Local updates
Members’ handbook updates nos. 224 to 226
Update no. 224 relates to the issuance of Definition of a Business (Amendments to HKFRS 3 Business Combinations).
Update no. 225 contains amendments to Definition of Material in HKAS 1 Presentation of Financial Statements and HKAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
Update no. 226 contains conforming amendments as a result of HKSA 250 (Revised) Consideration of Laws and Regulations in an Audit of Financial Statements and HKSAE 3000 (Revised) Assurance Engagements Other than Audits or Reviews of Historical Financial Information.
New and amended HKFRSs for December 2018 year-ends
List of new and amended standards and interpretations issued that are applicable to financial reports with December 2018 year-ends and subsequent periods.
HKFRS and IFRS comparison
Comparison between Hong Kong Financial Reporting Standards and International Financial Reporting Standards as at 31 December 2018.
HKFRS 17 Insurance Contracts – pocket summary on contract boundary
The Institute recently released its second pocket summary on HKFRS 17, which focuses on the contract boundary requirements, supplemented by a decision tree and illustrative examples.
Circular issued by the Securities and Futures Commission
On 25 January, the Securities and Futures Commission (SFC) issued a circular to licensed corporations (LCs) on the revised financial return. The revision pertains to Form 2 of the financial return, which is revised to enable LCs to report excluded lease liabilities. The form is effective from 1 February and it supersedes all previous versions and shall be used for a return required to be submitted under section 56 of the Securities and Futures (Financial Resources) Rules.
Circular on reporting related to the Private Columbaria Ordinance
The holder of a licence to operate a private columbaria is required to submit a written report on the compliance by the columbarium with the restrictions set out in Condition No. 24(d) of the Application Guide for Private Columbarium Licence and Other Specified Instruments. The report must be prepared by a CPA holding a practising certificate or a firm or a corporate practice registered under the Professional Accountants Ordinance (Cap. 50).
This circular provides general guidance for practising members of the Institute for the reporting as mentioned above.
Invitation to comment
The Institute is seeking comments on the International Accounting Standards Board (IASB) Exposure Draft ED/2018/2 Onerous Contracts – Cost of Fulfilling a Contract (Proposed Amendments to IAS 37) by 8 March.
Invitation to observe meetings of the HKIISG
Register to observe meetings of the Hong Kong Insurance Implementation Support Group (HKIISG) which discusses hot topics on HKFRS 17 Insurance Contracts. Meeting papers and summaries can be found on the Institute’s website.
Institute submissions
The Institute has submitted comments on:
- IASB discussion paper DP/2018/1 Financial Instruments with Characteristics of Equity
- Insurance Authority’s Consultation on the Draft Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules
- Insurance Authority’s Consultation on the Revised Draft Guideline on Enterprise Risk Management
Professional accountants in business
ACCA and IFAC launch Global Public Financial Management Series
Public financial management (PFM) refers to the collection, management and expenditure of public finances throughout an economy, the core objective of which is to improve citizens’ lives through better management of public money. Strong public financial management processes and systems are essential for effective and efficient delivery of public services, transparent public finances, and trust between government and citizens.
Professional accountants have an essential role to play in supporting good financial management practices. International Federation of Accountants (IFAC) and the Association of Chartered Certified Accountants are launching a global series that will identify, document and share success stories in PFM and showcase how such strong systems make a difference when public sector spending is under intense scrutiny.
Public sector finance leaders from Tanzania, Australia and Canada have already shared their stories in videos which are available at www.ifac.org.
Small and medium practitioners
Transforming your practice for the future
Representatives of three small- and medium-sized practices (SMPs) shared their insights and perspectives on how SMPs can transform into the “Practice of Tomorrow” during the IFAC SMP Committee meeting in London on 9 October 2018. This echoed the 2018 IFAC Global SMP Survey, focusing on:
- Technology developments and specifically, on migration to the cloud;
- Transition to advisory services as a future frontier; and
- Talent management and the firm’s culture, capitalizing on the relevance and trust in the professional accountants. What will be the business model of the future?
Read the summary of the discussion and other useful resources at www.ifac.org.
Global research report The SMP of the future in a changing world
A global research report The SMP of the Future in a Changing World commissioned by the Edinburgh Group – a coalition of 16 accounting bodies from across the world – examines the landscape ahead for the accounting profession.
In order to prepare for a rapidly evolving future that sees many changes on the horizon, e.g. digital technologies, regulation and deregulation to the education and skills, SMPs need to be proactive in seeking out new markets for their services and consider growth and diversification of their service offerings. They must also be cognizant of training requirements, recruitment and retention of accountancy-qualified and non-accountancy expertise and/or collaborations with other accounting firms and service providers.
Corporate finance
HKEX consultation conclusions on proposed changes to the review structure for listing committee decisions
The Hong Kong Exchanges and Clearing (HKEX) published consultation conclusions on proposed changes to the review structure for Listing Committee (LC) decisions on 18 January. The Institute issued a submission responding to this consultation in October 2018.
Under the revised rules:
- Decisions of material significance made by the LC will be subject to only one level of review
- A new independent review committee (the Listing Review Committee (LRC)) consisting of 20 or more outside market participants with no current LC members or representatives of the SFC or HKEX will be formed to replace the existing Listing (Review) Committee and the Listing (Disciplinary Review) Committee
- Decisions of the new LRC for non-disciplinary matters will be routinely published
- The SFC may request a review of any matter, including a decision of the LC by the new LRC
The revised rules are expected to be effective at around mid-2019. A summary of the consultation conclusions is set out in the press release.
Joint consultation of SFC, HKEX and the Federation of Share Registrars Limited on the model for an uncertificated securities market
On 28 January, the SFC, HKEX and the Federation of Share Registrars Limited jointly issued a Consultation Paper proposing a revised operational model for implementing an uncertificated securities market (USM) in Hong Kong.
Under the proposed USM, investors can hold and transfer securities in their own name without share certificates or paper documents. The digitization of securities holdings will expedite the post-trade settlement and servicing process, enabling Hong Kong’s markets to be more efficient and globally competitive. Implementation will be conducted in phases. A summary of the proposals is set out in the press release.
The deadline for responding to the consultation paper is 27 April.
Taxation
Announcements by the Inland Revenue Department
Members may wish to be aware of the following matters:
- Revised Profits Tax Return 2018/19: IRD posts the sample revised 2018/19 Profits Tax Returns and supplementary forms on the IRD’s website
- Suspension of service for eFiling of tax returns for individuals
- Legislative Council question on tax measures for aviation and maritime industries.
- Stamp duty statistics
Legislation and other initiatives
Anti-money laundering notices
For the latest updates on lists of terrorists, terrorist associates and relevant persons/entities under United Nations (UN) sanctions, members should refer to the Institute’s AML webpage. The UN sanctions webpage of the Commerce and Economic Development Bureau contains consolidated lists of UN sanctions currently in force in Hong Kong.
AML/CFT guidance
For mandatory guidance and information on the AML/CFT requirements for members, see the Institute’s Guidelines on Anti-Money Laundering and Counter-Terrorist Financing for Professional Accountants.
Members who are licensed trust or company service providers should also see the Guideline on Compliance of Anti-Money Laundering and Counter-Terrorist Financing Requirements for Trust or Company Service Providers, by Companies Registry.
Members should be aware of the Hong Kong Money Laundering and Terrorist Financing Risk Assessment Report (in particular Chapter 6, covering designated non-financial businesses and professions), which indicates ML/ TF risks and vulnerabilities in the Hong Kong market.
Institute issues submission on consultation on licensing under the property management services ordinance
The Institute has raised concerns in a submission responding to the Consultation on Proposed Licensing Regime for Property Management Companies and Property Management Practitioners. The main concern is that, among other things, the proposals would seem to require that a person who may be a qualified accountant working in a supervisory position in a property management company (PMC), and involved in e.g., preparing the accounts of a property managed by the PMC, would need to apply for a licence to be a property management practitioner, and would be subject to the regulation of the Property Management Services Authority (PMSA). This would mean, that an accountant performing mainstream accounting work, who is likely to be extensively regulated by a professional accounting body, such as the Institute, could find him/herself also subject to the overlapping regulation of another authority in relation to that work. The Institute has expressed its concerns to the PMSA and will monitor future developments.
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