Your fortnightly technical updates newsletter (18 August 2021)

Standard setting

Institute submission

The Institute has submitted comment letters on:

International Accounting Standards Board (IASB) Discussion Paper DP/2020/2 Business Combinations under Common Control
IASB Exposure Draft ED/2021/1 Regulatory Assets and Regulatory Liabilities

IAASB proposes new standard for the audits of LCEs

Less complex entities (LCEs) are important constituents of economies worldwide, and account for the great majority of entities. At the same time, increasingly complex structures and transactions need to be addressed in the International Standards on Auditing (ISAs). As complexity in the ISAs can pose challenges for audits of LCEs, the International Auditing and Assurance Standards Board (IAASB) has developed a draft standard that is proportionate to the typical nature and circumstance of an LCE audit.

The Institute is seeking comments on the IAASB Exposure Draft Proposed International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE) by 31 December. To facilitate responses, the IAASB has prepared an optional response template.

Learn more about the proposed standard by reading the overview article from the International Federation of Accountants (IFAC) and the IAASB webpage.

Invitation to comment

The Institute is also seeking comments on Exposure Draft Practice Note 740 (Revised) Auditor’s Letter on Continuing Connected Transactions under the Hong Kong Listing Rules by 30 August.

Auditing and Assurance Technical Bulletins

The Institute has published Auditing and Assurance Technical Bulletin (AATB) 6 Non-Authoritative Guidance on Applying HKSAE 3000 (Revised) to Extended External Reporting (EER) Assurance Engagements, in convergence with from the IAASB’s own guidance. It covers a broad spectrum of EER assurance including information prepared outside the requirements of the Hong Kong Exchanges and Clearing Limited (HKEX). Additional support material on EER is also available from the IAASB.

The Institute has also revised AATB 5 Environmental, Social and Governance (ESG) Assurance Reporting, which is tailored with reference to the ESG reporting circumstances in Hong Kong and the ESG information prepared under the requirements of the HKEX.

Auditor’s responses to the risks of material misstatement arising from estimates made in applying IFRS 17 Insurance Contracts

The Global Public Policy Committee, consisting of representatives of the six largest accounting networks, published a paper on the auditor’s approach to auditing estimates and associated judgements made in the application of IFRS 17 Insurance Contracts, taking into account the enhanced audit requirements in ISA 540 (Revised) Auditing Accounting Estimates and Related Disclosures to identify and assess the risks of material misstatement and audit responses to the identified risks, including the degree to which auditors plan to evaluate and rely on controls as part of their testing strategy.

Invitation to comment

The Institute is seeking comments on the International Ethics Standards Board for Accountants Exposure Draft Proposed Quality Management-related Conforming Amendments to the Code.

Advocacy and practice development

SFC to introduce investor identification and OTC securities transaction reporting

On 10 August, the Securities and Futures Commission (SFC) released consultation conclusions in relation to a consultation paper, issued in December 2020, proposing to introduce investor identification for the securities market in Hong Kong and require reporting over-the-counter (OTC) securities transactions. To summarize:

Licensed corporations and registered institutions have to submit to The Stock Exchange of Hong Kong Limited (SEHK) the names and identity document information of clients placing securities orders on SEHK
Information on OTC securities transactions in ordinary shares and real estate investment trusts listed on SEHK will be reported to the SFC under a separate regime

Please refer to the press release for details.

ORO tender notice

The Official Receiver’s Office (ORO) has issued a tender notice to invite interested parties to submit tender for providing services to complete Preliminary Examination in Bankruptcy Cases. The deadline for tender submission is 7 September 12:00 noon. More details are available here.

Announcements by the Inland Revenue Department

Members may wish to be aware of the following matters:

Automatic Exchange of Financial Account Information: Self-certification form and meanings of terms and expressions in the form
Stamp Duty statistics (July 2021)

Announcements by the government

Members may wish to be aware of the following matters:

Phase 1 of new inspection regime for personal information on the Companies Register will come into effect on 23 August 2021. From that date companies may replace the residential addresses of directors with their correspondence addresses, and replace full identity card numbers (IDNs) of directors and company secretaries with their partial IDNs on their own registers for public inspection.
The expiry dates of various regulations under the Prevention and Control of Disease Ordinance (Cap. 599) will be extended to 31 March, 2022

Anti-Money Laundering and Counter-Terrorist Financing Series – Practical solutions to implementing the AML/CTF requirements (re-run)

The workshops exploring practical solutions to facilitate compliance with anti-money laundering and counter-terrorist financing (AML/CTF) requirements will be rerun as webinars on 9 and 15 September. Join the webinar and learn about the AML/CTF obligations for accountants.

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:

How CPAs helped save businesses during COVID-19 from Journal of Accountancy
How CFOs can incorporate resilience in their plans: Workforce from Financial Management
For fearless leaders, the journey never stops from Entrepreneur
How accountants can use creative thinking at work from In the Black
3 questions to help your team solve problems from Harvard Business Review

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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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