HKEX published the results of the review of issuers’ 2021 annual reports and made recommendations, including financial reporting and related controls and disclosure on material lending transactions. HKEX suggested that the directors of issuers should exercise diligence and care when assessing the appropriateness of management’s accounting estimates and the assumptions adopted in the financial statements. Directors should ensure that these estimates are reasonable and consistent with current facts, circumstances, and industry standards. In addition, the directors should have a good understanding of the issuer’s risk appetite and exposure as well as its capacity to service the lending activities. Issuers should also provide financial information and statistics on their loan receivables, such as their total loan balance, the number of loans granted and outstanding, the average loan size or amount, and any other relevant data points. Finally, Issuers and their audit committees should communicate well with auditors on the audit focus areas and other emerging issues, and the company should take prompt actions to deal with auditors’ suggestions.
Learn with us in small steps