Local updates
Invitations to comment
The Institute is seeking comments on:
- The International Accounting Standards Board (IASB) exposure draft ED/2019/3 Reference to the Conceptual Framework – Proposed amendments to IFRS 3 by 23 August.
- The IASB exposure draft ED/2019/4 Amendments to IFRS 17 by 19 August.
- The International Auditing and Assurance Standards Board’s (IAASB) discussion paper on Audits of Less Complex Entities by 12 August.
Institute submissions
The Institute commented on:
- IAASB Consultation Paper Proposed Strategy for 2020-2023 and Work Plan for 2020-2021.
- IAASB Consultation Paper Extended External Reporting Assurance.
- IAASB exposure draft Quality Management for Firms and Engagements.
- IASB exposure draft ED/2019/1 Interest Rate Benchmark Reform – Proposed amendments to IFRS 9 and IAS 39.
International updates
Audit and assurance
- International Federation of Accountants (IFAC) audits of less complex entities survey.
- IAASB audits of less complex entities webinars.
- IAASB highlights podcast of June meeting.
Ethics
- IFACarticles:
– Dealing with ethical dilemmas with confidence.
– Paying professional ethics more than lip service.
- International Ethics Standards Board for Accountants (IESBA) highlights podcast of June meeting.
- IESBA eCode.
Financial reporting
- The June IASB update and podcast is now available with the updated work plan.
- The June International Financial Reporting Interpretations Committee update includes a summary of the decisions reached by the IFRS Interpretations Committee in its public meeting. In particular, it includes an agenda decision which explains how an entity applies existing IFRS Standards to holdings of cryptocurrencies. The Institute has previously submitted comments on the related tentative agenda decision.
- A webcast discussing the application of International Accounting Standard 23 Borrowing Costs and its interaction with International Financial Reporting Standard 15 Revenue from Contracts with Customers was recently released in response to an agenda decision published by the IFRS Interpretations Committee.
Professional accountants in business
Companies Registry announces the non-Hong Kong companies regulation
On 17 June, the Companies Registry (CR) issued External Circular No. 2/2019 to announce that the Non-Hong Kong Companies (Disclosure of Company Name, Place of Incorporation and Members’ Limited Liability) Regulation (Cap. 622M) will come into operation on 1 August.
The regulation re-enacts the existing provision of section 792 of the Companies Ordinance (Cap. 622) and aligns the disclosure obligations of non-Hong Kong companies with those of Hong Kong companies.
Detailed requirements for a non-Hong Kong company on the display of its company name and place of incorporation, the disclosure of members’ limited liability and related matters are provided in the regulation. Please also read the CR External Circular for ready reference.
Small and medium practices
Participate in the IFAC survey on audits of less complex entities
Small and medium practices are encouraged to participate in the audits of less complex entities survey conducted by IFAC to explore the challenges in applying the International Standards on Auditing in audits of less complex entities and the possible actions to address these challenges. The survey is open until 12 September, and should take less than five minutes to complete.
Corporate finance
SFC and CSRC hold high-level enforcement cooperation meeting
The Securities and Futures Commission (SFC) and the China Securities Regulatory Commission (CSRC) recently held the eighth regular high-level meeting in Nanning to discuss a range of matters concerning cross-boundary enforcement cooperation.
The SFC and the CSRC, during the meeting, reached an agreement on a cooperative framework to facilitate coordinated investigations into cases of mutual concerns, under which they may jointly tackle high impact or urgent cross-boundary cases.
The two regulators also explored ways to strengthen cross-boundary enforcement cooperation, including:
- A notification mechanism for cases involving companies listed both in Hong Kong and the Mainland (i.e. issuers of A and H shares), and an evidence sharing mechanism under the International Organization of Securities Commissions Multilateral Memorandum of Understanding; and
- Organizing thematic joint training and case study workshops to share investigation techniques and experiences.
Please refer to the press release for details.
Taxation
Announcements by the Inland Revenue Department
Members may wish to be aware of the following matters:
- Comprehensive avoidance of double taxation agreement with Cambodia.
- Tax obligations of property owners.
- Tax obligations of taxpayers and employers.
- Stamp Duty statistics (May 2019).
- Filing tips for 2018/19 profits tax returns.
- Inland Revenue Department Performance Pledges 2019/20.
Legislation and other initiatives
Anti-money laundering/counter-terrorist financing news
The Financial Action Task Force (FATF)’s Mutual Evaluation Report of Hong Kong was examined at the FATF plenary meeting on 20 June in the United States. The report assesses the compliance and effectiveness of Hong Kong’s anti-money laundering and counter-terrorist financing (AML/ CFT) regime against the international standards. While there will still be some follow-up work to do, Hong Kong’s system has been assessed to be compliant and effective overall, making it the first jurisdiction in the Asia-Pacific region to have achieved an overall compliant result. So far only five out of 23 assessed jurisdictions have been rated overall compliant by the FATF. The final report is expected to be published later in the year.
The FATF also recently published a Mutual Evaluation Report of the People’s Republic of China.
AML/CFT notices
(i) The FATF public statement
A public statement was published on 21 June regarding one jurisdiction subject to an FATF call to apply counter- measures to protect the international financial system from the ongoing and substantial money laundering and terrorist financing risks emanating from the jurisdiction, namely Democratic People’s Republic of Korea, and one jurisdiction subject to a FATF call to apply enhanced due diligence measures proportionate to the risks arising from the jurisdiction, namely Iran.
(ii) Jurisdictions which have strategic AML/ CFT deficiencies which have developed action plans with the FATF
In another document entitled Improving Global AML/CFT Compliance: On-going Process, the FATF has identified 12 jurisdictions (namely, The Bahamas, Botswana, Cambodia, Ethiopia, Ghana, Pakistan, Panama, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, Yemen) with strategic AML/CFT deficiencies. These jurisdictions have developed an action plan with the FATF.
(iii) For the current lists of terrorists, terrorist associates and relevant persons/entities under United Nations (UN) sanctions, members should refer to the Institute’s AML webpage which is updated regularly. The United Nations Sanctions webpage of the Commerce and Economic Development Bureau contains consolidated lists of UN sanctions currently in force in Hong Kong.
AML/CFT guidance
(i) The FATF has published an updated Guidance for a Risk-based Approach for the Accounting Profession. This guidance includes a general presentation of the risk-based approach (RBA) and provides specific guidance for individual professionals, firms, and supervisors.
RBA guidance for trust and company service providers, and legal professionals have also been published by the FATF for the first time.
For mandatory guidelines and information from the Institute on the AML/CFT requirements for members, see the Institute’s Guidelines on Anti-Money Laundering and Counter-Terrorist Financing for Professional Accountants.
(ii) Members who are licensed to provide trust or company services should also see the Guideline on Compliance of Anti-Money Laundering and Counter-Terrorist Financing Requirements for Trust or Company Service Providers, by the CR.
(iii) Members should ensure that they are 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.
Please refer to the full version of TechWatch 201, available as a PDF on the Institute’s website: www.hkicpa.org.hk
