On May22, 2019, the Supervision and Evaluation Bureau of the Ministry of Finance of the People’s Republic of China and the Financial Reporting Councilof the Hong Kong SAR (FRC), signed a Memorandum of Understanding to promote cooperation on audit regulation. Under the MOU, the audit regulators of the Mainland and HKSAR will deepen their cooperation on audit oversight based on the principle of mutual reliance. The two sides will strengthen communication while discharging duties in respect of inspection and investigation on audit oversight to improve the regulatory efficiency. The FRC could, through clear procedures,gain access to Hong Kong-based accounting firms’ audit working paperskept in the Mainland.

In recent years, the audit regulators of the Mainland and HKSAR have been carrying outremarkable cooperation on audit oversight, leading to improved quality of accounting information for the Mainland entities listed in HKSAR exchanges and better interconnectivity of the financial marketsbetween the Mainland and HKSAR. The signing of theMOU will bring the audit regulatory equivalence between the Mainland and HKSAR to a new level, promote in-depth integration of two capital markets, and boost the sound development of accountingprofessionin both places.