Update no. 238 contains:
- Amendments to Chapter A, Part 4B of the Code of Ethics for Professional Accountants to conform with the corresponding revisions to the International Ethics Standards Board for Accountants’ (IESBA) International Code of Ethics for Professional Accountants (Including Independence Standards) on terms and concepts used in International Standard on Assurance Engagements 3000 (Revised) Assurance Engagements Other Than Audits or Reviews of Historical Financial Information; and
- Revisions to Hong Kong Standard on Investment Circular Reporting Engagements (HKSIR) 500 Reporting on Profit Forecasts, Statements of Sufficiency of Working Capital and Statements of Indebtedness to conform to the latest regulatory and financial reporting requirements.
Update no. 239 contains an amendment to Hong Kong Financial Reporting Standard (HKFRS) 16 Leases that provides a practical exemption for lessees for rent concessions occurring as a direct consequence of the COVID-19 pandemic.
Institute’s comments on International Accounting Standards Board (IASB) exposure drafts
The Institute has submitted comments on:
- Exposure Draft ED/2020/1 Interest Rate Benchmark Reform – Phase 2 (Proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
- Exposure Draft ED/2020/3 Classification of Liabilities as Current or Non-current – Deferral of Effective Date: Proposed amendment to IAS 1
Illustrative examples on COVID-19- related rent concessions
The Institute has published examples on rent concessions to illustrate the application of the amendment to HKFRS 16 Leases to common rent concession fact patterns observed in Hong Kong during the COVID-19 pandemic.
Educational guidance for COVID-19 financial reporting issues
The Institute has published educational guidance highlighting key COVID-19-related financial reporting considerations for 2020 financial reporting periods.
Summary of COVID-19 financial reporting considerations
The International Federation of Accountants’ (IFAC) webpage summarizes key financial reporting challenges and implications from COVID-19, and highlights various relevant resources available that can assist with some of the financial reporting challenges and issues.
May IASB Update
The May IASB Update, highlighting the tentative decisions reached by the IASB, is now available.
IASB Investor Update Issue 20
Issue 20 of Investor Update, highlighting recently introduced International Financial Reporting Standards (IFRSs), events and publications of interest to investors, is now available.
Investor education webcast on understanding estimated credit loss information
In this webcast for investors, the staff of the IASB use illustrative examples to explain expected credit loss recognition, measurement model, and related disclosures that entities prepare under IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures.
May IASB podcast
This monthly podcast focuses on the IASB’s discussions on the amendment to IFRS 16 Leases at its supplemental meeting and discussions at its regular May meeting.
Auditing and assurance
Invitation to comment
The Institute is seeking comments on the International Auditing and Assurance Standards Board (IAASB) Exposure Draft International Standards on Auditing (ISA) 600 (Revised) Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors) and Proposed Conforming and Consequential Amendments to Other ISAs by 14 August.
Revisions to Auditing and Assurance Technical Bulletin
The Institute has revised Auditing and Assurance Technical Bulletin 3 Implementation Guidance on Revised HKSIR 400 Comfort Letters and Due Diligence Meetings to provide guidance to reporting accountants when providing change period comfort where there are changes in accounting policies during the change period.
IAASB’s guidance for auditors during the COVID-19 pandemic
As part of the IAASB’s ongoing response to COVID-19, guidance related to subsequent events and auditor reporting have been issued. More information and helpful links can be found on the IAASB’s COVID-19 webpage.
IAASB’s revised work plan
To account for COVID-19’s impact on the IAASB’s work, the IAASB has reconsidered the timelines for its projects and revised its work plan for 2020-2021.
IAASB’s implementation support on ISA 540 (Revised)
The IAASB’s illustrative examples for auditing accounting estimates illustrate a selection of requirements from ISA 540 (Revised) Auditing Accounting Estimates and Related Disclosures, which may be scaled down or scaled up when auditing simple or complex accounting estimates.
Summary of COVID-19 audit considerations
The IFAC webpage summarizes key audit challenges and implications from COVID-19, and highlights various general resources available that can assist with some of the audit challenges and issues.
Global messaging to inform conversations with key stakeholders related to COVID-19
IFAC has produced messages highlighting how the profession is working to address challenges for companies and their auditors during crisis and into recovery, which will assist professional accountancy organizations in their stakeholder dialogue.
Audits involving cryptoassets
The Public Company Accounting Oversight Board has issued Audits Involving Cryptoassets Spotlight discussing some of the issues auditors and audit committees should consider about audits involving cryptoassets, such as Bitcoin and other digital currencies.
The Institute’s submission
The Institute commented on the following IESBA exposure drafts:
- Proposed Revisions to the Non- Assurance Services Provisions of the Code; and
- Proposed Revisions to the Fee-Related Provisions of the Code
IFAC Exploring the IESBA Code 6: Conflict of Interest
Professional accountants are required to properly manage conflicts of interest that arise. This sixth instalment of Exploring the IESBA Code highlights key aspects of the code’s Conceptual Framework to deal with conflicts of interest.
The Institute’s submission
The Institute issued a submission on 11 May, in response to the consultation proposals by Hong Kong Exchanges and Clearing (HKEX) on corporate weighted voting right beneficiaries.
SFC consultation paper on REIT Code amendments
The Securities and Futures Commission published Consultation Paper on Proposed Amendments to the Code on Real Estate Investment Trusts (REIT). This proposes a number of enhancements to the code, which aim to strike a balance between facilitating market development and competitiveness on the one hand, and ensuring the protection of investors’ interests and market integrity on the other. The deadline for responding is 10 August.
Annual meeting with the Inland Revenue Department
The annual meeting between representatives of the Institute’s Taxation Faculty Executive Committee and the Inland Revenue Department (IRD) took place on 15 May. At the meeting the IRD confirmed the extended due dates for lodging profits tax returns for the year of assessment 2019-20. These are:
Announcements by the IRD
Members may wish to be aware of the following matters:
- Taxpayers and employers reminded of their obligations
- List of Qualifying Debt Instruments (as at the end of 31 March)
- Order on double taxation arrangement with Macau gazetted
- Legislative Council question on two-tiered profits tax rates regime
- Legislative Council question on taxation mechanism for demand-side management measures for the property market
- Tax returns for individuals issued
- Tax information – Tax exemptions in respect of relief measures under the Anti-epidemic Fund
- Alert regarding fraudulent website
- Interest on Tax Reserve Certificates
- Stamp Duty Ordinance amended to lower transaction cost for primary market exchange-traded fund activities
- Stamp Duty statistics
Legislation and other initiatives
Updated requirements relating to AGMs, etc.
From 8 May the requirements in relation to the exemption for annual general meetings and other meetings under the Prevention and Control of Disease (Prohibition on Group Gathering) Regulation (Cap. 599G) have changed. The government has published an updated guidance on its COVID-19 Thematic Website.
Further exemptions from compulsory quarantine under Cap. 599C
The government announced on 8 June that directors or executives of certain companies listed on the HKEX who can meet the eligibility criteria may apply for exemption from the compulsory quarantine arrangement when they arrive at Hong Kong from the Mainland, subject to a pre-determined quota.
Anti-money laundering notices
The updated list of terrorists and terrorist associates designated by the United Nations Security Council (UNSC) was gazetted on 22 May pursuant to the United Nations (Anti- Terrorism Measures) Ordinance (Cap. 575). See the related UNSC press release.
For the current lists of terrorists, terrorist associates and relevant persons/entities under UN sanctions, members should refer regularly to the Institute’s dedicated 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