Technical news

The latest standards and technical developments

Members’ handbook

Update no. 266 relates to the issuance of Practice Note (PN) 850 (Revised 2021) Reporting on Flag Days, General Charitable Fund-raising Activities and Solicitation of Signed Authorization Forms Covered by Public Subscription Permits issued by the Social Welfare Department. Starting from 1 January 2022, the Social Welfare Department (SWD) will regulate the activity of seeking charitable donations through face-to-face solicitation of signed authorization forms (SSAF) in public places for charitable purposes. PN 850 (Revised) has been revised to provide guidance for auditors when reporting on SSAF. Changes are also made to the PN as a result of the amendments by the SWD on the wordings of permit conditions for flag days and general charitable fundraising activities.

Financial reporting 

Invitations to comment

The Institute is seeking comments on the International Accounting Standards Board (IASB) Exposure Draft ED/2021/9 Non-current Liabilities with Covenants by 11 February 2022. The proposed amendments to International Accounting Standard (IAS) 1 Presentation of Financial Statements aim to improve the information companies provide about long-term debt with covenants.

The Institute is also seeking comments on IASB Exposure Draft ED/2021/10 Supplier Finance Arrangements by 15 February 2022. The proposed amendments to IAS 7 Statement of Cash Flows and International Financial Reporting Standard (IFRS) 7 Financial Instruments: Disclosures aim to enhance the transparency of supplier finance arrangements and their effects on a company’s liabilities and cash flows.

Institute submission

The Institute has submitted its comment letter on the IFRS Interpretations Committee tentative agenda decision Demand Deposits with Restrictions on Use.

IASB webcasts on proposed standard for subsidiaries without public accountability

A series of bite-size webcasts on Exposure Draft Subsidiaries without Public Accountability: Disclosures has been produced to explore the objective and scope of the project, proposed disclosures requirements, and structure and the application of the proposed standard.

IASB Research Forum 2021

The IASB recently held its Research Forum 2021 to discuss the latest accounting research that informs the IASB’s standard-setting activities. Topics covered include financial instruments, disclosures about acquisitions and earnings per share. The audio recordings and presentation materials are now available.

IASB November podcast and updates

The IASB November podcast, with its chair and vice-chair highlighting the projects discussed during the November meeting, and a summary of the November meeting, are now available.

IFRS Interpretations Committee agenda decisions

The IFRS Interpretations Committee published two agenda decisions:

  • Non-refundable value added tax on lease payments.
  • Accounting for warrants that are classified as financial liabilities on initial recognition.

Auditing and assurance

Institute’s Auditing and Assurance Standards Committee meeting minutes

Minutes of the meeting held in October is now available.

New series of articles on preparing for the new quality management standards

To help practitioners prepare for the new quality management standards, the International Federation of Accountants (IFAC) has released a new publication series focusing on the three steps of the risk assessment process as required by International Standard on Quality Management (ISQM) 1 Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements.

The first article of the series – ISQM 1 quality objectives and quality risks sets out the factors to be considered when performing the first two steps – establishing the quality objectives and identifying and assessing the quality risks which provide the basis for the design and implementation of the responses.

Revised standard for agreed-upon procedures engagements

An article by the IFAC highlights key changes to the revised agreed-upon procedures (AUP) standard, which is effective for AUP engagements for which the terms of engagement are agreed on or after 1 January 2022.

Using automated tools and techniques on audit planning

The Technology Working Group of the  International Auditing and Assurance Standards Board released non-authoritative support material to help auditors understand how to plan an audit under International Standard on Auditing 300 Planning an Audit of Financial Statements, when using automated tools and techniques.

What makes a good audit?

This publication by the United Kingdom Financial Reporting Council explains the key elements that make up a good audit, particularly in the areas of risk assessment and planning, execution of the audit, and completion and reporting.

ICAEW audit and assurance resources 

The ICAEW has the following materials that may be of interest to members:

  • A webinar recording on practical tips to topical issues and areas for improvement in coming audits.
  • A webinar recording focusing on risk identification and assessment and how this fits into a broader system of quality management required by ISQMs.
  • Audit and Beyond November 2021 for technical articles on key areas of audit focus under the COVID-19 pandemic, new quality management standards etc.

Institute members can also subscribe to ICAEW’s International Standards for free to access a wide range of resources on auditing and ethics.

Opportunities for assurance on non-financial information

In the recording of a webinar by CPA Australia, experts discuss views on the areas of assurance that are growing in demand and how auditors can upskill to be able to take advantage of these opportunities.


Vision for high-quality sustainability assurance

The IFAC has published its vision for high-quality assurance of sustainability information. It addresses the importance of global standards, regulation that supports decision-useful disclosure, and the value of an interconnected approach to sustainability and financial information reporting and assurance.

Sustainability information for small businesses: the opportunity for practitioners

This report by the IFAC examines the importance of readily available, relevant, and reliable sustainability information for achieving better-informed decisions, enhanced strategic and risk management, and more thorough and valuable reporting to external stakeholders. It also highlights a range of emerging services that practitioners can provide to their clients, including advisory services, reporting, agreed-upon procedures engagements, and assurance services.

HKEX publishes climate disclosures and corporate governance guidance

The Hong Kong Exchanges and Clearing (HKEX) has recently published guidance on climate disclosures for listed issuers, and analysis of initial public offering applicants’ corporate governance, and environmental, social and governance (ESG) practice disclosures in 2020/2021. The HKEX has also launched a centralized ESG education portal called ESG Academy to support listed companies in their sustainability journeys.

HKEX publishes net-zero guide for business and announces new ESG data display

The HKEX has recently published guidance that introduces the essential steps for businesses to develop a pathway to net-zero. The HKEX has also introduced a new equities section on its online portal, Sustainable & Green Exchange, which displays ESG metrics of Hong Kong-listed companies.

Value Reporting Foundation publishes its Integrated Thinking Principles

The Value Reporting Foundation has published Integrated Thinking Principles to provide a structured approach for considering how to create the right environment within an organization to introduce integrated thinking, and reviewing what may go wrong.

Corporate governance

Institute conducts research into ESG assurance

To understand the current situation of ESG assurance in Hong Kong, in parallel with the Best Corporate Governance and ESG Awards, the Institute conducted research on the ESG reporting of all the December 2020 year-end listed companies. The Institute found that, among the almost 1,900 companies included in the research, just under 5 percent of them had obtained external assurance and, in most cases, it was only a limited scope assurance. Among companies with large market capitalization, this figure increased to around 20 percent. For further details of the findings and other observations, read the full report available on the Institute’s website.


New ORO policy on unrealized assets

The recently issued Official Receiver’s Office (ORO) letter advises that with immediate effect when trustees apply to the court for their release from their trusteeship with unrealized assets, the trustees are required to provide to the Official Receiver full information of any unrealized assets and reasons why such assets cannot be realized.

Further details are contained in the letter and any questions on it may be addressed to Michael Cheung, Chief Insolvency Officer of the ORO, at 2867- 2515.

Corporate finance

HKEX’s consultation conclusions on reforms to enhance listing regime for overseas issuers

On 19 November, HKEX released consultation conclusions on its proposals to enhance and streamline the listing regime for overseas issuers. In particular:

  • One common set of core shareholder protection standards will apply to all issuers, providing the same level of protection to all investors;
  • Greater China issuers without a weighted voting rights (WVR) structure can secondary list: (a) without demonstrating they are an “innovative company” and (b) with a lower minimum market capitalization at listing than currently required; and
  • Grandfathered Greater China issuers and Non-Greater China issuers eligible for secondary listing with their existing WVR and/or variable interest entity (VIE) structures may opt for a dual primary listing.

Please refer to the press release for details.

Please also refer to the Institute’s submission available on the Institute’s website. While the Institute generally supported HKEX’s proposals, the submission expressed some concerns about the implications of allowing eligible overseas issuers to dual primary list and retain their non-compliant WVR and/or VIE structures, even if they are de-listed from the exchange on which they have a primary listing.


Announcements by the Inland Revenue Department

Members may wish to be aware of the following matters:

  • Couple convicted of falsely claiming deductions of expenses of self-education and approved charitable donations.
  • List of Qualifying Debt Instruments (as at September 2021).
  • Stamp Duty statistics.

Legislation and other initiatives

Announcements by the government

Members may wish to be aware of the following matters:

  • The Hong Kong government’s Green Bonds Offering.
  • Public consultation on updating Hong Kong’s copyright regime launched.
  • Secretary for Financial Services and the Treasury responds to statement by U.S. Securities and Exchange Commission.
  • Speech by Hong Kong Chief Executive at Hong Kong Quality Assurance Agency Symposium – Sustainable Finance and Climate Resilience.
  • Speech by Financial Secretary at 2021 Hong Kong Chartered Tax Adviser Conference.
  • Speech by Financial Secretary at Asian Insurance Forum 2021.
  • Government tightens boarding and quarantine requirements for places with Omicron cases detected.
  • Government announces “LeaveHomeSafe” mobile application arrangements in Cap. 599F premises and adjustment to catering business modes of operation.

AML notices

The List of individuals and entities published under section 31 of the United Nations Sanctions (Yemen) Regulation 2019 (Cap. 537CI) and List of individuals and entities published under section 30 of the United Nations Sanctions (Yemen) Regulation 2019 (Cap. 537CI) were updated on 11 November. See the relevant United Nations Security Council (UNSC) press release.

The United Nations Sanctions (Mali) Regulation 2019 (Amendment) Regulation 2021 was gazetted on 23 November. Please also refer to United Nations Sanctions (Mali) Regulation 2019.

The list of terrorists and terrorist associates designated by the UNSC, published pursuant to the United Nations (Anti-Terrorism Measures) Ordinance (Cap. 575), was gazetted on 25 November. See the relevant UNSC press release.

The list of individuals, groups, undertakings and entities published under section 25 of the United Nations Sanctions (ISIL and Al-Qaida) Regulation (Cap. 537CB) was updated on 25 November. See the relevant UNSC press release.

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:

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