controls on their reliability and
effectiveness in practice.
Phase III Obtaining Evidence About Internal Control Operating Effectiveness

● Test the accounting system and internal controls by performing tests of controls.
Phase IV Obtaining Substantive Evidence About Accounts, Disclosures, and Assertions

● Test the financial statements by carrying out substantive testing.
Phase V Completing the Audit and Making Reporting Decisions

● Review the financial statements to determine the overall reliability of the financial
statements.
● Express an opinion in the form of an audit report.
28
Exhibit 1.2
29
True and fair
Where the professional accountant expresses an opinion on whether the financial
statements are presented fairly, in all material respects, or give a true and fair view,
misstatements also include those adjustments of amounts, classifications, presentation,
or disclosures that, in the firm’s judgment, are necessary for the financial statements to
be presented fairly, in all material respects, or to give a true and fair view.
True: Information is factual and conforms with reality. In addition, the information
conforms with required standards and law. The financial statements have been correctly
extracted from the books and records.
Fair: Information is free from discrimination and bias and in compliance with expected
standards and rules. The financial statements should reflect the commercial substance
of the entity’s underlying transactions.
Professional accountants are not responsible for establishing whether the financial
statements are correct in every particular detail. This is because it can take a great deal
of time and trouble to check the accuracy of even a very small transaction and the
resulting benefit may not justify the effort. Also financial accounting inevitably
involves a degree of estimation which means that financial statements can never be
completely precise.
30
True and Fair view
Non-Reporting Exempted Companies
● Instead of preparing financial statements under the fair
presentation framework, financial statements prepared by
entities taking advantage of the reporting exemption are
required to be properly prepared in accordance with the revised
SME-FRF & SME-FRS as these are the applicable accounting
standards for such companies for the purposes of complying
with section 380(4)(b) under new Companies Ordinance (Cap.
622).
● The professional accountant's task is to decide whether the
financial statements for non-reporting exempted companies
under revised SME-FRF & SME-FRS, show a true and fair
view.
31
Materiality
Materiality is an expression of the relative significance or importance of a particular
matter in the financial statements as a whole. Any matter is material if its omission or
misstatements would reasonably influence the economic decisions of users. Materiality
has both quantitative and qualitative aspects. A misstatement can be quantitatively
immaterial but qualitatively material eg omission of disclosure of major litigation.
The materiality level is determined at the planning stage to ensure any material
misstatement in the financial statements can be discovered. The materiality level must
be considered by the auditor in order to determine the nature, extent and timing of audit
procedures and to evaluate the effect of misstatements discovered. Some useful
guidelines for measuring the materiality level are given below:
● 10% of pre-tax profits (normal criteria and applicable to most entities)
● 5% of gross profits (applicable to trading entities)
● 0.5-1% of revenue
● 0.5-1% of total assets (applicable to asset holding companies)
Other factors should be considered.

The assurance given by the auditor is governed by the fact that the auditor uses
judgment in deciding what audit procedures to use and what conclusions to draw, and
also by the limitations of every audit.
32
Sufficient appropriate evidence
● The practitioner plans and performs an assurance engagement
with an attitude of professional scepticism to obtain sufficient
appropriate evidence about whether the subject matter
information is free of material misstatement.
● The practitioner considers materiality, assurance engagement
risk, and the quantity and quality of available evidence when
planning and performing the engagement, in particular when
determining the nature, timing and extent of evidence-
gathering procedures.
● Sufficiency is about the quantity of evidence.
● Appropriateness is about quality of evidence (relevance and
reliability).
33
Achieving Audit Quality
Performed in accordance with generally accepted auditing
standards (GAAS)
GAAS provides reasonable assurance about the audited
financial statements and related disclosures:
● Presented in accordance with GAAP
● Are not materially misstated whether due to errors or fraud
34
Financial Reporting Council’s Audit Quality
Framework
Identifies five primary drivers of audit quality
● Audit firm culture
● Skills and personal qualities of audit partners and staff
● Effectiveness of the audit process
● Reliability and usefulness of audit reporting
● Factors outside the control of auditors that affect audit quality
35
Exhibit 1.5
36
Audit Firm Culture
Audit firm culture contributes to audit quality
Audit firm leaders influence culture
● Value and reward audit quality
● “Do the right thing”
● Provide appropriate time and resources
● Ensure monetary considerations do not adversely affect audit
quality
● Seek guidance as needed
● Provide quality systems
● Foster evaluation and compensation practices
● Monitor audit quality
37
General Skills and Knowledge Needed by External
Auditors
● Technical knowledge
● Leadership skills
● Teamwork skills
● Communication skills
● Decision-making skills
● Critical thinking skills
● General professionalism
● CPA license
38
The Engagement Team
Auditors positively contribute to audit quality when they:
● Understand the client’s business
● Adhere to auditing and ethical standards
● Exhibit professional skepticism
● Address issues identified during the audit
● Ensure appropriate levels of experience and supervision for
staff performing audit work
● Ensure mentoring and on-the-job training opportunities for
staff performing audit work
39
Professional scepticism
Professional scepticism is an attitude that includes a questioning mind, being alert to
conditions which may indicate possible misstatement due to error or fraud, and a
critical assessment of audit evidence. Auditors should never assume the management
is dishonest but should approach the audit with a questioning mind and a critical
assessment of audit evidence, being alert to conditions which may indicate possible
misstatement due to error or fraud. The professional accountant should adopt the
following behaviours:
● Plan and perform an audit with an attitude of professional scepticism

● Be aware when audit evidence contradicts other audit evidence obtained
● Raise awareness to audit evidence that casts doubt on the reliability of documents
or management representations
● Be cautious for any suspicious and unusual circumstances that may increase the
risks of misstatement of financial statements
● Avoid using unrealistic assumptions in designing audit procedures or evaluating
audit evidence
● Consider the reasonableness of responses
● Consider conditions that may indicate possible fraud
40
Effectiveness of the Audit Process
The audit process contributes in a positive way to audit
quality when:
● The audit methodology is well structured
● Quality technical support is available when auditors encounter
unfamiliar situations requiring assistance or guidance
● Ethical standards are communicated and achieved, thereby
aiding auditors’ integrity, objectivity, and independence
● Auditors’ evidence collection is not constrained by financial
pressures
41
Reliability and Usefulness of Audit Reporting
Audit reporting contributes positively to audit quality when:
● Audit reports are written in a way that clearly and unambiguously
conveys the auditor’s opinion on the financial statements and
addresses the needs of users of financial statements
● Auditors appropriately conclude as to the truth and fairness of the
financial statements (e.g., in the United States, concluding that the
financial statements are fairly presented in accordance with GAAP)
● The auditor communicates with the audit committee about:
● Audit scope (in other words, what the auditor is engaged to
accomplish)
● Threats to auditor objectivity
● Important risks identified and judgments that were made in
reaching the audit opinion
● Qualitative aspects of the client’s accounting and reporting and
possible ways of improving financial reporting
42
Factors Outside the Control of Auditors
● Some factors affecting audit quality are outside of the
direct control of the external auditor, such as client
corporate governance
● Good corporate governance includes audit committees
that are robust in dealing with issues and a greater
emphasis by the client on getting things right as opposed
to getting done by a particular date
43
Limitations of auditing
44
Summary
45
.
Audit Report on US Listed Company
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of NVIDIA Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of NVIDIA Corporation and its
subsidiaries as of January 27, 2019 and January 28, 2018, and the related consolidated
statements of income, comprehensive income, shareholders’ equity and cash flows for each of
the three years in the period ended January 27, 2019, including the related notes and financial
statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as
the “consolidated financial statements”). We also have audited the Company's internal control
over financial reporting as of January 27, 2019, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of the Company as of January 27, 2019 and January 28,
2018, and the results of its operations and its cash flows for each of the three years in the period
ended January 27, 2019 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of January 27, 2019, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the COSO.
46
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining
effective internal control over financial reporting, and for its assessment of the effectiveness of internal control
over financial reporting, included in Management's Annual Report on Internal Control over Financial Reporting
appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial
statements and on the Company's internal control over financial reporting based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and
are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement, whether due to error or fraud, and whether effective internal control over
financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.
47
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
company’s internal control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have
a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers LLP

San Jose, California
February 21, 2019
We have served as the Company’s auditor since 2004.
48
Audit Report on Hong Kong Listed Company
49
2018 Audit of the consolidated financial
statements of CK Hutchison Holdings Limited
Independent Auditor’s Report
To the Shareholders of CK Hutchison Holdings Limited
(incorporated in the Cayman Islands with limited liability)
Opinion
What we have audited
The consolidated financial statements of CK Hutchison Holdings Limited (the
“Company”) and its subsidiaries (collectively referred to as the “Group”) set out
on pages 170 to 286, which comprise:
• the consolidated and Company statements of financial position as at 31
December 2018;
• the consolidated income statement for the year then ended;
• the consolidated statement of comprehensive income for the year then ended;
• the consolidated statement of changes in equity for the year then ended;
• the consolidated statement of cash flows for the year then ended; and
• the notes to the consolidated financial statements, which include a summary
of significant accounting policies.
50
Our opinion
In our opinion, the consolidated financial statements give a true and fair view of the financial
position of the Company and of the Group as at 31 December 2018, and of its consolidated profit
and its consolidated cash flows for the year then ended in accordance with Hong Kong Financial
Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public
Accountants (“HKICPA”) and have been properly prepared in accordance with the disclosure
requirements of the Hong Kong Companies Ordinance.
Basis for Opinion
We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued
by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
51
Independence
We are independent of the Group in accordance with the HKICPA’s Code of Ethics for
Professional Accountants (“the Code”), and we have fulfilled our other ethical responsibilities in
accordance with the Code.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters. Key
audit matters identified in our audit are summarised as follows:
● Goodwill and brand names with an indefinite useful life; and
● Investments in associated companies and joint ventures
52
Other Information
The directors of the Company are responsible for the other information. The other information
comprises all of the information included in the annual report other than the consolidated financial
statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we
do not express any form of assurance conclusion thereon. In connection with our audit of the
consolidated financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
53
.
Responsibilities of Directors and Those Charged with Governance for the
Consolidated Financial Statements
The directors of the Company are responsible for the preparation of the consolidated financial
statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and
that comply with the disclosure requirements of the Hong Kong Companies Ordinance, and for
such internal control as the directors determine is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or
error. In preparing the consolidated financial statements, the directors are responsible for
assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do
so. Those charged with governance are responsible for overseeing the Group’s financial reporting
process.
54
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion. We report our opinion solely to you, as a
body, and for no other purpose. We do not assume responsibility towards or accept liability to
any other person for the contents of this report. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these consolidated financial
statements.
55
2018 Audit Report of the consolidated financial
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements (Cont’d)
As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated 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.
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 Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
56
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
(Cont’d)
Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
57
Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements (Cont’d)
Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair
presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the
consolidated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
58
2018 Audit of the consolidated financial statements of CK Hutchison
Holdings Limited
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements (Cont’d)
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Luk Lai Yin.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 21 March 2019
59

Session 1 Quality Auditing Why It Matters - Fall 2019 W HK Framework - Final

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Session 1 Quality Auditing Why It Matters - Fall 2019 W HK Framework - Final

Загружено:

Авторское право:

Доступные форматы

Session 1

Hong Kong Auditing Framework / Quality

● The Hong Kong Institute of CPAs (HKICPA) is pursuing a policy of achieving

● Refer to Hong Kong Standards on Quality Control, Auditing, Assurance and

This Framework provides a frame of reference for

● It is important for professional accountants to adhere to professional

● Professional accountants are governed by the Code of Ethics and HKSQCs.

By complying with professional standards, professional accountants

Assurance engagements may give reasonable assurance or limited assurance

An assurance engagement must involve a three party relationship and they

Inherent risk: the susceptibility of the subject matter information to a

(a) Agreed-upon procedures (HKSRS 4400)- the professional

Objective of external audit

The objectives of an audit are:

Phase II Performing Risk Assessment e.g.

Phase III Obtaining Evidence About Internal Control Operating Effectiveness

Phase IV Obtaining Substantive Evidence About Accounts, Disclosures, and Assertions

Phase V Completing the Audit and Making Reporting Decisions

Other factors should be considered.

● Plan and perform an audit with an attitude of professional scepticism

To the Stockholders and Board of Directors of NVIDIA Corporation

/s/ PricewaterhouseCoopers LLP

Basis for Opinion

Key Audit Matters

● Goodwill and brand names with an indefinite useful life; and

● Investments in associated companies and joint ventures

bear on our independence, and where applicable, related safeguards.

Certified Public Accountants

Hong Kong, 21 March 2019

Вам также может понравиться