Your fortnightly technical updates newsletter (26 May 2021)

Standard setting

Reminder: Webinar series covering common application issues

The Institute will hold a series of live webinars in June covering application issues of the following standards. These webinars will discuss real-life examples and case studies, and include live Q&A sessions:

• 2 June: Common application issues of HKFRS 9 Financial Instruments and HKFRS 15 Revenue from Contracts with Customers
• 11 June: Common application issues of HKFRS 3 Business Combinations
• 21 June: Common application issues of Accounting Guideline 5 Merger Accounting for Common Control Combinations

IFRS Interpretations Committee agenda decisions

The IFRS Interpretations Committee published two agenda decisions on 24 May:

• IFRS 9 Financial Instruments covering hedging variability in cash flows due to real interest rates
• IAS 19 Employee Benefits covering the periods of service to which an entity attributes benefit for a particular defined benefit plan

Invitation to comment

The Institute is seeking comments on the International Auditing and Assurance Standards Board (IAASB) Survey Consultation, the IAASB’s Work Plan for 2022-2023 by 5 July.

Free e-seminar on HKSA 540 (Revised)

Don’t miss the Institute’s e-seminar on HKSA 540 (Revised) Auditing Accounting Estimates and Related Disclosures to learn the key requirements of the standard which is effective for audits of financial statements for periods beginning on or after 15 December 2019. Enrolment is free-of-charge for members and student members until 30 June.

FRC UK virtual conference on audit firm culture

Register for the Financial Reporting Council (FRC) UK virtual conference in June which explores the cultural transformation in the audit profession. The conference will involve speakers and panel debates from leading academics, culture change experts, directors, regulators and standard setters.

Auditing and Assurance Standards Committee meeting minutes

Minutes of the meeting held in April is now available.

IAASB May board meeting

The audio recording of the IAASB May board meeting is now available.

Free e-seminar on NOCLAR

Don’t miss the Institute’s e-seminar on Responding to Non-Compliance with Laws or Regulations (NOCLAR) to learn the ethical standard on NOCLAR and the responsibilities of professional accountants when they become aware of NOCLAR. Enrolment is free-of-charge for members and student members until 30 June.

Ethical leadership in an era of complexity and digital change

Read the event highlights of a global roundtable exploring how professional accountants continue to add value in the digital world. A recording of the the spark sessions and breakout discussion debriefs is also available.

Advocacy and practice development

HKEX’s consultation conclusions on Main Board Profit Requirement

On 20 May, Hong Kong Exchanges and Clearing Limited (HKEX) released consultation conclusions on the Main Board profit requirement (MBPR). In particular, there will be a 60% increase in the MBPR to HK$80 million over the three-year trading record period and the profit spread will be revised. This is substantially reduced from the original proposals in the consultation paper of either a 150% or 200% increase in the minimum aggregate profit requirement. Please refer to the press release for details. The new requirements will take effect from 1 January 2022.

Please also refer to the Institute’s submission, objecting to HKEX’s proposal to increase the minimum MBPR.

HKEX’s consultation conclusions on Review of Listing Rules Relating to Disciplinary Powers and Sanctions

HKEX also released consultation conclusions on the Review of Listing Rules Relating to Disciplinary Powers and Sanctions. To summarize, HKEX will implement all the proposals relating to disciplinary powers and sanctions, with minor modifications, to bring disciplinary actions against a broader range of individuals. Please refer to the press release for details. The new rules will take effect on 3 July 2021. 

Please also refer to the Institute’s submission. While HKEX will proceed to extend a broader range of possible sanctions to professionals as well as listed companies, their directors and senior management, it is made clear in a note to the new rules (Rule 2A. 10B(3)) that sanctions are subject to the existing arrangements between the HKEX and professional regulatory bodies – including the Institute.

HKSAR and Mainland sign record of meeting concerning mutual recognition of and assistance to insolvency proceeding

The Secretary for Justice of the Hong Kong Special Administrative Region (HKSAR) Government and the Vice-President of the Supreme People's Court signed the record of meeting concerning mutual recognition of, and assistance to, insolvency proceedings between the courts of the Mainland and the HKSAR. Please refer to the press release for details.

This signing comes after discussions between the HKSAR Department of Justice (DoJ) and the Mainland authorities. Some Restructuring and Insolvency Faculty (RIF) Executive Committee members assisted the DoJ and the RIF also submitted information on practical issues faced by Hong Kong insolvency practitioners working in the Mainland.

Institute issues second submission on Inland Revenue (Amendment) (Miscellaneous Provisions) Bill 2021

The Institute issued a second submission on the Inland Revenue (Amendment) (Miscellaneous Provisions) 2021 Bill, following on from the government’s response to the Bills Committee on stakeholders’ submissions, including the Institute’s first submission. 

The second submission provides additional explanations of members’ concerns about the proposed sanctions that may be imposed on a “service provider" engaged by taxpayer to furnish a return on its behalf, which the Institute considers to be unnecessary and excessive. The government has responded to the Institute’s second submission.

Convenience of eTAX

The Inland Revenue Department (IRD) encourages taxpayers to consider filing their tax return through the IRD’s eTAX gateway to enjoy personalized online tax services. To save paper, taxpayers can select to receive electronic notices and documents.

Announcements by the IRD

Members may wish to be aware of the following matters:

• Enhanced employer’s application services – e-Application for preparation of IR56 Form(s) by using employer’s self-developed software 
• Tax obligations of taxpayers and employers
• Legislative Council question on pursuing development in the Mainland cities of the Guangdong-Hong Kong-Macao Greater Bay Area
• Stamp Duty statistics

Annual meeting with the IRD

The annual meeting between representatives of the Institute's Taxation Faculty Executive Committee and the IRD took place on 14 May. At the meeting, the IRD confirmed the extended due dates for lodging profits tax returns for the year of assessment 2020/21. These are:

Announcements by the government

Members may wish to be aware of the following matters:

• Government further tightens quarantine and testing arrangements for persons arriving from Taiwan and Singapore
• Target date of inaugural flights under HK-Singapore Air Travel Bubble deferred
• Government gazettes compulsory testing notice and specifications under Prevention and Control of Disease (Compulsory Testing for Certain Persons) Regulation
• Government announces enhanced anti-epidemic measures for designated quarantine hotels
• Government extends social distancing measures under Prevention and Control of Disease Ordinance

Consultation conclusions on Legislative Proposals to Enhance Anti-Money Laundering and Counter-Terrorist Financing Regulation in Hong Kong

On 21 May, the Financial Services and the Treasury Bureau released consultation conclusions on the legislative proposals to enhance anti-money laundering and counter-terrorist financing regulation in Hong Kong. Please refer to the press release for details. 

Please also refer to the Institute’s submission for your information.

AML notices

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.

Useful resources

Publications from other organizations:

• The resilience imperative: Succeeding in uncertain times from McKinsey & Company
• 4 skills and experiences that can set finance professionals apart from Financial Management
• Cybersecurity evolves to handle remote workers from CFO.com
• How to implement diversity and inclusion throughout your firm by AICPA
• Be more productive while doing less work from Journal of Accountancy

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