In a year, the world has drastically changed. The COVID-19 pandemic has caused incomprehensible disruption to countless organizations around the world. Lockdowns and travel restrictions, social distancing measures, increased demand for personal protective equipment, government financial support measures, and other factors have all affected the operations of businesses. Many of the “certainties” that were previously relied upon have turned out to be less sure bets. Although the “new normal” appears to be very abnormal, standard setters continue to work on projects to support the adoption of international standards, and ensure their effectiveness.
COVID-19 has demonstrated the importance of clear and thorough communication with stakeholders – particularly around financial matters. Financial reporting standards are drafted with the goal of helping companies to inform their stakeholders about their operations, and the need for authoritative standards for companies to apply to their reporting has never been clearer.
Standard setters around the world – including the Hong Kong Institute of CPAs – have produced guidance and support to help preparers and practitioners to apply financial reporting standards. The Institute has issued educational guidance on COVID-19-related financial reporting issues in March and June of this year covering matters affecting interim and annual financial statements, including events after the end of the reporting period, going concern, disclosures about key judgements and estimates and revenue recognition. As a preparer/practitioner, have you consulted the guidance from the Institute or others before beginning your reporting exercises?
Preparers and practitioners must also ensure they are aware of any issues around the applications of standards. The Institute engaged in continued dialogue with accounting experts and regulators to identify if there are any application issues on recently introduced standards. Two recently issued standards, Hong Kong Financial Reporting Standard (HKFRS) 15 Revenue from Contracts with Customers and HKFRS 16 Leases, changed how these two important topics are accounted for, which may have caused some application issues to arise. Do you know what some of the common misconceptions are?
Although the disruption from pandemic continues, standard setters are still involved in projects to update and replace standards. These projects are vital for ensuring that standards continue to meet the needs of various stakeholders. The Institute is researching topics including goodwill and impairment, and business combinations under common control, in preparation for contributing Hong Kong views to any updates to international standards. Are you ready for the future of financial reporting?
About the conference
The Annual Accounting Update 2020: The “New Normal” Financial Reporting will take place on Saturday 28 November as a live webinar. Featuring four presentations and a question and answer session, the conference will help to answer some of the questions raised above.
The conference will begin with an overview of the Institute’s major standard setting projects. Afterwards, there will be a presentation on some of the key financial reporting issues for 2020 period ends preparers and practitioners should watch out for. The third presentation will cover some common misconceptions and application issues with HKFRS 15 and HKFRS 16. Finally, amendments to Hong Kong Accounting Standard 1 Presentation of Financial Statements and HKFRS 3 Business Combinations will be discussed.
Viewers of the conference will learn more about the Institute’s activities and also receive advice on the key considerations for undertaking financial reporting during this “new normal.”
Ernest Lee is Technical Partner at Deloitte China, and a Fellow of the Hong Kong Institute of CPAs. He has over 27 years’ experience in auditing and providing technical advice on accounting and auditing related matters in a variety of industries across Asia-Pacific. He is the Chairman of the Institute’s Financial Reporting Standards Committee, and a member or former member of various advisory panels of the Institute. He is a member of the Financial Reporting Review Panel of the Financial Reporting Council and also serves as an Advisor to the Master of Accounting programme of Cambridge Judge Business School, University of Cambridge.