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| Your fortnightly technical updates newsletter (2 September 2020)
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| Members' Handbook
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| Update No. 244:
- Relates to the updates of PN 810.2 (Revised), The Duties of the Auditor of an Insurer authorized under the Insurance Ordinance to incorporate guidance for reporting under paragraph 36(2) of Part 6 of Schedule 3 to the Insurance Ordinance; and
- PN 860.1 (Revised), The Audit of Retirement Schemes to incorporate changes arising from the Occupational Retirement Schemes (Amendment) Ordinance 2020 and the revised Registrar’s Guidelines on the preparation of the Statement of the Employer’s Auditor under section 20(7A) of the ordinance.
Update No. 245:
- Contains amendments to Hong Kong Financial Reporting Standards (HKFRSs) which are effective for annual reporting periods beginning on or after 1 January 2020.
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| Standard setting
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| Guidance for COVID-19 financial reporting issues for SMEs
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| The Institute recently published guidance highlighting key COVID-19-related considerations when preparing financial statements under the Small and Medium-sized Entity Financial Reporting Framework and Financial Reporting Standard. The Institute previously published guidance in March and June on financial reporting issues for statements prepared under HKFRSs.
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| Amendments to IFRSs in response to the IBOR reform
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| The International Accounting Standards Board (IASB) has amended IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and Measurement, IFRS 7 Financial Instruments: Disclosures, IFRS 4 Insurance Contracts, and IFRS 16 Leases as a result of the interbank offered rates (IBOR) reform project. The amendments address issues affecting financial statements when changes are made to contractual cash flows and hedging relationships arising from the replacement of an IBOR with an alternative benchmark rate (replacement issues).
The amendments complement those that were published in September 2019 under Phase 1 of the project, which address issues affecting financial reporting in the period during which there is uncertainty about contractual cash flows and hedging relationships arising from the IBOR reform (pre-replacement issues).
A project summary has been published to provide further information on the work related to Phase 2 of the project, and the amendments are effective for annual reporting periods beginning on or after 1 January 2021, with early adoption permitted.
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| Revisions to notes relating to the Legislative Council election
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| The Registration and Electoral Office has updated the 2020 Legislative Council General Election – Notes for Candidate and Independent Auditor (Claim for Government Payment in respect of Declared Election Expenses under Cap. 241L).
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| IAASB’s virtual roundtables
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| The International Auditing and Assurance Standards Board (IAASB) invites interested stakeholders to attend its virtual roundtables to explore issues and challenges related to fraud through discussions with experts and leaders:
- Fraud in the Digital Age on 2 September
- Exploring the “Expectation Gap” Related to Fraud and Going Concern in the Current Environment, and Feedback on the New and Revised Auditor Reporting Standards on 28 September (save the date)
- Unique Aspects of Fraud in Audits of Less Complex Entities on 7 October (save the date)
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| IAASB’s webinar
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| During the webinar, the IAASB answered questions on the recently released Exposure Draft Proposed ISA 600 (Revised), Special Considerations - Audits of Group Financial Statements (Including the Work of Component Auditors) and Proposed Conforming and Consequential Amendments to Other ISAs.
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| IAASB’s illustrative examples for ISA 540 (Revised)
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| The IAASB’s implementation working group on ISA 540 (Revised), Auditing Accounting Estimates and Related Disclosures has issued illustrative examples for auditing expected credit loss accounting estimates. These examples have been developed to assist the auditor in understanding how ISA 540 (Revised) may be applied to accounting impairment losses under IFRS 9 Financial Instruments.
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| Advocacy and practice development
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| Review of Chapter 37 - Debt Issues to Professional Investors Only
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| On 21 August, the Stock Exchange of Hong Kong Limited (Exchange) issued the consultation conclusions on its Review of Chapter 37 – Debt Issues to Professional Investors Only. Most of the original proposal will be implemented.
In its response to the initial consultation paper, the Institute queried whether the eligibility exemption for all “state entities” should be maintained, given the broad definition and that not all such entities would have their debts guaranteed by the state. This point has been taken on board. We also suggested that the definition of “professional investor”, as it relates to an individual, is due for a review, although this question was not specifically raised in the consultation.
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| Codification of General Waivers and Principles Relating to IPOs and Listed Issuers and Minor Rule Amendments
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| On 28 August, the Exchange issued the consultation conclusions on Codification of General Waivers and Principles Relating to IPOs and Listed Issuers and Minor Rule Amendments. The views of the Institute (and the majority of other respondents) were accepted and the Exchange will not adopt the proposal to codify the relevant factors considered in granting a waiver from the requirements, under Main Board Listing Rule 3.28, regarding the experience and qualification of a company secretary.
The Institute’s submission to the consultation can be found here. Please refer to the consultation paper and consultation conclusions for further details.
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| Announcements by the Inland Revenue Department
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| Members may wish to be aware of the following matters:
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| Announcements by the government
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Members may wish to be aware of the following matters:
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| AML notices
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The lists of individuals and entities under the United Nations Sanctions (Democratic Republic of the Congo) Regulation 2019 was updated on 21 August. See the related UNSC 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.
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| Useful Resources
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| Publications from other organizations:
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| Install the HKICPA Events app
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| Disclaimer: Some sections contain information from outside sources. We endeavour to link to reputable sources but the Institute is not responsible for the accuracy of the content and the content does not necessarily represent the views of the Institute.
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