Dr Wise on Auditors' Circularisation Exercises

The SFC today publishes the June issue of Dr Wise’s Column, Don’t Ignore the Auditor Circular, on its InvestEd website at www.InvestEd.hk.

In this issue, Dr Wise explains that a circularisation exercise is an important audit step taken by auditors looking for direct, third party confirmation to check the existence, completeness and accuracy of positions, etc, as recorded by the company being audited. It is therefore not uncommon for auditors of a broker firm to send a request to clients of the broker firm, typically on a sample basis, enclosing a statement of account detailing their positions and asking them to confirm the accuracy of the information.

Dr Wise reminds investors who have received such a request to carefully check the information on the enclosed statement of account against their records, and promptly report to the designated person named on the confirmation request, who is totally independent of the broker firm. It is, however, not advisable to directly contact the broker firm or the account executive to follow up on any discrepancies spotted.

Dr Wise is a fictitious character. Through his column, he talks to investors about the key issues of investing and regulatory thoughts.

Dr Wise’s Column is published on the last working Tuesday of every month. From time to time, additional articles in the form of special issues may be published on topical matters. The column is posted under the “Features & Dr Wise” section of the InvestEd website. Investors are welcome to send their feedback and questions to Dr Wise by email to InvestEd@sfc.hk.

Ends

Note:

1. News media are welcome to carry the column with acknowledgement of the source of the information.