2. Qualification and Experience of Accountants

2.1 Standards

A sponsor should satisfy itself that:

(i) the expert is appropriately qualified, experienced and competent to give the opinion;

(ii) the expert is sufficiently resourced; and

(iii) the expert is independent from the listing applicant and its directors and controlling shareholder(s). [Paragraph 17.7(a) of the Code of Conduct]

2.2 Guidance

The sponsor must be able to satisfy this standard such that it can confirm to the Stock Exchange that it has reasonable grounds to believe and does believe (to the standard reasonably expected of a sponsor which is not itself expert in the matters dealt with in the accountant’s report) that the accountant meets this standard and that reliance could fairly be placed on the accountant’s work.14

2.3 Recommended Steps

2.3.1 As soon as practicable after appointment of the accountant, the sponsor should review the terms of the listing applicant’s engagement with, and, if the sponsor is not familiar with the accountant, obtain publicly available information about, the accountant. The sponsor should check all such information available and ask questions during any interviews or due diligence sessions with the accountant with a view to assessing whether the accountant has the relevant experience and expertise.

2.3.2 The accountant will usually confirm its independence as part of its comfort letter. Otherwise, the sponsor should consider obtaining a written confirmation of independence from the accountant or ask for such confirmation during the interview/due diligence session with the accountant. Such confirmation is required under the Listing Rules if the accountant is not subject to a standard of independence set by a relevant professional body, which may apply to accountants governed by certain overseas professional bodies.15

2.3.3 Sample questions for the accountants as part of the due diligence exercise relating to the accountants’ qualification and experience are included in Appendix II.

Endnotes

14. Paragraph (c)(iii) and (v) of Appendix 19, Paragraph 5(a) of Practice Note 21 to the Listing Rules and Paragraph 5.3(a) CFA Code. In extraordinary circumstances, for a firm of accountants with which the sponsor is less familiar, the sponsor may wish to consider whether additional due diligence work should be performed with respect to such accountant and the financial information prepared by it with a view to satisfying itself that the accountant meets this standard.

15. Paragraph 14(g) of Practice Note 21 to the Listing Rules. The relevant standard for accountants governed by the HKICPA is Professional Ethics Statement 1.203A “Independence for assurance engagements” issued by the HKICPA.