Update no. 276 includes updates to the Code of Ethics for Professional Accountants (the Code) for the new and revised provisions relating to:
- Revisions to the Code Addressing the Objectivity of an Engagement Quality Reviewer and Other Appropriate Reviewers;
- Revisions to the Non-Assurance Services Provisions of the Code;
- Revisions to the Fee-related Provisions of the Code; and
- Quality Management-related Conforming Amendments to the Code.
The above revisions to (1) Part 4A will become effective for audits and reviews of financial statements for periods beginning on or after 15 December 2022; (2) Part4B will become effective for assurance engagements beginning on or after 15 December 2022; and (3) Conforming and consequential amendments to other sections of the Code will become effective as of 15 December 2022.
Institute workshops on IFRS/HKFRS 17 Insurance Contracts
Due to continued demand from members, the Institute will re-run a series of face-to-face workshops on International Financial Reporting Standards (IFRS)/Hong Kong Financial Reporting Standards (HKFRS) 17 Insurance Contracts in September:
- 5 September: Life insurance (Part 2) – Deep dive application;
- 13 September: General insurance (Part 1) – Overview and deep dive application; and
- 21 September: General insurance (Part 2) – Reinsurance, interaction with other standards, and presentation and disclosures.
Institute e-learning on HKFRS 3 Business Combinations
This archived webinar covers the recent amendments to HKFRS 3 which revise the definition of business and introduce the optional concentration test. Speakers use examples to illustrate the differences in accounting for business combinations and asset acquisitions, and common application issues of HKFRS 3. An update of the development of the International Accounting Standards Board’s (IASB) projects relating to business combinations is also provided.
Institute e-learning on HKFRS 13 Fair Value Measurement
This archived webinar covers the key principles in HKFRS 13, including special considerations on non-financial assets and liabilities, measurement of fair value of unquoted equity instruments and fair value disclosure requirements. It explains how those principles and requirements apply to certain specific examples. Speakers also share the audit considerations on fair value measurement and practice review findings.
IASB Update July 2022
A summary of the IASB July meeting is now available.
IASB July 2022 podcast
The IASB podcast, with its chair and executive technical director highlighting the projects discussed during its July meeting, and a summary of the July meeting, are now available.
IASB sets out its 2022-2026 priorities
The IASB has published its Third Agenda Consultation Feedback Statement and Snapshot outlining its priorities for the next five years. The three main strategic priorities are to:
- Maintain the strategic direction and balance of the IASB’s activities while slightly increasing efforts to develop digital financial reporting and improving the understandability and accessibility of IFRS Accounting Standards;
- Progress current projects; and
- Add intangibles, statement of cash flows and climate-related risk in financial statements to the work plan.
IFRS Interpretations Committee Q2 2022 podcast
In this podcast, IFRS Interpretations Committee Chair and member of IASB Bruce Mackenzie joins IASB Technical Staff Member Patrina Buchanan to discuss activities to support consistent application of IFRS Accounting Standards in the second quarter of 2022.
IFRS Interpretations Committee agenda decisions
The IFRS Interpretations Committee has published the following agenda decisions:
- Negative Low Emissions Vehicle Credits – International Accounting Standard (IAS) 37 Provisions, Contingent Liabilities and Contingent Assets.
- Special Purpose Acquisition Companies: Classification of Public Shares as Financial Liabilities or Equity – IAS 32 Financial Instruments: Presentation.
- Transfer of Insurance Coverage under a Group of Annuity Contracts – IFRS 17 Insurance Contracts.
Auditing and assurance
Invitation to comment
The Institute is seeking comments on the International Auditing and Assurance Standards Board (IAASB) exposure draft on proposed narrow scope amendments to International Standard on Auditing (ISA) 700 (Revised) Forming an Opinion and Reporting on Financial Statements and ISA 260 (Revised) Communication with Those Charged with Governance by 4 September. The proposed amendments will help operationalize recently approved changes to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) related to listed and public interest entities. The changes to the Code require firms to publicly disclose when the independence requirements for public interest entities have been applied in an audit of financial statements.
The Institute’s Auditing and Assurance Standards Committee meeting minutes
Minutes of the 401st meeting is now available.
Reminder: Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules (Cap. 41L) Savings and Transitional Arrangements
The Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules (Cap. 41L) (Broker Rules) came into force on 23 September 2019. The Broker Rules set out the requirements applicable to licensed insurance broker companies for minimum share capital, net assets, professional indemnity insurance, the keeping of proper books and records, and contents for audited financial statements and auditor’s report subject to specified Savings and Transitional Arrangements.
When performing audit engagements for licensed insurance broker companies, auditors should consider relevant requirements in the Broker Rules including the Savings and Transitional Arrangements as summarized in the reminder issued by the Insurance Authority.
Implementation Guide for ISA 315 (Revised 2019) Identifying and Assessing the Risks of Material Misstatement
This first-time implementation guide published by the IAASB focuses on the more substantial changes that were made to ISA 315 (Revised 2019) and will help stakeholders understand and apply the revised standard as intended.
Reporting going concern matters in the auditor’s report
This non-authoritative publication issued by the IAASB addresses some of the common questions related to reporting going concern matters in the auditor’s report and focuses on the use of and interrelationship of the Material Uncertainty Related to Going Concern and Key Audit Matters sections, and the Emphasis of Matter paragraphs, in an auditor’s report prepared in accordance with the ISAs.
IAASB 2021 Public Report
The IAASB Public Report explains how the IAASB accelerated efforts in 2021 to serve the public interest in audit and assurance. In doing so, the IAASB focused on topics that have generated the greatest public interest attention, including fraud, going concern, audit evidence, and assurance on sustainability reporting.
Implementation tool: New quality management standards
CPA Canada’s Implementation tool for practitioners: New quality management standards explains the scope and objective of the quality management standards and individual appendices which expand on each component of a system of quality management. It also includes example scenarios, factors to consider in evaluating the system of quality management and tips to prepare for the new quality management standards.
ICAEW audit and assurance resources
The Institute of Chartered Accountants in England and Wales (ICAEW) has the following resources that may be of interest to members:
- A virtual event “Are you ready for the new International Standards on Quality Management (ISQMs)?” to be held on 16 September helps auditors to ensure that their procedures are up to date and ready for the new quality management standards. The webinar will cover establishing quality objectives; risk assessment; design and implementation of systems of quality management; monitoring and remediation processes; documentation, and more.
- The article, Why quality management is (mostly) about people, explores the human factor of a firm’s approach to quality management.
- Audit and Beyond July/August 2022 provides practical support and resources to auditors. Guidance in this edition includes fraud in a financial statements audit; Q&A on revised ISAs etc.
- Resources to help audit firms prepare for the new and revised quality management standards under ISQM 1, ISQM 2 and ISA 220 (Revised).
Institute members can subscribe to ICAEW’s International Standards platform for free to access a wide range of resources on auditing and ethics.
The Institute has submitted its comment letter on the International Sustainability Standards Board (ISSB) exposure drafts, IFRS S1 General Sustainability-related Disclosure Requirements and IFRS S2 Climate-related Disclosures.
IAASB’s comment letter to the ISSB
The IAASB has submitted a comment letter to the ISSB on its exposure drafts on sustainability- and climate-related disclosures. In its comment letter, the IAASB noted the importance of reliable, high-quality, globally consistent sustainability reporting that investors and regulators are able to trust.
ISSB Update July 2022
This ISSB Update highlights preliminary decisions of the ISSB at its inaugural meeting in July 2022. The ISSB discussed preliminary feedback gathered during meetings with stakeholders on the exposure drafts. It also discussed its approach to preparing a request for information to consult the public on its agenda priorities. The request for information will inform the development of the ISSB’s two-year work plan.
ISSB July 2022 podcast & update
The first episode of the ISSB podcast, with its chair and vice-chair discussing the highlights from the inaugural July meeting, and a summary of the July meeting, are now available.
IFRS Foundation completes consolidation with VRF
The IFRS Foundation has completed the consolidation of the Value Reporting Foundation (VRF) into the IFRS Foundation. It follows the commitment made at COP26 to consolidate staff and resources of leading global sustainability disclosure initiatives to support the IFRS Foundation’s new ISSB’s work to develop a comprehensive global baseline of sustainability disclosures for the capital markets.
More companies obtaining independent assurance on sustainability
The research study by the IFAC, American Institute of CPAs and Chartered Institute of Management Accountants shows that the number of global companies obtaining independent assurance on their environmental, social and governance (ESG) information has increased continuously. It also states that sustainability reporting and assurance will only reach its full potential when it is based on a harmonized global system led by the ISSB’s comprehensive baseline of disclosure. The research study also encourages auditors to be engaged in ESG assurance as they are professionally qualified and licensed accountants who have the requisite expertise, objectivity, integrity and commitment to professional standards that are essential for instilling trust in ESG reporting.
Opening of special accounts for obtaining protected information on the Companies Register maintained by the CR
The Companies Registry (CR) is now preparing for the implementation of Phase 2 of the New Inspection Regime of the Register under the Companies Ordinance (Cap. 622). In particular, liquidators and trustees in bankruptcy, who are specified persons under the new regime, can apply for opening of special accounts for making future applications for protected information electronically upon the commencement of Phase 2 of the new regime on 24 October 2022. Further details will be provided once available.
Announcements by the Inland Revenue Department (IRD)
Members may wish to be aware of the following matters:
- Inland Revenue (Amendment) (Tax Concessions for Certain Shipping-related Activities) Ordinance 2022 gazetted.
- IRD’s circular letter to tax representatives – extended due date for “D” Code Returns.
- LCQ13: Financial position of government.
- Insurance agent convicted of tax evasion.
- Jail sentence for insurance agent convicted for tax evasion.
- List of Qualifying Debt Instruments (as at the end of 30 June 2022).
- Stamp Duty statistics.
Electronic filing of profits tax return
Corporations and partnerships satisfying the conditions specified by the Commissioner of Inland Revenue can file their profits tax returns for any year of assessment from 2016/17 to 2021/22, and attach supplementary forms to profits tax return S1, S2, S3 and S4 electronically under eTAX, either by themselves or, with effect from 1 April 2022, through a service provider. Please visit the IRD’s website for details.
Legislation and other initiatives
Announcements by the government
Members may wish to be aware of the following matters:
- Policy Address consultation launched.
- Senior government appointments.
- Appointment of under secretaries and political assistants.
- Appointment of Chairman to Consumer Council announced.
- Appointments to Financial Reporting Review Panel.
- Appointments to Advisory Committee of Accounting and Financial Reporting Council.
- Process Review Panel for Financial Reporting Council publishes 2021 report.
- Analytical Accounts of Exchange Fund.
- Advance estimates on Gross Domestic Product for second quarter of 2022.
- Survey on Small and Medium-Sized Enterprises’ Credit Conditions for Second Quarter 2022.
- Exchange Fund Position at end-June 2022.
- Exchange Fund Abridged Balance Sheet and Currency Board Account.
- Ministry of Finance issues Renminbi Sovereign Bonds through Central Moneymarkets Unit of Hong Kong Monetary Authority.
- LCQ19: Roles and responsibilities of Deputy Secretaries of Departments.
- Government announces adjustments to quarantine arrangements for inbound persons.
- Government announces enhanced Vaccine Pass function.
- Resumption of airmail services to Australia, Canada, France, Italy, Japan, Malaysia, Nepal, New Zealand, Pakistan, South Africa and United States.
The list of individuals and entities published under section 43 of the United Nations Sanctions (Libya) Regulation 2019 (Cap. 537CF), was updated on 19 July.
The list of individuals and entities published under section 31 of the United Nations Sanctions (Democratic People’s Republic of Korea) Regulation (Cap. 537AE), was updated on 27 July.
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: www.hkicpa.org.hk