Members’ handbook updates
Members’ handbook update no. 236 relates to the amendments to the Small and Medium-sized Entity Financial Reporting Framework and Financial Reporting Standard.
Members’ handbook update no. 237 includes:
- HKSA 315 (Revised 2019) Identifying and Assessing the Risks of Material Misstatements; and
- PN 830 (Revised 2020) Reports by the Auditor under the Banking Ordinance.
Invitations to comment
The Institute is seeking comments on:
- The International Accounting Standards Board’s (IASB) Exposure Draft: ED/2019/7 General Presentation and Disclosures by 22 May.
- The International Auditing and Assurance Standards Board’s (IAASB) Public Consultation on Proposed Guidance Extended External Reporting Assurance by 1 June.
- IASB Request for Information: Comprehensive Review of the IFRS for SMEs Standard by 12 June.
- IASB Discussion Paper: DP/2020/1 Business Combinations – Disclosures, Goodwill and Impairment by 7 August.
Audit and assurance
- IAASB Guidance for Auditors during the Coronavirus Pandemic.
- IAASB March 2020 meeting audio.
- The International Federation of Accountants’ Exploring the IESBA Code: fourth instalment.
- The International Ethics Standards Board for Accountants’ (IESBA) technology initiative webinar (20 April).
- IESBA March 2020 meeting audio.
- March 2020 IASB update and podcast.
- IFRS 17 Insurance Contracts podcast covering the March IASB meeting, where the IASB tentatively decided to defer the effective date of IFRS 17 to 1 January 2023.
- Request for Information: Comprehensive Review of the IFRS for SMEs Standard webcast.
- Exposure Draft General Presentation and Disclosures webinar recording in Putonghua.
- March 2020 IFRS Interpretations Committee update.
- IASB guidance on applying IFRS 9 Financial Instruments in light of the COVID-19 pandemic.
HKEX launches e-training and publishes guidance on ESG reporting
The Hong Kong Stock Exchange (HKEX) published the following updated guidance materials on environmental, social and governance (ESG) reporting on 6 March:
- Guide for board and directors titled Leadership role and accountability in ESG;
- Step-by-step ESG reporting guidance titled How to prepare an ESG report; and
- Frequently asked questions series 18.
The updated guidance materials are launched to help issuers better navigate the evolving standards on ESG reporting. Please refer to the press release for details.
Restructuring and insolvency
Institute comments on consultation on contractual stays
The Institute issued a submission on 20 March, in response to a consultation paper, issued by the Hong Kong Monetary Authority, on 22 January. The consultation covers proposed rules to be made under the Financial Institutions (Resolution) Ordinance (Cap. 628) on contractual stays on termination rights, in financial contracts for authorized institutions.
The Institute’s submission indicates general support for the stay rules to be implemented as soon as possible, especially in view of the current volatile financial markets and difficult economic environment. In terms of detailed comments, the submission suggests that the scope of the proposed stay could be made broader in certain respects.
Official Receiver’s Office Circular No. 1/2020
The Official Receiver’s Office (ORO) issued a new Circular No. 1/2020, which supersedes Circular No. 7/2017 and that took effect on 2 March 2020. Circular No. 1/2020, among other things, announces an increase in the maximum amount that provisional liquidators or liquidators may retain in an ordinary bank account, without further authorization by the Official Receiver (OR), from HK$15,000 to HK$30,000.
In a meeting with the ORO towards the latter part of 2019, RIFEC’s representatives had explained the practical difficulties that insolvency practitioners face in trying to opening bank accounts in the name of companies in liquidation. It was noted that a contributing factor could be that banks were not incentivized to open an account where the maximum amount that could be held in the account for any length of time was HK$15,000. Following on from these discussions, the OR agreed to raise the ceiling to HK$30,000.
Institute issues further alert
The Institute issued another COVID-19 update alert on 2 April to notify members of revised tax deadlines and timetables, and other matters.
Announcements by the Inland Revenue Department
Members may wish to be aware of the following matters:
- Major changes to the profits tax return.
- Additional extended tax deadlines.
- Arrangements for issue of tax returns for 2019-20.
- Suspension of Service for Filing of Tax Return – Individuals through eTAX.
- Country-by-Country Reporting – Notification Deadline.
- Departmental Interpretation and Practice Note 39 (Revised) on Profits Tax – Digital Economy, Electronic Commerce and Digital Assets.
- Latest arrangements for public services.
- Clarification on Retail Sector Subsidy Scheme.
- Stamp Duty statistics (February 2020).
Legislation and other initiatives
Anti-money laundering notices
For the current lists of terrorists, terrorist associates and relevant person or entities under United Nations (UN) sanctions, members should refer to the Institute’s anti-money laundering (AML) webpage, which is updated regularly. The UN Sanctions webpage of the Commerce and Economic Development Bureau contains consolidated lists of UN sanctions currently in force in Hong Kong.
For mandatory guidelines and information from the Institute on the Anti-Money Laundering/Counter-Terrorist Financing (AML/CFT) requirements for members, see the Institute’s Guidelines on Anti-Money Laundering and Counter-Terrorist Financing for Professional Accountants. Member practices may also find the Financial Action Task Force’s (FATF) Guidance for a Risk-Based Approach for the Accounting Profession to be a useful reference when developing their own risk-based approach to applying the AML/CFT requirements.
The Institute has posted frequently asked questions relating to AML monitoring, under the Practice Review part of the website.
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 Companies Registry.
The FATF published guidance, in October 2019, entitled, Best Practices on Beneficial Ownership for Legal Persons. This paper aims to provide suggested solutions to the disclosure of beneficial ownership, supported by cases and examples of best practices from delegations of member jurisdictions of the FATF.
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 210 here.