Your fortnightly technical updates newsletter (6 April 2022)

Standard setting

Invitation to comment

The Institute is seeking comments on the following tentative agenda decisions published by the IFRS Interpretations Committee by 25 April:

Special Purpose Acquisition Companies: Accounting for warrants at acquisition
Special Purpose Acquisition Companies: Classification of public shares as financial liabilities or equity (IAS 32)
Transfer of insurance coverage under a group of annuity contracts (IFRS 17)
Lessor forgiveness of lease payments (IFRS 9 and IFRS 16)

Institute submissions

The Institute has submitted its comment letters on the following International Accounting Standards Board (IASB) consultation documents:

Live webinar: Practical implementation issues on core aspects of HKFRS 17

In this live webinar on 27 May, speakers will provide a high-level understanding of practical challenges faced by entities when implementing HKFRS 17. The webinar will provide insights on identifying these challenges and ways in which these challenges should be approached.

IASB March 2022 Update

The IASB has published a summary of discussions at its March meeting. Topics discussed include primary financial statements, financial instruments with characteristics of equity, post-implementation review of IFRS 9 – classification and measurement, and business combinations under common control.

IFRS Interpretations Committee March Update and agenda decision

The Interpretations Committee Update provides a summary of discussions at its March meeting. It has also published its agenda decision on TLTRO III Transactions (IFRS 9 Financial Instruments and IAS 20 Accounting for Government Grants and Disclosure of Government Assistance).

Live virtual workshops: New quality management standards series

Join the series in April to learn the key requirements, applications and illustrated examples on how small and medium practitioners can meet the requirements of the new quality management standards.

IAASB March board meeting

The meeting summary of the International Auditing and Assurance Standards Board (IAASB) quarterly board meeting is now available.

IAASB digital technology market scan

The third market scan from the IAASB's Disruptive Technology team, titled Artificial Intelligence – A Primer is now available. It provides a high-level primer on artificial intelligence as it is one of the most significant and potentially disruptive technologies in audit and assurance. Previous digital technology market scans released by the IAASB’s Disruptive Technology team covered topics on data standardization and API access.

Auditing accounting estimate implementation tool

The International Federation of Accountants (IFAC) released a new Auditing Accounting Estimates: ISA 540 (Revised) Implementation Tool to help auditors implement the International Auditing and Assurance Standards Board’s International Standard on Auditing 540 (Revised), Auditing Accounting Estimates and Related Disclosures by providing an overview of steps practitioners could take and related considerations.

ICAEW audit and assurance resources

The Institute of Chartered Accountants in England and Wales (ICAEW) publication Audit and Beyond March 2022 explores areas around fraud, audit quality, ISA 315 (Revised) etc. to offer tips for tackling these areas in practice.

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

Invitation to comment

The Institute is seeking comments on the following International Ethics Standards Board for Accountants’ (IESBA) Exposure Drafts:

Proposed Revisions to the Code Relating to the Definition of Engagement Team and Group Audits by 30 April 2022. Members may also register for the IESBA’s global webinars on 11 or 19 April which will discuss the proposed revisions and include an opportunity for participants to take part in a questions and answers session.
Proposed Technology-Related Revisions to the Code by 20 May 2022.

Revised non-assurance services and fee-related provisions of the Code of Ethics for Professional Accountants

Register for the e-learning session which covers specific provisions of the revised non-assurance services (NAS) and fee-related independence standards of the Code. The revisions significantly strengthen the guardrails around auditor independence in two important areas that have the potential to create incentives influencing auditor behavior — NAS provided to audit clients and fees. They will come into effect in December 2022.

Invitation to comment

The Institute is seeking comments on the following International Sustainability Standards Board (ISSB) exposure drafts by 13 June:

IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information
IFRS S2 Climate-related Disclosures

The exposure drafts have been developed in response to requests from G20 leaders, the International Organization of Securities Commissions and others for enhanced information from companies on sustainability-related risks and opportunities. When the ISSB issues the final requirements, they will form a comprehensive global baseline of sustainability disclosures designed to meet the information needs of investors in assessing enterprise value.

IFRS Foundation and GRI to align capital market and multi-stakeholder standards to create an interconnected approach for sustainability disclosures

On 24 March, the IFRS Foundation and Global Reporting Initiative (GRI) announced a collaboration agreement under which their respective standard-setting boards, ISSB and the Global Sustainability Standards Board, will seek to coordinate their work programmes and standard-setting activities.

ISSB communicates plans to build on SASB’s industry-based Standards and leverage SASB’s industry-based approach to standards development

On 31 March, the ISSB Chair and Vice-Chair communicated plans for building upon the SASB Standards and for embedding SASB’s industry-based standards development approach into the ISSB’s standards development process. As the IFRS Foundation Trustees committed when launching the ISSB, it will build on the work of existing investor-focused reporting initiatives to become the global standard-setter for sustainability disclosures for the financial markets.

Advocacy and practice development

Institute submission on HSIC’s consultation regarding a new ‘comprehensive’ China index

The Institute issued a submission in response to the Consultation Paper issued by Hang Seng Indexes Company Limited (HSIC), which sought views from the market about creating a new ‘comprehensive’ China Index that includes constituents from the Hang Seng China Enterprises Index and A-shares companies.

In general, we are supportive of the concept of a new ‘comprehensive’ China Index and have provided some observations on specific questions for HSIC’s consideration.

Implications of the Temporary Unemployment Relief Scheme for (Provisional) Trustees under the Bankruptcy Ordinance (Cap. 6)

The Official Receiver’s Office has issued a letter on 23 March, advising on factors that should be considered in determining whether or not it would be appropriate to lay claim to the one-off subsidy of HK$10,000 received by an undischarged bankrupt from the government’s Temporary Unemployment Relief Scheme, as after-acquired property. The letter reminds office-holders that they should not apply across-the-board decisions to all cases and are encouraged to exercise their professional judgement and use flexibility and discretion when assessing the bankrupt’s domestic needs and considering whether to lay claim to after-acquired property during the pandemic.

Electronic filing of Profits Tax Returns

With effect from 1 April 2022, Profits Tax Returns can be furnished by service providers. Corporations and partnerships satisfying the conditions specified by the Commissioner of Inland Revenue can file their Profits Tax Returns for any year of assessment from 2016/17 to 2021/22, and attach supplementary forms to Profits Tax Return S1, S2, S3 and S4, electronically under eTAX, either directly by themselves or through service providers. Please visit the Inland Revenue Department (IRD)'s website for details.

New profits tax return forms

As you may be aware, the bulk issue of 2021/22 profits tax returns (BIR51) took place on 1 April 2022. We note from the sample BIR51 that the Part 13 Declaration has been revised and service providers may sign on the tax return starting from this year. We have sought clarification from the IRD regarding the circumstances under which a service provider should sign the tax return and the relevant information is summarized below for your reference:

If a taxpayer has engaged a service provider to furnish the profits tax return on its behalf, the taxpayer itself does not need to sign the Declaration, but instead the service provider needs to sign it; and
a tax representative who only prepares the tax return and tax computation for a taxpayer is not required to sign the Declaration, if the tax representative is not also the service provider engaged to carry out the taxpayer's obligation under section 51(1) of the Inland Revenue Ordinance (IRO).

Please note that the term "service provider" is defined under section 51AAD(8) of the IRO to mean a person engaged to carry out a taxpayer's obligation under section 51(1). The service provider may or may not be the taxpayer's authorized tax representative. Members who are engaged as service providers in relation to a BIR51 should read the wording of the Declaration carefully and also be aware of the Notes and Instructions – Form BIR51, especially section G, Part 13 (Declaration) and section E (Offences and Penalties), in the light of the new penalties relating to service providers in the IRO.

Announcements by the Inland Revenue Department

Members may wish to be aware of the following matters:

Announcements by the government

Members may wish to be aware of the following matters:

AML notices

The updated list of terrorists and terrorist associates designated by the United Nations Security Council, published pursuant to the United Nations (Anti-Terrorism Measures) Ordinance (Cap. 575) was gazetted on 4 April 2022.

The list of individuals, groups, undertakings and entities published under section 25 of the United Nations Sanctions (ISIL and Al-Qaida) Regulation (Cap. 537CB), was updated on 2 April 2022. 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:

5 ways finance can drive cybersecurity preparedness from Financial Management
Audit transformation: Automation is one small step in the journey from Journal of Accountancy
Make resilience your company’s strategic advantage from Harvard Business Review
How your mind can better manage stress from Entrepreneur
How CFOs can win the struggle for talent from CFO.com

Install the HKICPA Events app

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.

This email together with the file(s) transmitted is intended solely for addressee(s) only and may contain confidential or privileged information. If you received this email in error, please contact the sender and delete it together with its attachment(s) from your computer(s). You should note that the views expressed in this email are those of the author and do not necessarily represent those of the Institute. The recipient should check this email and all attachments for the presence of virus. The Institute will not accept liability for any damage caused by any viruses transmitted with this email.

Manage communication preferences | Privacy policy | Personal information | Contact us