Hong Kong regulators are monitoring an increasing number of irregularities at small to medium-sized mainland firms listed in the city.
Sophia Kao, the chairman of the Financial Reporting Council (FRC), said yesterday the accounting regulator had placed 13 Hong Kong-listed firms on a watch list in the past two months.
Kao did not name any company but said that most of them were small and medium-sized enterprises (SMEs) based on the mainland.
'If you ask me whether it is unusual [to see so many mainland SMEs in suspected accounting problems], my answer is yes,' she said.
She said the 13 were targeted after collating information from various sources including the media.
'One of the key points is to see how auditing firms hired by those IPO-ready companies can do a better job checking the books before the companies go public,' Kao said, adding it was not the FRC's role to regulate accounting matters before a company made an initial public offering. 'I understand the competition among many auditing firms for those IPO deals is pretty high nowadays; however, it doesn't mean you can just relax a bit in terms of accounting standards.'
