Technical news

Members’ handbook updates

Handbook Update No. 311 relates to the issuance of Hong Kong Financial Reporting Standard (HKFRS) 18 Presentation and Disclosure in Financial Statements.

HKFRS 18 introduces the following three sets of new requirements to improve entities’ reporting of financial performance and give investors a better basis for analysing and comparing entities:

Presentation of new defined subtotals in the statement of profit or loss;
Disclosures about management-defined performance measures; and
Enhanced requirements for grouping (aggregation and disaggregation) of information.

Please also refer to Update No. 312 and Update No. 313, which relate to the amendments to Chapter A of the Institute’s Code of Ethics for Professional Accountants and Narrow Scope Amendments to Hong Kong Standard on Auditing (HKSA) 700 (Revised) and HKSA 260 (Revised).

Financial reporting

Institute submission

The Institute has submitted its comment letter on the International Accounting Standards Board (IASB) Exposure Draft Business Combinations – Disclosures, Goodwill and Impairment: Proposed amendments to International Financial Reporting Standard (IFRS) 3 Business Combinations and International Accounting Standard 36 Impairment of Assets.

Latest developments on financial instruments

The IASB has concluded its Post-implementation Review (PIR) of the impairment requirements in IFRS 9 Financial Instruments. Overall, feedback and research carried out during the PIR show that the impairment requirements in IFRS 9 are working as intended and provide useful information to users of financial instruments. For details, please refer to the Project Summary and Feedback Statement. In response to the feedback, the IASB will explore whether requirements for modification, derecognition and write-off of financial instruments, and the consequential effects on recognition of expected credit losses, can be clarified as part of its project on Amortized Cost Measurement.

The IASB has also issued amendments to the classification and measurement requirements in IFRS 9. The amendments respond to feedback from the 2022 PIR of the Accounting Standard and clarify the requirements in areas where stakeholders have raised concerns, or where new issues have emerged since IFRS 9 was issued.

Auditing and assurance

Institute submission

The Institute has submitted its comment letter on the International Auditing and Assurance Standards Board (IAASB) Exposure Draft on Proposed International Standard on Auditing 240 (Revised) The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements.

ISA for LCE Auditor Reporting Supplemental Guidance

The IAASB has released supplemental guidance on auditor reporting which provides assistance for auditors about modifications to the auditor’s report when using the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE). The guidance also includes information on using emphasis of matter and other matter paragraphs, reporting on other information, and reporting on a material uncertainty related to going concern.

The ISA for LCE anticipates relevant local bodies with standard-setting authority to determine quantitative thresholds for use of the ISA for LCE in their respective jurisdictions. In view of this, the Institute’s Auditing and Assurance Standards Committee is considering the applicability of the ISA for LCE in a local context and will follow the due process for adoption in Hong Kong.

Recent publications from IFAC

The International Federation of Accountants (IFAC) has published a number of new resources that may be of interest to its members.

AFRC publications

The Accounting and Financial Reporting Council (AFRC) has published the below publications in relation to achieving audit quality:

The AFRC has also published several documents that outline important issues in auditing and emphasize the aspects that require careful consideration when performing audit engagements:

Audit sampling and how to improve it

Based on the thematic review of audit sampling, this article by the Institute of Chartered Accountants in England and Wales explores what the findings mean for smaller firms and highlight some opportunities to enhance audit sampling.

Ethics

HKICPA resource centre

The Institute’s Resource Centre to the Code has been updated to incorporate technical resources on Revisions to the Code Addressing Tax Planning and Related Services, which will be effective in July 2025. The resource centre includes a wide range of resources and publications that will keep you updated on the latest ethics pronouncements.

Tax planning and related services

The International Ethics Standards Board for Accountants released the ethics standards on tax planning and related services effective for tax planning activities or tax planning services beginning after 30 June 2025. These standards establish a comprehensive ethical framework to guide professional accountants when providing tax planning and related services.

Navigating the Gen AI revolution: Implications for the accounting profession

This IFAC’s article highlights how Generative Artificial Intelligence (Gen AI) is transformative and consequential. It discusses the advent of AI and its capabilities, its benefits and risks, as well as its implications for the profession, particularly from the ethics angle.

Sustainability

GRI and IFRS Foundation collaboration to deliver full interoperability that enables seamless sustainability reporting

In response to market demand, the International Sustainability Standards Board (ISSB) and the Global Sustainability Standards Board will collaborate to optimize how ISSB Standards and the Global Reporting Initiative (GRI) standards can be used together. An initial outcome of this collaboration will involve a methodology pilot that builds on the recently published GRI 101 Biodiversity Standard and the ISSB’s upcoming project on Biodiversity, Ecosystems and Ecosystem Services.

Jurisdictions representing over half the global economy by GDP take steps towards ISSB Standards

Jurisdictions representing over half the global economy by gross domestic product (GDP) have announced steps to use the ISSB Standards or fully align their sustainability disclosure standards with those of the ISSB. To help jurisdictions in designing and planning their adoption or other use of ISSB Standards, the IFRS Foundation has released the publication Inaugural Jurisdictional Guide for the adoption or other use of ISSB Standards, which shows how jurisdictions are progressing towards delivering globally consistent and comparable sustainability-related information.

ISSB delivers further harmonization of the sustainability disclosure landscape as it embarks on new work plan

At the IFRS Foundation Conference 2024, Emmanuel Faber, ISSB Chair, announced further harmonization of the sustainability reporting landscape as the ISSB embarked on its new two-year work plan and published the Feedback Statement on that work plan.

Webinar series and webcasts: sustainability disclosure

The IFRS Foundation is launching a new series of monthly webinars to help preparers and other capital market participants worldwide ease their transition to using IFRS Sustainability Disclosure Standards. This webinar series complements the other resources published by the IFRS Foundation.

The IFRS Foundation has also published two new webcasts to help explain the requirements in the IFRS Sustainability Disclosure Standards related to the current and anticipated effects of sustainability-related risks and opportunities on a company’s financial position, financial performance and cash flows.

Corporate finance

Institute responses to SFC consultation on proposals to enhance REIT regime and SFO market conduct regime for listed CIS

The Institute issued a submission in response to the Securities and Futures Commission (SFC)’s consultation paper seeking market feedback on a statutory scheme of arrangement and compulsory acquisition mechanism for real estate investment trusts (REITs) and an enhanced market conduct regime for listed collective investment schemes (CIS) under the Securities and Futures Ordinance (SFO).

Corporate governance

Exchange issues Consultation Paper on Corporate Governance Code Enhancements

On 14 June, the Stock Exchange of Hong Kong Limited (Exchange) issued a consultation paper seeking market feedback on its proposed enhancements to the Corporate Governance Code and related Listing Rules. The deadline for responding to the consultation paper is 16 August. Please refer to the press release for details.

Insolvency

Revision of Panel A Rules

The Official Receiver’s Office has further revised the Panel A Rules introducing provisions on safeguarding national security. The revised Panel A Rules came into effect on 17 June 2024.

Professional Conduct and Duties of PIPs

The Official Receiver’s Office has issued a letter for the attention of members who are private insolvency practitioners (PIPs). The Official Receiver would like to draw to PIPs’ attention to, in particular, the comments made by the court in its two recent judgments concerning the conduct of PIPs, and to remind PIPs of the fundamental duties of full and frank disclosure in all insolvency proceedings. Further details are contained in the letter.

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