Update no. 255 includes revisions to various auditing and assurance pronouncements in Volume III to conform to Hong Kong Standard on Auditing 540 (Revised) Auditing Accounting Estimates and Related Disclosures that became effective for audits of financial statements for periods beginning on or after 15 December 2019.
Invitation to comment
The Institute is seeking comments on the International Accounting Standards Board (IASB) Exposure Draft ED/2021/1 Regulatory Assets and Regulatory Liabilities by 31 May.
Joint call for research papers on corporate disclosure
In conjunction with Accounting in Europe and The British Accounting Review, the IASB has published a joint call for research papers on the following topics:
- Compliance with mandatory disclosure requirements.
- Specific areas of interest to the IASB.
- Alternative research approaches.
The deadline for submissions is 31 January 2022.
January IASB podcast
The January podcast, focusing on the IASB discussions at its monthly meeting, is now available.
IASB’s webinar on Discussion Paper Business Combinations under Common Control
A recording of a webinar by the staff of IASB on Discussion Paper DP/2020/2 Business Combinations under Common Control held on 27 January is now available. It provided an overview of the paper, explained the IASB’s preliminary views, and gave viewers an opportunity to ask questions. Members can submit their comments on the paper by 5 July.
December 2020 IFRS Interpretations Committee podcast
The December 2020 International Financial Reporting Standards (IFRS) Interpretations Committee podcast, highlighting key activities undertaken by the Interpretations Committee to support the consistent application of IFRSs, is now available.
IFRS Foundation education material on going concern
The IFRS Foundation has published educational guidance to highlight relevant requirements in IFRSs for companies to assess their ability to continue as a going concern. The education material aims to support the consistent application of IFRSs, and does not add to or change any existing requirements.
IFRS Foundation webinars on IFRS 9, IFRS 15, and IFRS 16
The IFRS Foundation has organized six webinars in January and February aimed at academics to stimulate research into IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers, and IFRS 16 Leases, and to inform the post-implementation reviews of these standards. Each webinar consists of an overview of the standard’s objectives and related research opportunities, followed by questions and answers. The recordings are now available.
Auditing and assurance
IAASB January board meeting
The audio recording of the International Auditing and Assurance Standards Board (IAASB) January board meeting is now available.
IAASB webpage for the new and approved Quality Management standards
Visit the IAASB’s dedicated webpage for the new and approved Quality Management standards as well as other resources and implementation support.
Fraud, NOCLAR and government support
The Institute of Chartered Accountants in England and Wales (ICAEW) Know-How Guide provides some considerations for auditors when assessing the risks of fraud in relation to COVID-19 government support schemes.
Invitation to comment
The Institute is seeking comments on the International Ethics Standards Board for Accountants (IESBA) Exposure Draft Proposed Revisions to the Definitions of Listed Entity and Public Interest Entity in the Code by 3 April. The proposed revisions broaden the definition of a public interest entity in the International Code of Ethics for Professional Accountants (Including International Standards) (IESBA Code) to include more categories of entities, given the level of public interest in their financial condition, for the purposes of additional independence requirements to enhance confidence in their audits.
Implications arising from government-backed COVID-19 business support schemes
The staff of the United Kingdom Financial Reporting Council and the IESBA jointly released a publication on ethical and auditing implications arising from government-backed business support programmes, which have been utilized at unprecedented levels during the COVID-19 pandemic.
A focus on ethics and independence standards
An article from the International Federation of Accountants (IFAC) highlights the importance and continuance relevance of the IESBA Code. It also recaps revisions and restructured changes to the IESBA Code in 2018 and various recent and upcoming revisions.
Revision to the IESBA Code on objectivity for engagement quality reviewers
The IESBA released revisions to the IESBA Code addressing the objectivity of an engagement quality reviewer and other appropriate reviewers. This project dovetailed with the IAASB’s is development of International Standard on Quality Management 2 Engagement Quality Reviews.
Extended external reporting
Revisions to the International Integrated Reporting Framework
The International Integrated Reporting Council recently published revisions to the International Integrated Reporting Framework to enable more decision-useful reporting. The revisions focus on a simplification of the required statement of responsibility for the integrated report; improved insight into the quality and integrity of the underlying reporting process; a clearer distinction between outputs and outcomes; and a greater emphasis on the balanced reporting of outcomes and value preservation and erosion scenarios.
Institute responds to HKEX Consultation Paper: The Main Board Profit Requirement
The Institute issued a submission in response to the Consultation Paper issued by Hong Kong Exchanges and Clearing Ltd. (HKEX), which proposes to increase the Main Board aggregate profit requirement from HK$50 million to HK$125 million or HK$150 million.
The Institute does not support the proposal for a number of reasons. We are aware that the proposal has raised concerns among some sectors of the Institute’s membership, given the impact that it may have on the ability of smaller companies, including local small- and medium-sized enterprises with growth potential, to raise funds, on diversity in the capital market, and on the business of numerous professionals engaged in work on initial public offerings. While we acknowledge the importance of an effective gatekeeping role to facilitate the listing of high-quality companies and those with good potential for growth, we do not agree with the approach proposed in the consultation paper for the reasons explained in the submission. Please also refer to the Institute’s email issued on 28 January for further information.
Response to HKEX’s Concept Paper on Modernizing Hong Kong’s IPO Settlement Process
The Institute issued a submission in response to the concept paper, issued by the HKEX, which proposes to introduce a new purpose-built software platform, known as the Fast Interface for New Issuance or “FINI”. The platform will coordinate, streamline and improve workflows between the various parties involved in the settlement process for initial public offerings (IPOs), and so be able to shorten the IPO settlement timetable from the existing “T+5” to “T+1”, in line with other major capital markets.
The Institute’s Corporate Finance Advisory Panel (CFAP), in principle, supports the overall proposal outlined in this concept paper and makes certain additional suggestions and observations to HKEX.
Institute responds to consultation paper on proposals to enhance the Hang Seng Index
The Institute issued a submission in response to Hang Seng Indexes Company Ltd. Consultation Paper Proposal to enhance the “Hang Seng Index” as regards continuing to serve as the most representative and important benchmark of the Hong Kong stock market.
The Institute’s CFAP, in principle, agrees that the Hang Seng Index should be further developed to strengthen its representativeness and diversity, as the principal benchmark of the Hong Kong stock market. In the submission, the CFAP also provides some comments and observations on specific proposals.
Response to SFC Consultation Paper on the Management and Disclosure of Climate-related Risks by Fund Managers
The Institute issued a submission in response to the consultation paper issued by the Securities and Futures Commission (SFC) on the management and disclosure of climate-related risks by fund managers.
The CFAP, in principle, supports the thrust of the proposals, which is to require fund managers of collective investment schemes to be able to assess the potential impact of environmental, social and governance (ESG)-related issues on their business, and to disclose more ESG information, in particular about the management of climate-related risks, to investors. Under the proposals, there will be enhanced standards for “large fund managers,” i.e. those with assets under management of HK$4 billion of more. The CFAP also considers that additional practical guidance should be issued by the SFC to help fund managers to comply the proposed new requirements.
Announcements by the Inland Revenue Department
Members may wish to be aware of the following matters:
- Suspension of Service for Filing of Tax Return – Individuals through eTAX.
- Gazettal of Inland Revenue (Amendment) (Tax Concessions for Carried Interest) Bill 2021.
- Automatic Exchange of Financial Account Information:
– Inland Revenue Ordinance (Amendment of Section 50A) Notice 2020.
– Inland Revenue Ordinance (Amendment of Schedule 17D) Notice 2020.
– the relevant new FAQ34.
- Profits tax concessions for insurance-related businesses to commence operation on 19 March.
- Legislative Council question on relief measures.
- Legislative Council question on property conveyancing procedures and related irregularities.
- Legislative Council question on alleviating the financial burdens of members of the public.
- IRD responds to media enquiries on property stamp duty matters arising from intervention into Messrs Wong, Fung & Co.
- Business Registration Notice.
- Change of Postal Address of Employer.
- IRD to resume basic public services.
- Stamp Duty statistics.
Legislation and other initiatives
Announcements by the government
Members may wish to be aware of the following matters:
- Government extends social distancing measures under Prevention and Control of Disease Ordinance.
- More public services to resume in a safe and orderly manner.
AML news and notices
Institute responds to FSTB Public Consultation on Legislative Proposals to Enhance Anti-Money Laundering and Counter-Terrorist Financing Regulation in Hong Kong
The Institute issued a submission in response to the Public Consultation on Legislative Proposals to Enhance Anti-Money Laundering and Counter-Terrorist Financing Regulation in Hong Kong, issued by the Financial Services and the Treasury Bureau (FSTB).
Broadly, the Institute supports the need to introduce regulation for virtual asset service providers and for dealers in precious metals and stones, under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) (AMLO), in order to demonstrate Hong Kong’s compliance with Financial Action Task Force’s Recommendations. Meanwhile, the Institute offers comments on some of the specific questions in the consultation paper.
In respect of the proposed miscellaneous technical amendments under AMLO, also covered in the consultation paper, while, in general, the Institute is supportive of the changes, we suggest that the opportunity also be taken to make other amendments to set out, or clarify, in law or guidance certain other relevant matters. Please refer to the Institute’s submission for details.
IFAC and ICAEW release 4th instalment of six-part anti-money laundering educational series
On 25 January, IFAC and ICAEW, released the fourth instalment in its Anti-Money Laundering: The Basics educational series covering asset transfers, one of the primary ways in which criminals layer or integrate the proceeds of crime into the legitimate economy.
The publication is part of a six-month short series helping accountants to enhance their understanding of how money laundering works, the risks they face, and what they can do to mitigate these risks and make a positive contribution to the public interest.
COVID-19 and evolving risks for money laundering, terrorist financing and cybercrime
A publication by staff of CPA Canada and the IESBA highlights the heightened risks of money laundering, terrorist financing and cybercrime in the COVID-19 environment.
Members may be interested in the United Kingdom government’s recently published updated risk assessment of money laundering and terrorist financing in the U.K. Chapter 9 covers accountancy services.
For the current lists of terrorists, terrorist associates and relevant persons/entities under United Nations sanctions, members should refer regularly to the Institute’s AML webpage. Other useful documents and guidance can also be found on the same page.
Please refer to the full versions of Technical News on the Institute’s website.