- Update no. 247 relates to the publication of Amendments to Hong Kong Financial Reporting Standard (HKFRS) 17 Insurance Contracts.
- Update no. 248 relates to the publication of Hong Kong Interpretation 5 (2020) Presentation of Financial Statements – Classification by the Borrower of a Term Loan that Contains a Repayment on Demand Clause
- Update no. 249 relates to the publication of Interest Rate Benchmark Reform – Phase 2, which amends Hong Kong Accounting Standard (HKAS) 39 Financial Instruments: Recognition and Measurement, HKFRS 4 Insurance Contracts, HKFRS 7 Financial Instruments: Disclosures, HKFRS 9 Financial Instruments and HKFRS 16 Leases.
- Update no. 250 relates to the withdrawal of standards and interpretations which have been superseded by the issuance of new standards.
Webinars on COVID-19 related financial reporting issues for 2020 reporting periods
The Institute is holding a series of webinars to highlight key financial reporting implications of COVID-19:
- 11 December. Expected credit losses accounting considerations under HKFRS 9 Financial Instruments
- 14 December. Application issues of HKFRS 16 Leases and recent amendments to HKFRS 16
- 16 December. COVID-19 related and common practical issues
IFRS Interpretations Committee’s third Compilation of Agenda Decisions
The IFRS Interpretations Committee has published its third biannual Compilation of Agenda Decisions, which brings together agenda decisions from April to September 2020. The committee publishes agenda decisions when, following consultation, it decides further standard-setting is not required to deal with a question raised. For example, if existing requirements are adequate to answer the question.
Recording of the IASB research forum
A recording is now available for the 2020 IASB Research Forum held by the IASB and the Accounting and Business Research discussing some of the latest accounting research relevant to the IASB’s work. Topics included the accounting for intangible assets, the impact of International Financial Reporting Standard (IFRS) 11 Joint Arrangements on the comparability of accounting information, and capital transition arrangements adoption and its effect on bank systematic risk under IFRS 9 Financial Instruments.
IASB October 2020 podcast and update
The October podcast, focusing on the IASB discussions at its monthly meeting, and the October Update newsletter, highlighting the tentative decisions reached at that meeting, are now available.
Auditing and assurance
Invitation to comment
The Institute is seeking comments on:
- Exposure Draft Technical Bulletin AATB 5 Environmental, Social and Governance (ESG) Assurance Reporting by 2 December.
- The International Auditing and Assurance Standard Board (IAASB) Discussion Paper Fraud and Going Concern in an Audit of Financial Statements: Exploring the Differences Between Public Perceptions About the Role of the Auditor and the Auditor’s responsibilities in a Financial Statement Audit by 11 December.
IAASB’s implementation plans for the quality management standards
The IAASB has developed implementation plans for the new quality management standards which explain implementation materials stakeholders can anticipate, topics covered, and expected timing.
IAASB issues communique on plans to address complexity, understandability, scalability, proportionally
The communique details the IAASB’s efforts to balance the needs of all its stakeholders by developing a separate standard focused on less complex entities while simultaneously addressing complexity, understandability, scalability and proportionality in the International Standards on Auditing more broadly.
The role of auditors in company-prepared cybersecurity information
A publication by the Center for Audit Quality discusses the role auditors play in cybersecurity as it relates to the audit of the financial statements and how the auditor’s role in cybersecurity could evolve beyond the financial statements to better meet the evolving needs of investors, senior management, boards of directors, and other pertinent stakeholders.
Auditing of revenue recognition
An article by Journal of Accountancy discusses tips for successful auditing of revenue recognition.
ACCA white paper on Ethics in a COVID-19 world
The Association of Chartered Certified Accountants (ACCA) has launched its white paper Ethics in a COVID-19 World exploring the role of ethics against the backdrop of the pandemic. It also highlights a number of examples in which the pandemic has increased the risk of ethical compromise.
CIMA new online ethics tool
The Chartered Institute of Management Accountants (CIMA) has launched a new online ethics decision tool designed to help accounting professionals make ethically sound decisions in tough situations.
Emergence of integrated reporting assurance
An article by the Chartered Accountants Australia and New Zealand discusses the emergence of integrated reporting assurance.
Invitation to comment
The Securities and Futures Commission (SFC) has launched a consultation on the proposed requirements for fund managers to take climate-related risks into consideration in their investment and risk management processes, and make appropriate disclosures, to meet investors’ growing demands for climate risk information and to combat “greenwashing.” The deadline for submission to the SFC is 15 January 2021. Please refer to the press release for details.
Consultation conclusions on corporate WVR beneficiaries
On 30 October, the Stock Exchange of Hong Kong Limited (HKEX) issued consultation conclusions on its proposals to extend the current weighted voting rights (WVR) regime. See the press release.
After considering the feedback from respondents, for the time being, HKEX has decided not to implement the new proposals to permit primary listing of companies with corporate WVR structures, while secondary listings of such companies may be allowed, subject to specific conditions. HKEX explained that they will give more time for the market to develop a better understanding of Hong Kong’s approach towards regulating listed companies with WVR structures and their controllers, and for regulators to ensure that the existing Chapter 8A regime operates as intended, which will help to inform any future amendments.
The Institute issued a response to the original consultation paper in May.
Best Corporate Governance Awards
The 20th anniversary Best Corporate Governance Awards are nearing their final stages. The shortlisted listed companies and public sector organizations in the various corporate governance categories and the sustainability and social responsibility reporting section of the Awards have been referred to the judges for final determinations.
The results will be announced at the beginning of December.
Proposals for Corporate Rescue Bill
The government has issued a policy paper to the Legislative Council Panel on Financial Affairs, which proposes to introduce a long-awaited bill on corporate rescue into the Legislative Council in early 2021.
Liaison meeting with the State Taxation Administration
The Taxation Faculty’s China Tax Subcommittee recently held its annual liaison meeting with the State Taxation Administration, to discuss topical cross-border and Mainland China tax issues. The meeting notes are now available in both traditional and simplified Chinese.
Announcements by the Inland Revenue Department
Members may wish to be aware of the following matters:
- Orders on Comprehensive Avoidance of Double Taxation Agreements with Serbia and Georgia to be gazetted
- Legislative Council question on regulation of online fundraising activities
- Legislative Council question on provision of further assistance for people in need
- Legislative Council question on Innovation and Technology Fund
- Stamp Duty statistics
Legislation and other initiatives
Invitation by FSTB to comment on enhancing AML/CTF regulation in Hong Kong
The Financial Services and the Treasury Bureau (FSTB) has launched a consultation on legislative proposals to enhance anti- money laundering and counter-terrorist financing (AML/CTF) regulation in Hong Kong. The deadline for submission of responses to FSTB is 31 January 2021. Please refer to the press release for details.
FATF’s publication on high-risk and other monitored jurisdictions and counter proliferation financing
The Financial Action Task Force (FATF) held its plenary in October, publishing three statements that may be of interest to members.
- The FATF decided to pause the review process for the list of high-risk jurisdictions subject to a call for action. Reference should continue to be made to the previously issued list adopted in February.
- The FATF gave the option for jurisdictions under increased monitoring to not report at the meeting given their focus on addressing the impact of the COVID-19 pandemic. Nonetheless, seven jurisdictions chose to report.
- Finally, the FATF issued a public statement on counter proliferation financing, strengthening the global response to Weapons of Mass Destruction (WMD) proliferation financing. The FATF will also develop guidance to assist countries and the private sector in assessing and mitigating the proliferation financing risk.
The list of individuals and entities under the United Nations Sanctions (Democratic Republic of the Congo) Regulation 2019 (Cap. 537CJ) was updated on 3 November. See the related United Nations Security Council 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.
Members may wish to be aware of the following case, involving serious deficiencies in AML controls, with the largest fines imposed by the SFC in its history: SFC reprimands and fines Goldman Sachs (Asia) LLC US$350 million for serious regulatory failures over 1Malaysia Development Berhad’s bond offerings.
Please refer to the full versions of Technical News on the Institute’s website.