List of new and amended HKFRS
The Institute has published the list of new and amended Hong Kong Financial Reporting Standards (HKFRS) that are applicable to December 2023 year-end.
IASB summarizes its completed project on extractive activities
The International Accounting Standards Board (IASB) published a summary of its project on extractive activities. The summary explains the reasons for the IASB taking on the project, the work done and the key decisions made, including the reasons for deciding to retain International Financial Reporting Standards (IFRS) 6 Exploration for and Evaluation of Mineral Resources.
Based on evidence collected between 2018 and 2023, the IASB decided not to develop new or amended recognition, measurement or disclosure requirements for exploration and evaluation expenditure or other aspects of accounting for extractive activities. The IASB did not find compelling evidence that standard-setting would be necessary.
Webcast series: the forthcoming IFRS Accounting Standard for subsidiaries
In this webcast, William Biese, member of the Mexican Financial Reporting Standard Setting Board, joined the IASB technical staff member to discuss the possible effects of the forthcoming reduced-disclosure IFRS Accounting Standard for subsidiaries of parent companies that apply IFRS Accounting Standards.
They discussed how this new standard may simplify and reduce the cost of preparing subsidiaries’ financial statements while maintaining their usefulness to their users.
Auditing and assurance
Invitation to comment
The Institute is seeking comments on the International Auditing and Assurance Standards Board (IAASB) Exposure Draft on Proposed Narrow Scope Amendments to International Standards on Quality Management; International Standards on Auditing (ISAs); and International Standard on Review Engagements 2400 (Revised) Engagements to Review Historical Financial Statement, as a Result of the Revisions to the Definitions of Listed Entity and Public Interest Entity (PIE) in the International Ethics Standards Board for Accountants (IESBA) Code by 8 March.
These proposed revisions have two key objectives. First, they would align definitions and requirements in the IAASB standards with new definitions for publicly traded and PIEs in the IESBA Code. Second, the amendments would extend the applicability of existing differential requirements for listed entities to meet heightened stakeholder expectations regarding audits of PIE.
Considerations for 2023 year-end audits
With the 2023 year-end audits approaching, the Institute has published an alert with some points for consideration when performing audits and other forms of reporting. They include additional procedures when receiving responses to confirmation requests by electronic mail, and impact to auditor’s reports as a result of the narrow-scope amendments made to Hong Kong Accounting Standard 1 Presentation of Financial Statements.
2023 Financial year-end audit reminder
The Accounting and Financial Reporting Council highlighted the areas that could significantly impact financial reporting and audit quality in the current economic and business circumstances in its publication Audit Focus – Effective Planning: The Key to High-Quality Audits. Auditors are reminded of the requirement to identify and address all relevant audit risks that may arise during the audit process.
A standard for audits of less complex entities
The IAASB has published the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities, known as the ISA for LCE. It is a standalone global auditing standard designed specifically for smaller and less complex businesses and organizations. Built on the foundation of the ISAs, audits performed using this standard provide the same level of assurance for eligible audits: reasonable assurance. The standard is effective for audits beginning on or after 15 December 2025 for jurisdictions that adopt or permit its use.
The Institute’s Auditing and Assurance Standards Committee will consider the applicability of the standard in a local context and will follow the due process for adoption in Hong Kong. This article developed by the International Federation of Accountants (IFAC) discusses the key attributes of the ISA for LCE.
IFAC Technology Matrix
The IFAC has created a Technology Matrix as a quick guide to help stakeholders understand and access the breadth of technology resources available from the IFAC.
Featuring content from April 2021- 2023, the matrix categorized resources using technology ABCs:
- A: Artificial Intelligence (AI)
- B: Blockchain
- C: Cyber-security
- D: Data governance (an valuing data)
- E: Ethics
- Other tech content (i.e. content not falling within A, B, C, D or E)
The Matrix will be updated periodically throughout the year; all IFAC technology-related materials are also available using the Technology content tag.
The use of AI for SMPs
A presentation given by a member of the IFAC Small- and Medium-Sized Practices Advisory Group on the use of AI for small-and medium-sized practices (SMPs) has been introduced on the IFAC website as a useful resource. The presentation covers:
- An overview of the different types of AI
- Ethical challenges in the use of AI
- Practical use of ChatGPT
- Supervision responsibilities for AI use
Additional resources for SMPs on technology and other important topics are available at the IFAC’s Practice Transformation Hub.
HKICPA Ethics Survey 2024
Take part in the Institute’s Ethics Survey 2024 on the ethical attitudes of professional accountants in Hong Kong regarding their use of technology when carrying out professional activities, and the potential implications on their compliance with the fundamental principles of the Institute’s Code of Ethics for Professional Accountants. The survey takes less than 10 minutes to complete and will close on 9 February.
The IESBA made an announcement for its successful completion and approvals of various exposure drafts and standards:
- Commitment to sustainability reporting and assurance – The exposure draft approved by the IESBA will contain proposed independence standards for use by all sustainability assurance practitioners regardless of whether they are professional accountants, and specific ethics provisions relevant to sustainability reporting and assurance. The IESBA intends to release the exposure draft in late January.
- Using the work of external experts – The IESBA approved proposed ethics provisions addressing the use of external experts by organizations as well as in the context of audit and assurance engagements, including sustainability assurance engagements. Professional accountants and sustainability assurance practitioners will be guided by an ethical framework to evaluate the competence, capabilities, and objectivity of external experts.
- Strengthening ethical behaviour in tax planning – The IESBA approved the final revisions to the Code of Ethics for Professional Accountants (including International Independence Standards) to address tax planning and related services. These revisions establish an ethical framework in the public interest to guide professional accountants in making judgements and decisions when providing relevant services.
- Strategy and Work Plan 2024-2027 – The IESBA approved its Strategy and Work Plan (SWP) for 2024-2027. Among other matters, the IESBA will tackle two new ambitious strategic areas of focus: accounting firm culture and governance, and extending the impact of the Code beyond the accounting profession, where it believes the SWP can significantly expand reach and business impact.
ICAS updated ethics case studies
The Institute of Chartered Accountants of Scotland (ICAS) has updated its Shades of Grey – Ethical Dilemma case studies. Initially published in 2009, the 19 ethical dilemmas in the updated publication are intended to cover a wide range of situations that might be faced by chartered accountants in business or in practice.
ISSB at COP28
Chair of the IFRS Foundation Trustees, Erkki Liikanen addressed COP28 in December 2023 to reflect on progress since the IFRS Foundation announced its decision to establish the International Sustainability Standards Board (ISSB) in 2021. Liikanen confirmed three further commitments in the IFRS Foundation’s efforts to support efficient and resilient capital markets through robust sustainability-related financial disclosures. Furthermore, he announced the re-appointment of ISSB Chair, Emmanuel Faber, for a second term.
The declaration of support, announced during the Finance Day at COP28, was signed up by close to 400 organizations, including companies, investors, stock exchanges, professional accounting organizations, audit firms, regulators and standard setters from around the world, committed to advance the ISSB climate global baseline.
IFRS Sustainability knowledge hub
The IFRS Sustainability knowledge hub set up by the IFRS Foundation serves as a useful repository of different resources related to the IFRS Sustainability Disclosure Standards. Members can refer to the quick start guide on how to use the hub and to find relevant information.
Consultation on Legislative Proposal to Implement Regulatory Regime for Stablecoin Issuers and Announcement on Introduction of Sandbox Arrangement
On 27 December 2023, the Financial Services and the Treasury Bureau and the Hong Kong Monetary Authority (HKMA) jointly issued a public consultation paper to seek views on the legislative proposal to regulate issuers of stablecoins. The HKMA will also introduce a sandbox arrangement for communicating supervisory expectations and guidance on compliance to entities having a genuine interest in and a reasonable plan on issuing fiat-referenced stablecoin in Hong Kong. The deadline for responding to the consultation paper is 29 February.
HKEX publishes Consultation Conclusions on GEM Listing Reforms
On 15 December 2023, the Stock Exchange of Hong Kong Limited (HKEX) released Consultation Conclusions on GEM Listing Reforms. The Institute issued a submission in response to this consultation on 6 November 2023. Refer to the press release for details.
Legislation and other initiatives
Anti-money laundering (AML) notices
For the current lists of terrorists, terrorist associates and relevant persons/entities under United Nations sanctions, members should refer regularly to the Institute’s AML webpage. Other useful documents and guidance can also be found on the same page.
Please refer to the full versions of Technical News on the Institute’s website: www.hkicpa.org.hk