Technical news

Financial reporting

Invitation to comment

The Institute is seeking comments on the International Accounting Standards Board (IASB) Request for Information Post-implementation Review of IFRS 15 Revenue from Contracts with Customers by 18 September.

Institute submission

The Institute has submitted its comment letter on the IASB Exposure Draft Amendments to the Classification and Measurement of Financial Assets (Proposed amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures).

The Institute’s Financial Reporting Standards Committee meeting minutes

Minutes of the June 2023 meeting is now available.

Accounting implications of the abolition of the MPF-LSP offsetting mechanism in Hong Kong

The Institute has published comprehensive guidance for the accounting implications of the abolition of the Mandatory Provident Fund (MPF)-Long Service Payment (LSP) offsetting mechanism (the abolition). The guidance provides a detailed discussion on the background of the issue, the two acceptable accounting approaches, disclosures, time allowed to implement the guidance, and illustrative examples.

The effects of climate-related matters on financial statements

The IFRS Foundation has updated its educational material developed to help companies determine how to consider climate-related matters when preparing their financial statements applying IFRS Accounting Standards.

Auditing and assurance

New quality management series: small firm implementation

To help small firm practitioners implement the new quality management standards, the International Federation of Accountants (IFAC) has released a three-part publication series focusing on providing tips and guidance for practical implementation.

The second installment of the series, Developing a detailed implementation plan, provides a step approach to identifying your quality objectives; completing your quality risk assessment process; identifying existing, or creating new, responses to those quality risks; and implementing, documenting, and communicating your system of quality management.

Click here for the first installment of the series released in October 2022.

Call to action for sustainability reporting and assurance

Along the issuance of the two sustainability standards by the International Sustainability Standards Board (ISSB), IFAC has released the following materials to aid professional accountants in delivering high-quality sustainability-related reporting and assurance services.

Ethics

Institute submission

The Institute has submitted its comment letter on the International Ethics Standards Board for Accountants (IESBA) Consultation Paper, Proposed IESBA Strategy and Work Plan 2024-2047.

The Institute’s Ethics Committee meeting

Minutes of the 256th meeting is now available.

The Institute’s ethics video on bias

Watch the educational video produced by the Institute highlighting the role and mindset expected of professional accountants with a focus on “bias” in the context of the International Code of Ethics for Professional Accountants (including International Independence Standards) (Code).

IESBA emphasizes the critical importance of ethical behaviour for all professional accountants

This news by IESBA mentions that recent events in a number of major jurisdictions involving professional accountants have raised concerns with many stakeholders and the public about whether the accountants’ conduct was straightforward and honest, free from conflicts of interest, in accordance with confidentiality requirements, or in the public interest.

Applying the Code’s conceptual framework to independence

This publication by the staff of the IESBA and the Australian Accounting Professional and Ethical Standards Board describes key technology-related provisions of the Code and provides auditors with three practical examples involving technology-related non-assurance services to illustrate how to apply the Code’s requirements with respect to independence.

Sustainability

ISSB issues inaugural global sustainability disclosure standards

The ISSB issued its inaugural standards – IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures on 26 June. The standards aim to improve trust and confidence in company disclosures about sustainability to inform investment decisions and create a common language for disclosing the effect of climate-related risks and opportunities on a company’s prospects. The ISSB chair officially launched the standards at the IFRS Foundation Conference in his speech titled “A new common language to build more resilient economics”.

Following the issuance of IFRS S1 and IFRS S2, the Institute, as the statutory sustainability standard setter in Hong Kong, issued an alert which outlines the Institute’s roadmap for developing sustainability disclosure standards for the accounting profession in Hong Kong.

Supporting materials for IFRS Sustainability Disclosure Standards

In these two ISSB webcasts, the ISSB vice-chair explains how IFRS S1 and IFRS S2 work together, and how IFRS S2 builds on the requirements in IFRS S1 by setting out requirements for a company to disclose both cross-industry and industry-specific information about climate-related risks and opportunities. In addition, the ISSB has published an article that highlights 10 things to know about the first two ISSB standards.

Survey: the ISSB Knowledge Hub

The ISSB Knowledge Hub will be a free online resource for preparers, designed to help them understand and get ready for applying IFRS S1 and IFRS S2. It will incorporate an easy-to-navigate and searchable repository of resources which will be developed by the IFRS Foundation and its partners. These resources include case studies, good practice guidance, webinars and an e-learning platform.

The exposure draft consultation feedback for IFRS S1 and IFRS S2 included requests for a new capacity building programme, illustrative guidance, case studies, examples, training and other resources. The IFRS Foundation is seeking additional feedback and requests on the capacity-building priorities that different stakeholders have, any specific focus areas or topics that are of interest (linked to IFRS S1 and IFRS S2), or other suggestions on how the IFRS Foundation can support preparers and others. Find survey here.

Corporate finance

HKEX concludes consultation on Proposals to Expand the Paperless Listing Regime

On 30 June, the Stock Exchange of Hong Kong (HKEX) released consultation conclusions on the proposals to expand the Paperless Listing Regime and other Rule Amendments.

The Institute issued a submission in response to this consultation on 28 February. In principle, we support the HKEX’s proposals on the basis that they could improve the market efficiency and lower costs to issuers in company administration and reduce the use of paper. At the same time, we also raised concerns and suggestions to the HKEX to accommodate the needs of some retail investors, particularly elderly investors, who may face difficulties in transitioning to a full paperless regime, in its proposals.

Please refer to the press release for details.

HSIC concludes consultation on Eligibility of Foreign Companies to the HSI

On 7 July, Hang Seng Indexes Company Limited (HSIC) released consultation conclusions on the eligibility of foreign companies to be included in the Hang Seng Index (HSI), as well as the review results of the seven industry groups for the HIS constituent selection and the number of “Hong Kong” constituents in the HSI.

Insolvency

Bankruptcy and Companies Legislation (Miscellaneous Amendments) Ordinance 2023

The Institute has received a letter from the Official Receiver’s Office, advising that the Bankruptcy and Companies Legislation (Miscellaneous Amendments) Ordinance 2023 (Amendments Ordinance) was enacted by the Legislative Council on 12 July and will be published in the Gazette on 21 July.

The Amendments Ordinance mainly serves to amend the Bankruptcy Ordinance (Cap. 6), the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) and their subsidiary legislation to:

Facilitate the submission of certain documents to the Official Receiver by electronic means;
Change the publication requirements for various notices;
Facilitate the sending of proxies by electronic means; and
Make other miscellaneous and related amendments.

Further details are contained in the letter, and any questions on the matter should be addressed to oroadmin@oro.gov.hk.

Taxation

Reminder on profits tax return filing requirements

The Inland Revenue Department (IRD) asks taxpayers to take note of the following new filing requirements when filing profits tax returns this year:

If taxpayers have any gross income during the basis period, they must submit a profits tax return together with all supporting documents (including financial statements and a tax computation). Small corporations and businesses with gross income not exceeding HK$2 million will no longer be permitted to file their profits tax returns without supporting documents.
Where appropriate, taxpayers are required to electronically file (e-file) all relevant supplementary forms and other forms to be furnished with the profits tax return under the eTAX services provided at GovHK.

As an alternative to paper filing of profits tax return, taxpayers are encouraged to participate in voluntary e-filing through the eTAX platform, which will also enable them to enjoy a further one-month extension of the filing deadline. For details on the new filing requirements, please visit the IRD’s website.

Legislation and other initiatives

Revised AML guidelines

Please note that Revised Guidelines on Anti-Money Laundering and Counter-Terrorist Financing for Professional Accountants have been uploaded on the Institute’s AML webpage for members’ reference. The guidelines, which were gazetted on 25 May and came into effect on 1 June 2023, the same commencement date as relevant amendments to Anti-Money Laundering and Counter-Terrorist Financing Ordinance, form Chapter F of the Code of Ethics for Professional Accountants. Accordingly, AML workshops (in English) exploring the latest updates and practical guidance to facilitate compliance with AML/CFT requirements will be held on 10 August (Part I) and 22 August (Part II) respectively. In addition, a live webinar (in Cantonese) will be conducted on 16 August to discuss the main changes in the revised AML/CFT guidelines and their implications for members.

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