Hong Kong's Securities and Futures Commission, Accounting and Financial Reporting Council and Stock Exchange set expectations for going concern audit disclaimers

Hong Kong's Securities and Futures Commission, Accounting and Financial Reporting Council and Stock Exchange issued a joint statement setting expectations for listed issuers, audit committees and auditors where financial statements receive a disclaimer of opinion solely relating to going concern. Such cases increased from 12 in 2017 to 95 in 2025, including 65 that had persisted for more than one year and one lasting 14 years. The regulators are concerned that these disclaimers leave investors without an audit opinion on the financial statements and have often been accompanied by generic or insufficient disclosures. Management should produce evidence-based going concern assessments using reasonable assumptions, reliable data and feasible action plans, then report detailed progress, deviations and revisions through annual disclosures and quarterly updates. Audit committees should challenge those assessments, oversee implementation and explain their conclusions, particularly when they agree with management despite auditors' concerns. Auditors should identify deficiencies promptly, consider alternative audit procedures, specify why evidence was insufficient and complete the necessary audit work on all other areas of the financial statements. The authorities may pursue regulatory, disciplinary or enforcement action where they identify misconduct or noncompliance. If disclosures and conduct do not improve significantly, the Stock Exchange will consider amending the Listing Rules, including by requiring the suspension of issuers whose financial statements carry a disclaimer solely related to going concern.