Your fortnightly technical updates newsletter (27 July 2022)

Offline Members' Handbook

Due to system limitations, the offline version of the Members’ Handbook is updated only up to Update No. 272 (March 2022) and does not reflect any subsequent updates. The offline version will be decommissioned in Q4 2022.
 

Please refer to the online Members’ Handbook for the latest version. The online version can also be downloaded for offline use.

Standard setting

Institute workshops on IFRS/HKFRS 17 Insurance Contracts

Due to continued demand from members, the Institute will re-run a series of face-to-face workshops on International Financial Reporting Standards (IFRS)/ Hong Kong Financial Reporting Standards (HKFRS) 17 Insurance Contracts in August and September:

• 26 August: Life insurance (Part 1) – Overview and deep dive application
• 5 September: Life insurance (Part 2) – Deep dive application
• 13 September: General insurance (Part 1) – Overview and deep dive application
• 21 September: General insurance (Part 2) – Reinsurance, interaction with other standards, and presentation and disclosures

E-learning on HKFRS 3 Business Combinations

This archived webinar covers the recent amendments to HKFRS 3 which revise the definition of business and introduce the optional concentration test. Speakers use examples to illustrate the differences in accounting for business combinations and asset acquisitions, and common application issues of HKFRS 3. An update of the development of the International Accounting Standards Board’s (IASB) projects relating to business combinations is also provided.

IFRS Interpretations Committee Q2 2022 podcast

In this podcast, IFRS Interpretations Committee Chair and member of IASB Bruce Mackenzie joins IASB Technical Staff Member Patrina Buchanan to discuss activities to support consistent application of IFRS Accounting Standards in the second quarter of 2022.

IFRS Interpretations Committee agenda decisions

The IFRS Interpretations Committee has published the following agenda decisions:

• Negative Low Emissions Vehicle Credits – International Accounting Standard (IAS) 37 Provisions, Contingent Liabilities and Contingent Assets
• Special Purpose Acquisition Companies (SPAC): Classification of Public Shares as Financial Liabilities or Equity – IAS 32 Financial Instruments: Presentation
• Transfer of Insurance Coverage under a Group of Annuity Contracts – IFRS 17 Insurance Contracts

IASB Update July 2022

A summary of the IASB July meeting is now available.

Invitation to comment

The Institute is seeking comments on the following:

• The Exposure Draft, Technical Bulletin AATB 3 (Revised) Implementation Guidance on Revised Hong Kong Standard on Investment Circular Reporting Engagements (HKSIR) 400 Comfort Letters and Due Diligence Meetings by 19 August. It proposes additional guidance to reporting accountants when, if criteria to issue comfort letters under HKSIR 400 (Revised) are not met, a report based on agreed-upon procedures are provided to a requesting party.
• The Exposure Draft, Circular on Reporting for Certification of Funds under Schedule 16D to the Inland Revenue Ordinance (Cap. 112) by 13 August. It provides guidance to practising members when undertaking engagements to report on a fund’s compliance with the Guideline on Certification of Funds Issued by the Monetary Authority under Schedule 16D to the Inland Revenue Ordinance (Cap. 112).
• The International Auditing and Assurance Standards Board (IAASB) Exposure Draft on proposed narrow scope amendments to International Standard on Auditing (ISA) 700 (Revised), Forming an Opinion and Reporting on Financial Statements and ISA 260 (Revised), Communication with Those Charged with Governance by 4 September. The proposed amendments will help operationalize recently approved changes to the International Ethics Standards Board for Accountants’ (IESBA) International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) related to listed and public interest entities. The changes to the Code require firms to publicly disclose when the independence requirements for public interest entities have been applied in an audit of financial statements.

The Institute’s Auditing and Assurance Standards Committee meeting minutes

Minutes of the 401st meeting is now available.

Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules (Cap. 41L) Savings and Transitional Arrangements

The Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules (Cap. 41L) (“Broker Rules”) came into force on 23 September 2019. The Broker Rules set out the requirements applicable to licensed insurance broker companies for minimum share capital, net assets, professional indemnity insurance, the keeping of proper books and records, and contents for audited financial statements and auditor’s report subject to specified Savings and Transitional Arrangements.

When performing audit engagements for licensed insurance broker companies, auditors should consider relevant requirements in the Broker Rules including the Savings and Transitional Arrangements as summarized in the reminder issued by the Insurance Authority.

e-International Standards Survey

The International Federation of Accountants (IFAC) is seeking user feedback via a brief survey by 31 August that will help shape phase two of its digital platform, e-International Standards (eIS). The eIS provides direct access to the standards developed by the IAASB, the IESBA, and the International Public Sector Accounting Standards Board (IPSASB), alongside key support, reference, and guidance materials, available to contextualize the language and provide enhanced transparency.

IAASB 2021 Public Report

The IAASB Public Report explains how the IAASB accelerated efforts in 2021 to serve the public interest in audit and assurance. In doing so, the IAASB focused on topics that have generated the greatest public interest attention, including fraud, going concern, audit evidence, and assurance on sustainability reporting.

Implementation tool: New quality management standards

CPA Canada’s Implementation tool for practitioners: New quality management standards explains the scope and objective of the quality management standards and individual appendices which expand on each component of a system of quality management. It also includes example scenarios, factors to consider in evaluating the system of quality management and tips to prepare for the new quality management standards.

ICAEW audit and assurance resources

The Institute of Chartered Accountants in England and Wales (ICAEW) has the following resources that may be of interest to members:

• A virtual event Are you ready for the new ISQMs? to be held on 16 September helps auditors to ensure that their procedures are up to date and ready for the new quality management standards. The webinar will cover establishing quality objectives; risk assessment; design and implementation of systems of quality management; monitoring and remediation processes; documentationm and more.
• The article, Why quality management is (mostly) about people, explores the human factor of a firm's approach to quality management.
• Audit and Beyond July/August 2022 provides practical support and resources to auditors. Guidance in this edition includes fraud in a financial statements audit; Q&A on revised ISAs etc.
• Resources to help audit firms prepare for the new and revised quality management standards under ISQM 1, ISQM 2 and International Standard on Auditing (ISA) 220 (Revised).

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

HKICPA resource centre

Access resources and publications at the Institute’s revamped Resource Centre to the Code which will keep you updated on the latest ethics pronouncements.

Institute submission

The Institute has submitted its comment letter on the International Sustainability Standards Board (ISSB) exposure drafts, IFRS S1 General Sustainability-related Disclosure Requirements and IFRS S2 Climate-related Disclosures (Exposure Drafts).

ISSB Update July 2022

This ISSB Update highlights preliminary decisions of the ISSB at its inaugural meeting in July 2022. The ISSB discussed preliminary feedback gathered during meetings with stakeholders on the Exposure Drafts. It also discussed its approach to preparing a request for information to consult the public on its agenda priorities. The request for information will inform the development of the ISSB's two-year work plan.

Two members were appointed to the ISSB

The Trustees of the IFRS Foundation have appointed Tae-Young Paik and Elizabeth Seeger as inaugural members of the ISSB and are at advanced stages of the remaining appointments to reach the full complement of 14 members.

Advocacy and practice development

Best Corporate Governance and ESG Awards open for entries

The Institute is pleased to launch the Best Corporate Governance and ESG Awards 2022.
The Awards highlight the importance of good corporate governance (CG) and environmental, social and governance (ESG) reporting and practices to listed companies (companies) and public sector/ not-for-profit organizations (PSOs), as well as their investors and stakeholders. They recognize companies and PSOs that have achieved high standards of CG and ESG and that are taking steps to integrate the oversight and implementation of CG and ESG into their strategy and operations. In addition, there will continue to be separate awards to acknowledge those entities that have performed to a high standard in either CG or ESG.

Please refer to our entry brochure for further information. While there is no entry fee, entering the Awards can provide companies and PSOs with the opportunity to gain recognition and enhance their reputation. The submission deadline is 10 August 2022.

You may also click here for our recent CG and ESG related publications.

Opening of special accounts for obtaining protected information on the Companies Register maintained by the CR

The Companies Registry (CR) is now preparing for the implementation of Phase 2 of the New Inspection Regime of the Register under the Companies Ordinance (Cap. 622). In particular, liquidators and trustees in bankruptcy, who are specified persons under the new regime, can apply for opening of special accounts for making future applications for protected information electronically upon the commencement of Phase 2 of the new regime on 24 October 2022. Further details will be provided once available. See also Companies Registry releases statistics for first half of 2022.

Announcements by the Inland Revenue Department (IRD)

Members may wish to be aware of the following matters:

• Inland Revenue (Amendment) (Tax Concessions for Certain Shipping-related Activities) Ordinance 2022 gazetted
• LCQ13: Financial position of Government
• Insurance agent convicted of tax evasion
• Stamp Duty statistics

Electronic Filing of Profits Tax Return

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 by themselves or, with effect from 1 April 2022, through a service provider. Please visit the IRD's website for details.

Announcements by the government 

Members may wish to be aware of the following matters: 

• Policy Address consultation launched
• Senior government appointments
• Appointment of under secretaries and political assistants
• Process Review Panel for Financial Reporting Council publishes 2021 report
• Appointment of Chairman to Consumer Council announced
• Appointments to Financial Reporting Review Panel
• Resumption of airmail services to Australia, Canada, France, Italy, Japan, Malaysia, Nepal, New Zealand, Pakistan, South Africa and United States
• Analytical Accounts of Exchange Fund
• LCQ19: Roles and responsibilities of Deputy Secretaries of Departments

AML notices

The List of individuals and entities published under section 43 of the United Nations Sanctions (Libya) Regulation 2019 (Cap.537CF), was updated on 19 July 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:

• What organisations can learn from workers’ definition of ‘Good Work’ from Financial Management
• Finance transformation: Unleashing the potential of data from CFO.com
• CPA firm top ten technologies by AICPA
• Top firms dig deeper to retain employees from Journal of Accountancy

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