Members’ handbook
Handbook Update No. 347 contains the following update to Volume II of the Members’ Handbook:
i. The following new and revised accounting standards and amendments, effective for annual reporting periods beginning on or after 1 January 2027, were previously included in Section 2. The consequential amendments arising from these pronouncements have now been incorporated into the relevant Hong Kong Financial Reporting Standards (HKFRS) Accounting Standards, Basis for Conclusions and Implementation Guidance in Section 2:
- HKFRS 18 Presentation and Disclosure in Financial Statements
- HKFRS 19 Subsidiaries without Public Accountability: Disclosures
- Amendments to HKFRS 19 Subsidiaries without Public Accountability: Disclosures
- Translation to a Hyperinflationary Presentation Currency (Amendments to HKAS 21)
- HKFRS for Private Entities Accounting Standard
ii. Certain HKFRS Accounting Standards, which have incorporated relevant amendments effective for annual reporting periods beginning on or after 1 January 2026, are now relocated from Section 2 to Section 1.
Handbook Update No. 346 revises various pronouncements in Volume I and Volume III of the Members’ Handbook to:
- Incorporate Ethics Standards for Sustainability Assurance and Other Revisions to the Code Relating to Sustainability Assurance and Reporting and Revisions to the Code Addressing Using the Work of an External Expert to the Code of Ethics for Professional Accountants.
- Update the Conforming and Consequential Amendments to Other Hong Kong Standards Arising from HKSSA 5000.
- Update the Narrow Scope Amendments to Hong Kong Engagement Standards Arising from the Project on Using the Work of an External Expert.
Handbook Update No. 345 relates to the incorporation of the Amendments to Greenhouse Gas Emissions Disclosures (Amendments to HKFRS S2 Climate-related Disclosures), effective for annual reporting periods beginning on or after 1 January 2027, into HKFRS S2 and its Basis for Conclusions.
Financial reporting
Institute’s resources to support the implementation of HKFRS 18
As the implementation of HKFRS 18 progresses, the Institute remains committed to supporting members with practical resources, including:
This issue focuses on how HKFRS 18 applies to banks and insurers, highlighting:
– Key impacts on the structure of the statement of profit or loss.
– Illustrative statements of profit or loss for banks and insurers.
– Examples of financial measures used by banks and insurers, and considerations for identifying management-defined performance measures.
This webcast provides a practical walkthrough of the five categories, the two new mandatory subtotals, practical steps for preparers, and a before-and-after illustration of the statement of profit or loss.
List of new and amended HKFRSs
The Institute has published the list of amended HKFRSs applicable to accounting periods beginning on or after 1 January 2026.
IASB issues IFRS 20 Regulatory Assets and Regulatory Liabilities
The International Accounting Standards Board (IASB) issued IFRS 20, a new accounting standard for companies subject to a specific type of rate regulation. The standard aims to help investors better understand how that rate regulation affects a company’s financial performance, financial position and prospects for future cash flows. Access the supporting materials:
- Project Summary gives an overview of the project in non-technical language.
- Effects Analysis describes the likely benefits and costs of IFRS 20.
- Feedback Statement summarizes stakeholder feedback and the IASB’s response to feedback.
IASB issues amendments clarifying the fair value option in IAS 28
The IASB issued targeted amendments to clarify which investments in associates and joint ventures a company is eligible to measure using the fair value option under IAS 28 Investments in Associates and Joint Ventures, with the amendments taking effect when a company first applies IFRS 18.
New educational material to support implementation of IFRS for SMEs
The IFRS Foundation has published a webcast and four educational modules (free registration required) to support implementation of the IFRS for SMEs Accounting Standard. The webcast provides an overview of amendments relating to topics addressed in multiple sections, while the new educational modules focus on Section 13 Inventories, Section 17 Property, Plant and Equipment, Section 21 Provisions and Contingencies and Section 30 Foreign Currency Translation.
Compilation of Agenda Decisions – Volume 14 published
The IFRS Foundation has published Compilation of Agenda Decisions Volume 14, issued by the IFRS Interpretations Committee, covering the period from November 2025 to April 2026. It includes eight new agenda decisions and updates to six previously published agenda decisions.
Auditing and assurance
HKICPA Audit Guide: Digital Assets
The Institute published the HKICPA Audit Guide: Digital Assets. This non-authoritative guide assists auditors in identifying and addressing common issues in audits of entities engaged in digital asset activities, including cryptocurrencies, stablecoins and security tokens. It synthesizes regulatory inspection findings across jurisdictions, guidance from regulatory and professional bodies, and emerging audit practices into a structured, phase-by-phase guidance.
Suggested Chinese translation of unmodified auditor’s reports based on the HKSA for LCE
The Suggested Chinese translation of unmodified auditor’s reports based on the Hong Kong Standard on Auditing for Audits of Financial Statements of Less Complex Entities (HKSA for LCE) is now available.
AFRC Survey 2025
In September 2025, the Accounting and Financial Reporting Council (AFRC) invited practice units to share their insights via survey. The analysis identified several areas that may indicate non-compliance with applicable professional standards, including the Hong Kong Code of Ethics for Professional Accountants and Hong Kong Standards on Quality Management. In light of these observations, this publication highlights key areas of concern and reminds practice units of their ongoing obligation to fully comply with relevant laws, regulations, and professional standards.
Ethics
Comment letter
The Institute has submitted its comments on the International Ethics Standards Board for Accountants’ (IESBA) Survey for Post-Implementation Review of the Restructured Code.
IESBA’s snapshots
IESBA released two snapshots focused on ethics and independence approach to the use of technology and the Firm Culture and Governance Project. IESBA’s snapshots provide short overviews of IESBA projects, explaining their purpose, direction, and current focus in clear and accessible terms, alongside more detailed technical materials.
IESBA video on the role of the CFO
In this video, an IESBA member reflects on the realities chief financial officers are navigating today, from expanding responsibilities beyond finance to the complexity of ethical decision-making.
Sustainability
ISSA 5000 Frequently asked questions: The application of materiality
The International Auditing and Assurance Standards Board released a new FAQ publication to support implementation of the International Standard on Sustainability Assurance (ISSA) 5000 General Requirements for Sustainability Assurance Engagements. The FAQs focus on materiality in sustainability assurance engagements and are intended to promote consistent understanding and effective application of the concept under ISSA 5000.
ISSB nature-related disclosure proposals
The International Sustainability Standards Board (ISSB) Vice-Chair outlined the ISSB’s proposed Practice Statement on nature-related disclosures, with an Exposure Draft targeted for publication in October 2026. Key decisions include using the Practice Statement together with IFRS S1 and IFRS S2, making it a tool companies can choose to use when providing nature-related information to investors, and drawing on the Taskforce on Nature-related Financial Disclosures framework to develop the proposals.
Legislation & other initiatives
FATF publication on high-risk and other monitored jurisdictions
On 19 June, the Financial Action Task Force (FATF) published a statement on high-risk jurisdictions subject to a call for action, calling on its members and all jurisdictions to apply specific measures and actions against Iran, the Democratic People’s Republic of Korea and Myanmar.
The FATF also issued a notice on jurisdictions under increased monitoring, identifying other jurisdictions with strategic deficiencies in their anti-money laundering/ counter-terrorist regimes and working with the FATF to address them. The FATF generally calls for a risk-based approach, rather than enhanced due diligence for these jurisdictions. The full list of such jurisdictions and their current status can be found in the FATF notice.
Revised FAQs on suspicious transaction reporting
Members are reminded that the Institute issued a revised FAQs on Suspicious Transaction Reporting, in collaboration with the AFRC and with valuable input from the Joint Financial Intelligence Unit. The updated FAQs provide clear and practical guidance on common issues encountered by CPA practices and Institute members, helping them better understand and fulfil their legal obligations while meeting regulatory expectations.
Please refer to the full versions of Technical News on the Institute’s website: www.hkicpa.org.hk
