5. Review of the Accountant’s Report

5.1 Standards

As regards the accountant’s opinion and the rest of the information contained in the accountant’s report, a sponsor should:

(i) critically review the accountant’s opinion and the rest of the information in the accountant’s report against the totality of all other information known to the sponsor about the listing applicant (including the business model, track record, operations, forecasts, sector performance and any relevant information publicly available) through due diligence and the sponsor’s knowledge and experience of the listing applicant, the market in which the listing applicant operates and of comparable companies;

(ii) corroborate the information in the expert report with the information disclosed in non-expert sections and the sponsor’s knowledge and experience of the listing applicant to ascertain whether the information throughout is consistent and coherent; and

(iii) conduct follow up work to resolve any material discrepancies, irregularities or inconsistencies. [Paragraph 17.7(d) of the Code of Conduct]

5.2 Recommended Steps

5.2.1 Apart from checking the information contained in the accountant’s report against the rest of the information contained in the listing document, the sponsor may consider to, as soon as the listing document is in an advance draft form, check the information contained in the accountant’s report against all material information the sponsor has gathered as part of its due diligence exercise on the listing applicant, its business and its business plan.

5.2.2 The sponsor should seek to obtain from the listing applicant and review any written representations provided by the listing applicant to the accountants with a view to confirming that the accountant’s report or other reports made in connection with the listing application, whether such representations are consistent with the sponsor’s knowledge of the listing applicant, its business and business plans.24

5.2.3 The sponsor should review the audit or review opinion to ensure it conforms with the industry standard and contains no unusual exceptions or qualifications.

5.2.4 If the report contains any qualification or exception, the sponsor should conduct further due diligence as to the nature and reason for such qualification and ensure that it is properly disclosed.25

5.2.5 Sample questions for the accountants as part of the due diligence exercise relating to the review of the accountant’s report are included in Appendix II.

Endnotes

24. Paragraph 14(d) Practice Note 21 to the Listing Rules.

25. Paragraph 14(f) Practice Note 21 to the Listing Rules.