ENG-2009 — Page 124

76 Financial and Monetary Affairs

standards. The FRC started reviewing in July 2008 modified auditor's reports of financial statements of entities listed in Hong Kong.

Statistics on FRC's work

2007

2008

2009

No. of complaints received

17

12

13

No. of modified auditors' reports reviewed

Not applicable

28

129

No. of investigations initiated

1

4

No. of investigations completed

1

No. of enquiries initiated

1

1

2

No. of enquiries completed

1

2

A Process Review Panel reviews the FRC's handling of cases to ensure its actions and decisions comply consistently with established procedures.

Proposed Establishment of an Independent Insurance Authority

The Government has been looking into the establishment of an independent Insurance Authority (IA) to enable it to operate more flexibly to meet regulatory challenges and to better prepare Hong Kong for a risk-based capital regulatory regime.

In view of the latest development in the financial market, the Government carried out an extended study in late 2009 to review the existing insurance regulatory system and identify areas for improvement. The study is expected to be completed in the second quarter of 2010. The Government will prepare the detailed proposals for public consultation in mid-2010.

Proposed Establishment of a Policyholders' Protection Fund

To improve the stability of the insurance market and safeguard the interests of policyholders in the event of an insurer's insolvency, the Government has proposed the establishment of a Policyholders' Protection Fund (PPF) in Hong Kong and aims to consult the public on the detailed proposals of PPF in 2010.

Review of proposals for introducing a corporate rescue procedure

As part of its response to the global financial crisis, the Government has adopted the recommendation made by the Task Force on Economic Challenges in January 2009 to re-consider the introduction of a corporate rescue procedure to help companies with viable long-term business prospects, in short-term financial difficulty, to turn around.

The Government launched a three-month public consultation on the subject in October 2009.