Technical news

Members’ handbook

Invitations to comment

Handbook Update No. 332 relates to the (i) following local adoption of the International Ethics Standards Board for Accountants (IESBA)’s amendments in Volume I of the Members’ Handbook, and (ii) the accompanying “Key Impacts” documents:

Ethics Standards for Sustainability Assurance and Other Revisions to the Code Relating to Sustainability Assurance and Reporting (Sustainability Ethics Standards); and
Revisions to the Code Addressing Using the Work of an External Expert (External Expert Revisions).

Financial reporting

Supporting your professional work on virtual assets

As the standard setter for the accounting profession, the Institute is committed to supporting members in navigating the evolving digital asset landscape. We are currently formulating appropriate guidance for the accounting and auditing of virtual assets and related matters. This initiative complements the Hong Kong government’s policy direction to further develop Hong Kong’s digital asset market, as announced in the Chief Executive’s 2025 Policy Address.

To keep members informed, we have issued Alert 51, which outlines the accounting and auditing initiatives currently underway.

IFRS for SMEs Accounting Standard: new educational materials

The IFRS Foundation has published a package of new educational resources to support the implementation of the third edition of the IFRS for SMEs Accounting Standard. These materials are also relevant for applying the revised HKFRS for Private Entities Accounting Standard, issued by the Institute in April, which is equivalent to the third edition of the IFRS for SMEs Accounting Standard issued by the International Accounting Standards Board (IASB).

Webcasts

Educational modules

Auditing and assurance

Narrow scope amendments

The International Auditing and Assurance Standards Board (IAASB) has released narrow scope amendments to its standards, revising the definition of a listed entity to align with the definition in the IESBA’s Code of Ethics for Professional Accountants (including International Independence Standards). The new definition will amend the International Standards on Quality Management (ISQMs) and International Standards on Auditing (ISAs). In addition, amendments to International Standard on Review Engagement (ISRE) 2400 (Revised) Engagements to Review Historical Financial Statements, aim to align with the IESBA Code of Ethics regarding certain public disclosures about the application of independence requirements.

The narrow scope amendments:

Adopt the same definition of publicly traded entity (PTE) in the ISQMs and ISAs as adopted in the IESBA Code of Ethics, while recognizing the role of local standard setters and regulators in defining PTEs for their jurisdictions.
Incorporate an overarching objective for differential requirements for PTEs in the ISQMs and ISAs and a framework for when it may be appropriate to apply such requirements to other entities.
Amend the applicability of the existing requirements for audits of listed entities to apply to audits of PTEs.
Add a new requirement in ISRE 2400 (Revised) for public disclosure in the practitioner’s review report when the practitioner applied independence requirements specific to reviews of financial statements of certain entities, such as public interest entities.

Throughout the development of these amendments, the IAASB maintained close collaboration and coordination with IESBA, striving to align key concepts in the IAASB’s and IESBA’s standards, to the greatest extent possible. The IAASB has published a Basis for Conclusions to assist its stakeholder understanding and implementing the narrow scope amendments.

The narrow scope amendments will take effect for engagements for periods beginning on or after 15 December 2026.

In addition, the IAASB approved targeted amendments to its standards arising from revisions to the IESBA Code of Ethics regarding the use of the work of an external expert.

IAASB video series: What auditors need to know about the new fraud standard: ISA 240 (Revised)

The IAASB has released videos introducing ISA 240 (Revised) The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, issued in response to recent corporate failures and high-profile fraud cases. Julie Corden, former IAASB member and chair of its Fraud Task Force, introduces the standard and the revisions in four videos:

Introducing the Revised Fraud Standard;
A Sharper Focus on Fraud Risk Assessment;
A More Robust Response to Identified or Suspected Fraud; and
Enhanced Transparency in the Auditor’s Report.

Audit focus for 2025 year-end audits

The Accounting and Financial Reporting Council (AFRC) has released the following publications for 2025 year-end audits:

Audit Focus for 2025 Year-End Audits – This publication highlights engagement-specific focus areas for 2025 year-end audits and outlines firm-level key considerations to ensure the delivery of high-quality audits in a complex and evolving landscape.

Audit Focus for 2025 Year-End Audits – Financial Services Sector – Drawing on the AFRC’s inspection experience, this publication highlights sector-specific risks and audit considerations relevant to the 2025 environment. Since auditing financial institutions present unique challenges, it also outlines considerations for firms to gauge their readiness to undertake financial services audit and assurance engagements and provides guidance on meeting the high expectations of this sector.

Rethinking auditor skills and education

As artificial intelligence (AI) redefines the audit profession, the skills required to excel are undergoing a significant change. This was the resounding message from a landmark roundtable in June 2025, co-hosted by the IAASB, which brought together audit professionals, educators, and regulators to examine how accountancy education must evolve in the face of accelerating technological change.

This article summarizes key insights from the roundtable on AI implications for auditor skills and competencies and initial professional education and development. A previously published article titled Embracing the AI Frontier: The Transformative Impact of AI on Audit Firms & Methodologies shares insights and tips for audit firms as they consider evolving their methodologies.

Ethics

What are the key impacts of the newly adopted IESBA amendments in the Code?

The following “Key Impacts” documents have been issued to support the local adoption of the IESBA’s amendments to the HKICPA Code of Ethics for Professional Accountants. The documents aim to provide an overview of the standards and highlight how feedback from major local stakeholders gathered during the IESBA’s consultations was addressed:

Sustainability

Institute implementation support for HKSSA 5000

The Institute is committed to equipping stakeholders with the professional knowledge required to navigate the evolving sustainability landscape. To support the implementation of Hong Kong Standard on Sustainability Assurance (HKSSA) 5000 General Requirements for Sustainability Assurance Engagements, we have developed the following multi-faceted resources:

Staff publication: Q&As on HKSSA 5000 – These Q&As should be read in conjunction with the Institute’s HKSSA 5000 and are intended for general guidance only. They do not necessarily reflect the views of the Standard Setting Department, the Institute, the Council, or any of its committees.
E-learning: Overview of HKSSA 5000 – This session provides a comprehensive overview of the new assurance standard, covering fundamental principles and concepts, engagement acceptance and continuance, group sustainability assurance engagements and the use of the work of others.

IESBA new guidance to support implementation of standards on external experts and sustainability Assurance

The IESBA has released two new staff publications to enhance understanding and support global adoption and implementation of its ethics standard on Using the Work of an External Expert, as well as the International Ethics Standards for Sustainability Assurance, both of which are effective from December 2026.

Corporate finance

Invitation to comment

The Hong Kong Exchanges and Clearing Limited (HKEX) has published a Consultation Paper on Review of Chapter 15A – Structured Products. The paper contains proposals and draft changes to the Listing Rules for the continuing development of the structured products market and balancing of investor protection and product choice. Key focuses include enhancing market competitiveness, market quality and investment protection, and market efficiency and transparency. Members of the public are invited to respond to the consultation by completing an online questionnaire by 11 November.

HKEX’s guide on carbon credits

The HKEX has published Carbon Credits: A Buyer’s Guide which provides an overview of the nature of carbon credits and how the carbon market operates. This market is gaining momentum as more corporations turn to buying carbon credits as an interim measure of offsetting emissions on their journey to reaching net zero.

Please refer to the full versions of Technical News on the Institute’s website: www.hkicpa.org.hk