Your fortnightly technical updates newsletter (10 November 2021)

Standard setting

Live webinar on considerations in performing impairment assessments

This live webinar on 14 December will discuss how to perform an impairment assessment and the related considerations for applying the requirements of Hong Kong Accounting Standard 36 Impairment of Assets and Hong Kong Standard on Auditing 540 (Revised) Auditing Accounting Estimates and Related Disclosures. The speaker will also share tips on reviewing valuation reports and common pitfalls in performing an impairment test.

Live webinar on IFRS Interpretations Committee agenda decisions that are relevant to Hong Kong

This live webinar on 15 December will cover several IFRS Interpretations Committee agenda decisions/tentative agenda decisions that may have wider implications in Hong Kong. The speaker will explain how the applicable principles and requirements in the International Financial Reporting Standards apply to specific fact patterns.

IASB October 2021 podcast and October update

The International Accounting Standards Board (IASB) October podcast, with its chair and vice-chair highlighting the projects discussed during the October meeting, and a summary of the October meeting, are now available.

IASB webcast series on Exposure Draft Management Commentary

A series of bitesize webcasts on Exposure Draft Management Commentary has been produced to address frequently asked questions about the IASB’s proposals for a new framework for preparing management commentary.

Invitation to comment

The Institute is seeking comments on International Auditing and Assurance Standards Board (IAASB) Exposure Draft Proposed International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (LCEs) by 31 December. Members may be interested in the following regarding the proposed standard for less complex entity audits:

Take part in the Institute’s survey, which highlights the key attributes of the exposure draft followed by yes/no questions
An optional response template
Join the Institute of Chartered Accountants in England and Wales’ (ICAEW) live webinar on 12 November to learn more on the proposed standard
Follow the IAASB on Linkedin for the next upcoming Linkedin Live LCE session
A podcast by the ICAEW

Auditing and Assurance Standards Committee meeting minutes

Minutes of the meeting held in September is now available.

Financial Reporting Council reports

The Financial Reporting Council issued its Annual Investigation and Compliance Report, covering the 18-month period from 1 October 2019 to 31 March 2021. It also published its Interim Inspection Report in the middle of its first 3-year inspection cycle.

Webinars on auditing and assurance

Don’t miss the following webinars in November:

16 November: Industry update relating to licensed corporations
18 November: Industry update relating to investment funds

Quality management webinar series

Watch the recording of the IAASB’s webinars that take a deep dive into aspects of the International Standard on Quality Management (ISQM)1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements.

IAASB first digital handbook

The IAASB’s digital handbook of pronouncements is now live on its website. It is designed to meet stakeholders’ needs, allows for quick reference to other standard-setting boards’ standards and related resources.

Joint report on fraud, going concern and the expectation gap in audit

A report by the Association of Chartered Certified Accountants, Chartered Accountants Australia and New Zealand, Chartered Professional Accountants of Canada and the Canadian Auditing and Assurance Standards Board examines the auditor’s role in the areas of fraud and going concern and the related expectation gap and identifies recommendations to narrow this gap.

ICAEW audit and assurance resources

The ICAEW has the following material that may be of interest to members:

Watch the recording of ICAEW’s Financial Reporting, Audit and Assurance Conference to explore a wide range of technical topics
Join the online webinar on 29 November on risk identification and assessment under ISQM 1
Access to technical articles on fraud and audit; improving audit quality etc. through ICAEW’s Audit and Beyond October 2021

Institute members can also subscribe to ICAEW’s International Standards for free to access a wide range of resources on auditing and ethics.

Launch of eCode 2.0

The International Ethics Standards Board for Accountants (IESBA) launched eCode 2.0 using the e-International Standards platform. In addition to providing electronic access to the authoritative standards developed by the IESBA, it provides access to non-authoritative resource materials, including staff-prepared basis for conclusions and questions and answers publications.

Formation of a new International Sustainability Standards Board and other updates related to sustainability standards development

At the 2021 United Nations Climate Change Conference (COP26) on 3 November, the IFRS Foundation Trustees announced the formation of a new International Sustainability Standards Board, a commitment to consolidate with the Climate Disclosure Standards Board and the Value Reporting Foundation, and the publication of prototype climate and general disclosure requirements developed by its Technical Readiness Working Group. The speech delivered by Erkki Liikanen, Chair of the trustees and a recording of a panel discussion from COP26 on this topic are now available.

Live webinar: Sustainability offers new opportunities for SMPs

This free live webinar, co-hosted by the European Federation of Accountants and Auditors for SMEs and the International Federation of Accountants, will cover recent developments focused on SMPs and SMEs and involve a distinguished panel covering how SMPs can get started, and examples of those taking action in sustainability.

ICAEW sustainability articles

The ICAEW has the following articles that may be of interest to members:

Climate change: the basics on getting started: How businesses can get started on making a positive change for the climate
How SMEs can take steps towards net zero: A finance director of an SME explains what the company has done so far, and how other SMEs can follow suit

Advocacy and practice development

Institute submission on HKEX consultation on Special Purpose Acquisition Companies

The Institute issued a submission in response to the Consultation Paper published by the Hong Kong Exchanges and Clearing (HKEX), seeking public feedback on proposals to create a listing regime for special purpose acquisition companies (SPACs) in Hong Kong.

The submission agrees that the listing of SPACs is an issue that merits consideration by the HKEX. However, the view is that, if a new listing regime for SPACs is introduced, we should proceed with caution in the first instance, given the specific characteristics of the Hong Kong market, which still has a substantial proportion of retail investor participation. This also takes into account that regulatory changes relating to SPACs in the United Kingdom and Singapore are still very recent, and that the surge in SPAC listings in the United States over the past couple of years has been accompanied by increased regulatory scrutiny and warnings to investors from the Securities and Exchanges Commission.

Under the circumstances, the proposed restrictions, including limiting investment in SPACs to professional investors, until they have merged with a substantive business that meets most of the normal listing requirements, are understandable from an investor protection perspective. In addition, the Institute’s Corporate Finance Advisory Panel commented on a number of the detailed proposals, putting put forward suggestions aimed at making the future market in SPACs more active, liquid and viable.

HKEX consults on Proposed Amendments to Listing Rules relating to Share Schemes of Listed Issuers

HKEX has issued a consultation paper seeking market views on its proposal to extend Chapter 17 of the Listing Rules to also govern share award schemes, in view of the increasing adoption of these schemes. HKEX, in particular, proposes changes to specific requirements in Chapter 17, such as the definition of eligible participants and the requirements for scheme mandate refreshments, to align them with the purpose of share schemes and to improve disclosure of grants of share options and share awards. The deadline for submissions to HKEX is 31 December.

SFC’s consultation conclusions on conduct requirements for bookbuilding and placing activities

On 29 October, the Securities and Futures Commission (SFC) released consultation conclusions on the conduct requirements for capital market transactions in Hong Kong, which clarify the roles of intermediaries and set out the standards expected of them in bookbuilding, pricing, allocation and placing activities.

The amendments to the Code of Conduct for Persons Licensed by or Registered with the SFC and Guideline to sponsors, underwriters and placing agents involved in the listing and placing of GEM stocks become effective on 5 August 2022.

Please refer to the press release for details.

Please also refer to the Institute’s submission, generally supporting the underlying aims of the SFC’s proposals.

ORO tender notice

The Official Receiver’s Office (ORO) has issued a tender notice to invite interested practitioners to submit tenders for taking up of appointments as provisional liquidator under section 194(1A) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32). The contractual period will be two years ending on 31 March 2024. The deadline for tender submission is 30 November 12:00 noon.

More details are available on the ORO's website.

Global Accounting Alliance webinars on current issues in taxation

The Global Accounting Alliance (GAA), of which the Institute is member, will be hosting two webinars on highly topical tax issues on 23 and 24 November. These events will involve, respectively, discussions with revenue authorities from different jurisdictions, and also a practitioner discussion among a panel of GAA tax directors and practitioners, including a panellist from the Institute’s Taxation Faculty Executive Committee. Members can enrol for free.

Subscription to Mainland Accounting and Tax Journals

The 2022 issues of the Chinese Certified Public Accountant, China Taxation and International Taxation in China are available for subscription until 23 November.

Announcement by the Inland Revenue Department

Members may wish to be aware of the following:

Stamp Duty statistics

AML notices

The United Nations Sanctions (South Sudan) Regulation 2019 (Amendment) Regulation 2021 was gazetted on 29 October.

The United Nations Sanctions (Central African Republic) Regulation 2020 (Amendment) Regulation 2021 was gazetted on 29 October.

The List of individuals and entities published under section 43 of the United Nations Sanctions (Libya) Regulation (Cap.537CF) was updated on 26 October. See the relevant 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.

Useful resources

Publications from other organizations:

Six ways to embed climate change risk management by ICAEW
How boards can combat pandemic-induced uncertainty from Financial Management
Managing noise, change, and emerging risks from Journal of Accountancy
Make learning a part of your daily routine from Harvard Business Review
Small business CFOs must build ethical awareness from CFO.com
Why you need a documented succession plan from In the Black

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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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