Update no. 277 contains the following updates to volume II of the members’ handbook:
- The fundamental structure of volumeII of the members’ handbook has been re-arranged into two sections. Section1 includes all financial reporting standards that are effective for accounting periods beginning on or after 1 January 2022. Section 2 includes financial reporting standards that are effective for accounting periods beginning on or after 1 January 2023.
- Consequential amendments arising from Hong Kong Financial Reporting Standards (HKFRSs) and amendments that are effective for accounting periods beginning on or after 1 January 2023 were previously set out in the appendices to the respective HKFRSs, but are now incorporated into the text of the relevant HKFRSs, basis for conclusions and illustrative examples in section 2.
- HKFRSs included in section 1 are updated for editorial corrections.
Live webinar: Interaction between risk-based capital and HKFRS 17 Insurance Contracts
The Hong Kong Insurance Authority is developing a new Hong Kong Risk-Based Capital (HKRBC) regime for the insurance industry in Hong Kong, and the HKRBC is expected to be effective in 2024. The Institute’s live webinar on 10 October will explain the key elements of the HKRBC including the key assumptions and methodology for the HKRBC, as well as how the HKRBC would interact with HKFRS 17 and the related impact on Hong Kong insurers.
Live webinar: Accounting considerations for a SPAC
A listing regime for special purpose acquisition companies (SPACs) in Hong Kong was effective from 1 January 2022. The structure of a SPAC could give rise to a number of complex financial reporting issues at different points during its lifecycle. The Institute’s live webinar on 1 November will highlight the key financial reporting considerations observed or expected in typical SPAC structures in the two distinct phases of a SPAC’s lifecycle, and cover the related and latest developments from the IFRS Interpretations Committee.
Auditing and assurance
Workshop for new auditors (re-run)
The Institute’s workshop on 11, 13 and 18 October is a tailor-made programme that provides the core concepts and practical skills essential for new auditors of financial statement audits. It applies an interactive learning format through discussions, case studies and role-play. Speakers will teach auditing concepts and practical skills, as well as share their practice experience relevant to new auditors.
Circular on Reporting for Certification of Funds under Schedule 16D to the Inland Revenue Ordinance (Cap. 112)
This Institute’s circular provides guidance to practitioners when undertaking engagements to report on a fund’s compliance with the Guideline on Certification of Funds Issued by the Monetary Authority under Schedule 16D to the Inland Revenue Ordinance (Cap. 112).
Digital transformation and innovation in auditing: Insights from a review of academic research
An article by International Federation of Accountants (IFAC) discusses research on digital transformation in the external audit setting. The research has provided valuable insights into digital transformation within audit engagements and delineates person-specific, task, and environmental factors that influence adoption of technology. It recommends audit firms and practitioners take a methodical approach to technology adoption by involving all necessary parties and ensuring there are sufficient resources (e.g. human capital and technology) to enable the adoption of specific types of data analytic tools.
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:
- The report Sharpening the Focus on Corporate Fraud describes the significant resources devoted to fraud-related activities within individual audit firms, and across the profession and looks at what more can be done by all players in the financial reporting ecosystem to improve fraud deterrence and detection.
- Resources to help audit firms prepare for the new and revised quality management standards under International Standard on Quality Management (ISQM) 1, ISQM 2 and International Standard on Auditing (ISA) 220 (Revised).
- ISQM 1 implementation: 100 days to go offers tips and recommended reading for very small practices.
- Quality management: ISQM 1 in practice – experience sharing from a practitioner in designing and implementing the new and revised quality management standards in practice, by making references to the available resources provided by various professional bodies and making uses of the firm’s existing documentation regarding its quality control system.
- The podcast – What are the issues with tackling fraud? highlights the common types of fraud, the challenges of trying to combat it, the red flags that accountants might come across, and how professionals should respond.
- Summary of links to technical help, webinars, publications and events to all stages of an audit.
- Resources and support tools on auditing accounting estimates under ISA 540 (Revised), such as webcasts and articles with practical illustrations.
Institute members can subscribe to ICAEW’s International Standards platform for free to access a wide range of resources on auditing and ethics.
Bringing the Code of Ethics to life
An article by ICAEW introduces a publication on ethical dilemmas case studies released by the Consultative Committee of Accountancy Bodies which gives helpful advice for accountants to apply to real-life situations. The case studies examine the practical considerations, including how to communicate the issue with the client and possible courses of actions to address the issue; address suspected non-compliance with laws and regulations, including bribery and cover-up of breaches of environmental laws and regulations, and consider any legal reporting obligations for the firm, etc. The case studies provide an interesting and illuminating way to engage with the Code of Ethics for Professional Accountants (Code of Ethics) while also increasing awareness of some threats to ethical conduct that can arise in an accounting firm.
ISSB July 2022 Jurisdictional Working Group meeting summary
The meeting summary of the International Sustainability Standards Board (ISSB) July Jurisdictional Working Group meeting is now available.
Leading financial market participants call for stronger alignment of regulatory and standard setting efforts around sustainability disclosure
Sixty-five companies, investors and professional accounting firms from across the world signed an endorsed statement calling for major standard-setting efforts to more closely align with and support a global baseline for reporting sustainability-related information. The statement was developed jointly by the World Business Council for Sustainable Development, the Principles for Responsible Investment and the IFAC.
Institute submission on SFC’s consultation on Proposed Amendments to Enforcement-related Provisions of the SFO
The Institute issued a submission in response to the consultation paper issued by the Securities and Futures Commission (SFC) on Proposed Amendments to Enforcement-related Provisions of the Securities and Futures Ordinance (SFO).
In general, we support the SFC’s aims to strengthen protection of the interests of the investing public and uphold the reputation of Hong Kong’s financial markets, including through effective enforcement action. At the same time, in the submission, we raised several questions on the specifics of certain proposals.
Announcements by the Inland Revenue Department (IRD)
Members may wish to be aware of the following matters:
- Financial Secretary’s Office spokesman responds to media enquiries.
- New application features of eTax Portal.
- Hong Kong Monetary Authority releases guidelines on auditor’s report for application for certification of funds for carried interest tax concession.
- Financial Services and the Treasury Bureau and Shenzhen Qianhai Authority jointly promulgate 18 measures for Supporting the Linked Development of Shenzhen and Hong Kong Venture Capital Investments in Qianhai.
- Stamp Duty statistics.
Legislation and other initiatives
Announcements by the government
Members may wish to be aware of the following matters:
- Government expresses gratitude for national support for further expanding mutual access between Mainland and Hong Kong financial markets.
- Government releases Green Bond Report 2022.
- Steering Committee on Bond Market Development in Hong Kong releases report.
- Government receives final report on power cable incident from CLP Power Hong Kong Limited.
- Speech by the Financial Secretary at AIMA APAC Annual Forum 2022.
- Secretary for Financial Services and the Treasury’s opening remarks at 21st Hong Kong Venture Capital and Private Equity Association China Private Equity Summit.
- Financial Services and the Treasury Bureau and SFC and InvestHK exchange viewpoints with industry leaders to foster digital asset industry development in Hong Kong.
- Hong Kong Monetary Authority takes disciplinary action against Commerzbank AG, Hong Kong Branch for contraventions of Anti-Money Laundering and Counter-Terrorist Financing Ordinance.
- StartmeupHK Festival 2022: A week-long showcase of Hong Kong’s dynamic and thriving startup ecosystem.
- Financial results for the four months ended 31 July 2022.
- Unemployment and underemployment statistics for May – July 2022.
- Economic situation in the second quarter of 2022 and latest gross domestic product and price forecasts for 2022.
- Speech by the Chief Executive at Chinese General Chamber of Commerce Hong Kong Summit 2022.
- 2022 Guangdong/Hong Kong Seminar on Intellectual Property and Development of Small and Medium Enterprises (Online) held.
IFAC’s Action Plan for Fighting Corruption and Economic Crime
The IFAC issued its action plan to enhance the accounting profession’s contribution to, and support of, a robust anti-corruption ecosystem encompassing a diverse array of participants and policies. The action plan sets out more than 30 specific actions for IFAC and the accounting profession related to education, evidence-based policy, global standards, partnership, and thought leadership.
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