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As IPOs surge, Hong Kong’s audit regulator vows tougher scrutiny

With more than 430 applicants in the IPO pipeline, the city’s accounting watchdog is ramping up post-listing inspections

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AFRC presents the main findings and insights from its annual inspection and enforcement reports for 2025-26. David Sun Tak-kei (L), chairman of the AFRC, and CEO Janey Lai Chui-pik. Photo: AFRC
Themis Qi
Hong Kong’s auditing watchdog has vowed to strengthen inspections of newly listed companies as a surge in initial public offerings raises concerns about the quality of financial reporting.
The Accounting and Financial Reporting Council (AFRC), the city’s independent accounting regulator, said evaluating the financial reporting of new public companies – specifically those that had completed or would complete new share issuance within a one-year window – was among its priorities for the current financial year ending March 2027.

“The increase in IPOs will be helpful for the development of Hong Kong’s finance industry,” said David Sun Tak-kei, chairman of the AFRC, following a media briefing on Tuesday. “But the high quality of financial reporting also matters.”

To maintain standards, the AFRC would continue to engage with auditors on projects for completed IPOs, Sun added.

Citing the relevant laws, AFRC CEO Janey Lai Chui-pik said the council would inspect audit reports after companies list, adding that pre-listing reviews of IPO applicants would remain the responsibility of the Hong Kong Exchanges and Clearing (HKEX) and the Securities and Futures Commission (SFC).

Earlier this year, Hong Kong’s regulatory authorities launched a coordinated campaign to scrutinise listing application documents and enforce compliance among financial intermediaries.

In February, the AFRC issued an open letter warning auditors of public entities against sacrificing quality in pursuit of business growth. This followed a directive from the SFC in late January that tightened the compliance framework for sponsors.

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