The Securities and Futures Commission (SFC), the Accounting and Financial Reporting Council (AFRC) and The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Thursday) issued a joint statement addressing growing regulatory concerns over the increasing number of listed issuers publishing financial statements with a disclaimer of opinion solely relating to going concern.
The joint statement sets out clear expectations for listed issuers’ management, audit committees and auditors, with the common objective of enhancing the quality and reliability of financial reporting and maintaining investor confidence.
A disclaimer of opinion means that the auditor has not expressed an opinion on the listed issuer’s financial statements, raising questions about their reliability. The joint statement emphasises that addressing these concerns is a shared responsibility across the financial reporting ecosystem. Management should prepare robust going concern assessments supported by reasonable assumptions, reliable data and feasible action plans. Audit committees should critically review management’s going concern assessments and actively oversee the implementation of action plans. Auditors should critically evaluate the assessments, communicate identified deficiencies and clearly explain the basis for any disclaimer of opinion.
Ms. Christina Choi, the SFC’s Executive Director of Corporate Finance, said: “Reliable financial reporting is the bedrock of investor confidence and quality market. All relevant parties must take collective ownership of going concern issues—acting early, challenging assumptions rigorously and providing transparent, meaningful disclosures. This joint statement makes clear that inaction and inadequate scrutiny are unacceptable.”
Ms. Yap Kim Bong, the AFRC’s Head of Policy, Registration and Oversight, said: “This joint statement underscores the important roles that listed issuers’ management, audit committees and auditors play in maintaining confidence in our capital markets. No single party can achieve this alone. Auditors must play their part by delivering a high-quality audit that supports the audit opinion issued and communicating in the auditor’s report any matters, beyond going concern, that could lead to a modified opinion.”
Ms. Katherine Ng, HKEX’s Head of Listing, said: “A disclaimer of opinion, even when it relates solely to going concern, can have significant implications for market quality and investor confidence. Upholding the integrity of our markets requires listed issuers to take ownership of the underlying issues, pursue credible actions to address them, and keep investors informed through timely and transparent disclosures. Audit committees also have a vital role to play in providing independent and rigorous oversight of management’s responsibilities.”
The SFC, the AFRC and the Exchange will continue to monitor the situation closely and take appropriate regulatory, disciplinary or enforcement actions where misconduct or non-compliance is identified. If no significant improvement is observed, the Exchange will consider amending the Listing Rules as necessary, including requiring listed issuers with a disclaimer of opinion solely relating to going concern to be suspended.
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