Your fortnightly technical updates newsletter (9 December 2020)

Standard setting

Webinar on interest rate benchmark reform and its effects on financial reporting

On 12 January, the Institute is holding a live webinar to provide an overview on the effects of the interest rate benchmark reform on financial reporting. The webinar will go through the necessary amendments to financial reporting standards, and walk participants through how to apply the amendments with illustrative examples.

Webinar on solicitors’ accounts rules and PN 840 reporting engagements

Practising members are sometimes engaged to issue an accountant’s report on a firm of solicitors. The report is prepared with regard to the requirements of the Solicitors’ Accounts Rules and Accountant’s Report Rules made under the Legal Practitioners Ordinance (Cap. 159) as explained in Practice Note (PN) 840 Reporting on Solicitors' Accounts under the Solicitors' Accounts Rules and the Accountant's Report Rules. The Institute’s webinar on 4 January will explain solicitors’ obligations with respect to their handling of clients’ money and common breaches of such obligations, followed by a panel discussion on pitfalls in solicitors’ accounts reporting.

Invitation to comment

The Institute is seeking comments on:

• Exposure Draft Practice Note 730 (Revised) Guidance for Auditors Regarding Preliminary Announcements of Results by 20 December
• The International Auditing and Assurance Standards Board (IAASB) Discussion Paper Fraud and Going Concern in an Audit of Financial Statements: Exploring the Differences Between Public Perceptions About the Role of the Auditor and the Auditor’s Responsibilities in a Financial Statement Audit by 31 December

UK FRC consolidated COVID-19 guidance for companies and auditors

The UK Financial Reporting Council (FRC) has published consolidated guidance for companies and auditors addressing audit engagements that may be affected by COVID-19.

Advocacy and practice development

Invitation to comment

(i) HKEX’s consultation on Main Board Profit Requirement

On 27 November, the Stock Exchange of Hong Kong Limited (HKEX) issued a consultation paper on proposals to increase the profit requirement for Main Board listing applicants. Please refer to the press release for details.

The deadline for responding to the consultation paper is 1 February 2021. Members are welcome to submit any views or comments on the proposals to the Institute (quoting their membership number and contact details) to the Advocacy & Practice Development department on or before 8 January 2021.

(ii) SFC’s proposals to introduce investor identification for the securities market in Hong Kong

On 4 December, the Securities and Futures Commission (SFC) issued a consultation paper on proposals to introduce investor identification for the securities market in Hong Kong. Please refer to the press release for details.

The deadline for submission to the SFC is 4 March 2021.

Consultation conclusions on proposed amendments to the Code on REITs

On 27 November, the SFC issued consultation conclusions on its proposals to amend the Code on Real Estate Investment Trusts (REITs). The proposals received broad support and, with some modifications to clarify specific requirements, such as those which apply to minority-owned properties, the amendments were gazetted on 4 December and became effective immediately. See the press release on 27 November and 4 December for details.

The Institute issued a response to the original consultation paper in August, which, in general, supported the SFC’s proposals.

Result announcement of Best Corporate Governance Awards 2020

Celebrating their 20th anniversary, the Institute’s Best Corporate Governance Awards (BCGA) continue to set a benchmark for current corporate governance and sustainability standards and best practices in Hong Kong. 

The results of the BCGA 2020 were announced on a media briefing on 2 December. This year, about 500 annual reports and around 500 sustainability reports were considered in the initial stage. The judges noted some positive signs, including improvements in the quality of environmental, social and governance (ESG) reporting, and decided to give out a record number of 30 awards. A diverse range of candidates reached the final stages, and seven new awardees emerged, including those winning awards for the first time in the sustainability and social responsibility/ ESG reporting section.

Please see the press release with links to the full list of winners, the Judges’ Report and more details.

Announcements by the Inland Revenue Department

Members may wish to be aware of the following matters:

• Latest arrangements of Inland Revenue Department's public services 
• Departmental Interpretation and Practice Notes No. 62 Taxation Of Ship Leasing Activities
• Interest on Tax Reserve Certificates
• Legislative Council question on relief measures
• Abolition of Doubled Ad Valorem Stamp Duty on non-residential property transactions
  • Ad valorem stamp duty 
  • relevant frequent asked questions and illustrative examples
• Stamp Duty statistics

Announcements by the government

Members may wish to be aware of the following matters:

• Government gazetted specifications under Prevention and Control of Disease (Compulsory Testing for Certain Persons) Regulation (Cap. 599J) 
• Government further tightens social distancing measures and extends expiry dates of Regulations under Prevention and Control of Disease Ordinance
• The Office of the Privacy Commissioner for Personal Data issues three practical Guidance Notes under the series “Protecting Personal Data under Work-from-Home Arrangements”

AML guidance

Members may be interested in Anti-Money Laundering: The Basics, developed by the International Federation of Accountants and the Institute of Chartered Accountants in England and Wales, which provides brief guidance covering different AML topics.

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:

• 3 strategies to come out ahead of the pandemic from Financial Management
• 4 A&A challenges caused by COVID-19 by AICPA
• 8 soft skills that make you an even better leader from Entrepreneur
• Performance reviews: The art of feedback from InTheBlack
• How to avoid rushing to solutions when problem-solving from Harvard Business Review
• Auditing fraud risk during a pandemic from Journal of Accountancy

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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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