In 2025, there will likely be continued growth in the utilization of AI in the accounting profession given the value it brings. In particular, Generative AI (GenAI), a type of AI that creates original human-like content, has ushered in a new era of increased productivity and data-driven insight.
For accounting firms, GenAI offers the ability to streamline processes, boost efficiency, and derive meaningful insight from data. However, firms are still cautious about adopting GenAI technology into their workflows, according to The 2024 Generative AI in Professional Services report from the Thomson Reuters Institute. Of the survey respondents, 8 percent of tax firms and corporate tax departments identified as using GenAI technology, with 13 percent of these firms planning to use the tech soon. It also found that 30 percent of them are in the consideration phase of whether to use GenAI tools.
On the corporate sector side, chief financial officers are gearing up to continue AI strategy plans this year. Research, published in the recent KPMG Global AI in Finance report, shows that the use of AI is rapidly expanding across the world – 71 percent of companies are using AI in finance, and 41 percent of them to a moderate or large degree. GenAI has become a top priority for the future, with 95 percent of organizations that qualify as “leaders”, those more mature in AI usage, and 39 percent of others expecting to selectively or widely adopt it within financial reporting in the next three years, demonstrating the scale of the shifts to come.
The publication of the first two sustainability disclosure standards – HKFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and HKFRS S2 Climate-related Disclosures (HKFRS Sustainability Disclosure Standards) – on 12 December 2024 is just the beginning of a long journey to building a comprehensive sustainability disclosure ecosystem for Hong Kong, to solidify the city’s status as a leading hub for sustainable finance.
In line with the Roadmap on Sustainability Disclosure in Hong Kong published by the government, the Institute will be developing local assurance and ethics standards on a full convergence basis with international standards. It aims to publish the final local standards by the end of this year. The Accounting and Financial Reporting Council will also this year release a proposed local regulatory framework for sustainability assurance for public consultation.
With the HKFRS Sustainability Disclosure Standards’ effective date of 1 August 2025, the Institute will be focused on ensuring the successful implementation of the standards, organizing seminars, webinars and other engagement activities to build capacity for the profession and those beyond it. Refer to the Sustainability Information Centre for the latest technical resources and activities.
Development in the Greater Bay Area (GBA) will remain a strategic focus for members, particularly as Mainland China appears steadfast in implementing a higher standard of opening up, and Hong Kong enterprises look to develop on the Mainland through preferential arrangements. A guideline, outlining 20 policy measures across six areas to expand institutional opening-up in the country’s pilot free trade zones and a free trade port, was jointly issued by the People’s Bank of China, Ministry of Commerce, National Financial Regulatory Administration, China Securities Regulatory Commission, and State Administration of Foreign Exchange.
When it comes to movement between cities, efforts to integrate the four transportation networks in the GBA are being deepened. Preparatory work is underway for projects such as the Guangzhou-Zhuhai-Macao High-Speed Railway and the Foshan-Guangzhou-Dongguan Intercity Railway. Meanwhile, construction has started on the transformation of Guangzhou East Station, and the new Huanggang Port has been completed.
Tech-minded members should also note advancements taking place in the Mainland’s manned and unmanned equipment industry or “low-altitude economy,” touted as a new growth driver for the country. The Guangzhou Low-Altitude Economy Development Regulation will take effect on 28 February. The regulation addresses key areas such as airspace, infrastructure, flight services, industrial development, and application scenarios, providing a legal framework to support the growth of emerging industries.
With the Hong Kong government’s initiatives for attracting talents announced last year, the accounting profession could potentially see its talent supply bolstered.
The Policy Address in October last year included measures to attract quality talents, including updating the government’s “Talent List” in early 2025 to include talents required for the development of the “eight centres”. The Institute believes this would further expand the talent pool of the profession for maintaining the service quality of the accounting profession in Hong Kong.
Proposing ideas to the government on attracting and retaining talent for both the profession and Hong Kong is something the Institute does regularly. In January 2024, the Institute, based on the findings of a survey, proposed several recommendations to address the talent shortage challenge of the accounting profession. One was to include the accounting profession in the “Talent List” to attract accounting-related professionals to the industry.
The Institute’s recent partnerships with other world-leading accounting bodies and newly signed agreements underscore the paths open to Institute members to complement their CPA qualification and expand their professional network. They also serve as a nudge for members aspiring to advance their careers internationally.
The new partnership between the Institute and the Association of Chartered Certified Accountants (ACCA), for example, simplifies admission to ACCA membership for Institute members, giving them access to ACCA’s global professional network and extensive continuous professional development opportunities and technical resources.
Highlighting the global recognition of the Institute’s membership qualification, in November 2023 the Institute signed a five-year extension to the Reciprocal Membership Agreements with five chartered accountancy bodies within the Global Accounting Alliance, including the Chartered Accountants Australia and New Zealand, Chartered Accountants Ireland, Institute of Chartered Accountants in England and Wales, Institute of Chartered Accountants of Scotland and South African Institute of Chartered Accountants. These agreements facilitate global qualification mobility for eligible members, and will remain in effect until 30 November 2028.
Visit the Institute’s webpage to learn more about these agreements.
With the growing risk of cybersecurity threats, many companies and firms will be thinking about adopting comprehensive cybersecurity strategies. The number of cybersecurity cases in Hong Kong stood at 12,536 in 2024, up 62 percent from 7,752 cases in 2023, marking a five-year high, according to The Hong Kong Computer Emergency Response Team Coordination Centre (HKCERT) in January. The information security watchdog said that the number of phishing cases more than doubled to 7,811 from the 3,752 in 2023. Nearly a quarter of the phishing attacks focused on banking, finance and e-payment services.
“With the use of AI, the number of phishing links increased exponentially last year,” said Alex Chan, General Manager of HKCERT’s digital transformation division, reported the South China Morning Post.
With such cybersecurity threats expected to become more prominent in the future, and as hackers become more sophisticated, information technology (IT) and cybersecurity governance has grown increasingly important. Last year, the Institute conducted a short research study on IT and cybersecurity governance disclosures, reviewing the quality of disclosure among the Hang Sang Index companies. As the report highlights, “establishing an effective IT governance strategy, with sufficient dedicated resources for cybersecurity, should be an important focus area for companies, particularly those handling large volumes of sensitive private information.”
Investing in continuous professional development will continue to be a top priority, both for the Institute and members, who look to stay equipped with up-to-date knowledge on important topics, and thrive in an evolving business landscape.
This year, the Institute is placing an emphasis on helping members enhance their knowledge and skills in the areas of ethics and digitalization, with training curriculums that include highlights on related hot topics and industry trends. Of course, competencies covered in the Institute’s variety of continuing professional development (CPD) events and programmes go far beyond this, and members are reminded to take advantage of them.
CPD activities will be a key focus this year particularly for public interest entity (PIE) auditors given the new CPD requirements PIE auditors must fulfil from 1 December 2023 onwards. In response to this update, the Institute regularly curates relevant courses to help PIE auditors tackle these requirements.
Members are encouraged to check out the free e-learning course on CPD requirements and compliance audit, launched by the Institute to help members enhance their familiarity with the requirements, and ensure a seamless learning journey.
They can also expect the return of special offers such as the 2025 Membership Renewal Reward Scheme offering free CPD courses. More bundles will be announced throughout the year. Download the Events app and stay tuned.
Maintaining the utmost standards of ethics as CPAs will also be important for members this year, and with that there are certain areas related to requirements in the Code of Ethics for Professional Accountants (Code) that members should be aware of. In July 2023, the Institute released the Technology-related Revisions to the Code by adopting the revisions issued by the International Ethics Standards Board for Accountants. These revisions, which became effective from 15 December 2024, guide the ethical mindset and behaviour of professional accountants as they deal with changes brought by technology in their work processes. Join the e-learning course to explore these revisions.
The Revisions to the Definitions of Listed Entity and Public Interest Entity in the Code is another important change, which is effective for audits of financial statements for periods beginning on or after 15 December 2024. The Institute’s Ethics Committee has incorporated local refinements to ensure the definitions are relevant for implementation in Hong Kong. Members can learn about it through a video prepared by the Institute.
The public interest role accountants play in tax planning is also a key focus, as Revisions to the Code Addressing Tax Planning and Related Services will become effective on or after 1 July 2025. Members should join the Institute’s e-learning course to gain insights into all of these changes and be well-prepared.
Amid ongoing economic uncertainties, which could lead to elevated risks in financial reporting and auditing, auditors are reminded of the crucial role they play in fostering trust and confidence in financial information.
Key areas which auditors should pay attention to when reassessing their responses for year-end audits include the significant audit implications of the current challenging economic environment, where companies may experience extended financial pressures. This is covered in the Accounting and Financial Reporting Council’s Audit Focus for 2024 year-end audits, which also provides critical reminders to auditors to ensure audit quality is upheld this year.
When it comes to group audits, practitioners performing such engagements for the year ended on or after 31 December 2024 should adopt HKSA 600 (Revised) Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors). This updated standard introduces significant changes to the auditor’s responsibilities, emphasizing a proactive and risk-based approach to group audits. Practitioners can refer to the Institute’s updated Audit Practice Manual (2024 edition) and other resources relevant to the application of HKSA 600 (Revised), available at the Institute’s resource centre.
Practitioners should also note that revisions related to the definition of engagement team and group audits in the Code will take effect concurrently with the effective date of HKSA 600 (Revised).
As expected, members will be staying ahead of financial reporting updates and common application issues in order to maintain a high quality work for the firms or companies they work for.
In preparing for their 2024 year-end financial statements, entities should take note of the amended HKFRS Accounting Standards that became mandatorily effective on 1 January 2024. Among these amended standards, entities should pay special attention to the Amendments to HKAS 1 Presentation of Financial Statements, which clarify how entities classify liabilities as current or non-current and how covenants with which an entity must comply in a loan arrangement affect such classification. The illustrative examples published by the Institute as well as the relevant e-learning session can help entities gain a better understanding of the amendments.
Entities are also recommended to prepare for the implementation of several new and amended standards that will be effective in the next one or two years as soon as possible, as they could impact entities’ current reporting practices, internal control processes and accounting systems. These include Amendments to the Classification and Measurement of Financial Instruments and HKFRS 18 Presentation and Disclosure in Financial Statements. Refer to the new and major standards webpage for technical resources.
