The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), today (Friday) published a report summarising key observations and findings from its review of 100 financial reports released by listed issuers in 2007 and 2008.  The report is available under the Regulatory Framework and Rules section of the HKEx website.

As part of its regulatory role, the Exchange operates a Financial Statements Review Programme which reviews, on a sample basis, the periodic financial statements released by listed issuers to monitor issuers’ compliance with the disclosure requirements of the Listing Rules and accounting standards.  Through publishing the findings from its most recent review, the Exchange aims to promote higher standards of financial disclosure by listed issuers.

The primary objective of the report published today is to increase listed issuers’ awareness of the possible pitfalls in the preparation of periodic financial reports so they can learn from the experience of others and improve the quality of their reports. 

The report covers the Exchange’s review of annual, interim and quarterly reports released by listed issuers between July 2007 and September 2008.  During the review process, the Exchange issued 96 letters to listed issuers that contained a total of more than 500 enquiries and observations.

The Exchange requested explanations on areas of possible non-compliance. Where omitted disclosures were regarded as less significant, the Exchange obtained confirmation from issuers that the omissions would be rectified in future financial reports. 

After consideration of the responses, the Exchange was pleased to note that except for two cases which were referred to the Financial Reporting Council, there were no significant breaches of the Listing Rules or accounting standards that would render the financial statements false or misleading or warrant additional investigation or enforcement action. 

The results of the review indicate that some disclosures could be improved and that listed issuers should reassess the adequacy and effectiveness of their existing financial reporting systems periodically and make changes where necessary so they can meet all disclosure requirements in their future financial reports.