>The role of auditor is mainly on reducing the information risks derived from agency risks. Examining the financial statements by independent auditors is one of the most effective means to reduce information risks. Auditors also provide insurance against loss from this because claims for negligence generally arise when an auditor has failed to perform an audit at a reasonable standard of care.

>While the auditor is responsible for expressing an opinion on the financial statements, the responsibility for preparing and fairly presenting the financial statements in accordance with the applicable financial reporting framework is that of the management of the entity, with oversight from those charged with governance.

>Besides the requirements of Companies Ordinance in reporting on the truth and fairness of financial statements, auditors are required to:

1 plan and perform an audit with an attitude of professional scepticism recognising that circumstances may exist that causes material misstatements in the financial statements under audit, according to the terms of audit engagement and requirements of auditing standards.

2 exercise professional judgement in evaluating sufficient appropriate audit evidence that has been obtained to reduce audit risks to an acceptable level and to support audit opinion.

>Auditors are required to comply with HKSAs and the Code when performing their auditing function and communication with those charged with governance, including significant audit issues, deficiencies in internal controls and non-compliance with law and regulations.

>If client has effective corporate governance mechanism, audit risks can be reduced because this can promote the independence of external auditors, the effectiveness of client's internal controls and internal auditing function, and also the transparency and reliability of the financial reporting.