This month, I participated in a series of interviews with the media to talk about the latest industry developments, the Institute’s implementation of Strategic Plan 2022 so far, as well as a wide range of issues related to the Institute’s operations.
We reported on the smooth transition of the Institute’s regulatory role to the Financial Reporting Council (FRC) and further explained how the COVID pandemic has hindered the progress of the review between members of the Global Accounting Alliance, which has led to a temporarily shortened mutual recognition agreement renewal period. We also spoke about the ways accounting firms have been handling the issue of talent retention, which has also affected many industries and regulators in Hong Kong, as well as the opportunities for Hong Kong accountants in the Greater Bay Area.
During the interviews, I also touched on the two exposure drafts setting out proposed International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards published by the International Sustainability Standards Board (ISSB) in March. With the period for comment having ended on 29 July, the ISSB must now analyse the comments received from more than 1,300 comment letters from jurisdictions spanning six continents, and deliberate how they will adjust the current proposals.
A summary of the Institute’s response can be found here while the full response has been made available on the Institute’s website. The Institute will continue to participate in the global discourse and will work closely with the relevant authorities to introduce the international sustainability reporting standards to Hong Kong.
In late August, it was announced that the Ministry of Finance of The People’s Republic of China and the China Securities Regulatory Commission signed a Statement of Protocol with the United States Public Company Accounting Oversight Board (PCAOB). The landmark agreement allows the PCAOB’s access to audit workpapers of Chinese companies registered with the U.S. Securities and Exchange Commission and breaks a longstanding deadlock between the regulators of the two countries. While details of the arrangements have yet been announced, there is likely not much time before inspections are to be carried out.
Without much detail at the moment of writing, the role of the local profession may likely involve coordinating, arranging, and centralizing audit workpapers from the Mainland to Hong Kong to facilitate the inspection process. Preparations will surely be underway as the U.S. has indicated its inspectors must be on the ground by mid-September for their work to be completed by the end of this year.
On 16 August, the Institute and the FRC, which will be renamed the Accounting and Financial Reporting Council’s (AFRC), signed a Revised Statement of Protocol on Oversight Arrangement. The revised statement includes the AFRC’s broader responsibilities to oversee the Institute’s performance of its statutory functions under the further reform of the regulatory regime of the accounting profession, which commences on 1 October.
The Institute has been closely working with the FRC over the past year to steer a smooth transition of the Institute’s statutory functions of regulating the accounting profession to the AFRC. After the completion of reform, the Institute will continue to shoulder the responsibilities of incubating talent and developing Hong Kong’s accounting profession, as well as the crucial role of setting industry standards. We will continue to ensure the profession’s dedicated contribution to maintaining Hong Kong’s status as an international financial hub.
As the Mid-Autumn Festival approaches, I would like to wish our members and readers good health and joyful days ahead with their loved ones.
Loretta Fong CPA (practising)
“After the completion of reform, the Institute will continue to shoulder the responsibilities of incubating talent and developing Hong Kong’s accounting profession, as well as the crucial role of setting industry standards.”