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Standard setting
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Invitation to comment
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The Institute is seeking comments on the International Financial Reporting Standards (IFRS) Interpretations Committee tentative agenda decision on Definition of a Lease – Substitution Rights (IFRS 16 Leases) by 9 January 2023.
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Reminder: The Institute’s live webinar on year-end financial reporting reminders for 2022
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Don’t miss the live webinar on 17 January which will discuss financial reporting considerations for closing out 2022. The speaker will discuss the following topics:
- New and amended Hong Kong Financial Reporting Standards (HKFRSs) that are effective for 2022
- Common application issues of HKFRS 9 Financial Instruments, HKFRS 15 Revenue from Contracts with Customers and HKFRS 16 Leases
- IFRS Interpretations Committee agenda decisions that are relevant to Hong Kong
- Amendments to HKFRSs that have been issued but are not yet effective
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The Institute’s Financial Reporting Standards Committee meeting minutes
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Minutes of the October 2022 meeting is now available.
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IASB November 2022 podcast & update
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The International Accounting Standards Board (IASB) podcast, with its chair and executive technical director highlighting the projects discussed during its November meeting, and a summary of the November meeting, are now available.
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Webcast: Overview of the IFRS for SMEs Accounting Standard consultation
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In this webcast, the IASB provides an overview of its Exposure Draft (ED) Third Edition of the IFRS for SMEs Accounting Standard, including a brief background on the ED, the approach taken in this second comprehensive review, and a summary of the main proposals in the ED.
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IFRS Interpretations Committee Update November 2022
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The IFRS Interpretations Committee Update provides a summary of discussions at its November meeting.
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Invitation to comment
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The Institute is seeking comments on International Auditing and Assurance Standards Board’s (IAASB) Exposure Draft on Proposed International Standard on Auditing (ISA) 500 (Revised), Audit Evidence and proposed conforming and consequential amendments to other ISAs by 24 March 2023. The proposed changes:
- Provide a principles-based approach to considering and making judgments about information intended to be used as audit evidence and evaluating whether sufficient appropriate audit evidence has been obtained;
- Modernize ISA 500 to be adaptable to the current business and audit environment, while considering scalability for different circumstances, including the entity and the auditor’s use of technology, such as automated tools and techniques; and
- Emphasize the role of professional skepticism when making judgments about information intended to be used as audit evidence and evaluating the audit evidence obtained.
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Insurance Authority’s findings from inspection and monitoring of licensed insurance broker companies
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The Insurance Authority’s (IA) circular Common Findings from On-site Inspection and Off-site Monitoring draws licensed insurance broker companies’ attention to specific common issues observed during the IA’s supervision work. Annex 2 of the circular includes a reminder for broker companies to make advance arrangements to meet the new requirements on share capital/ net assets and professional indemnity insurance which will be phased in as from 1 January 2024. This reminder is particularly relevant to auditors in their audits of financial statements and preparation of auditor’s compliance reports for broker companies.
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Quality management resources
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By 15 December 2022, firms will need to have designed and implemented a system of quality management (SOQM) that complies with Hong Kong Standard on Quality Management (HKSQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements.
Below is a list of resources provided by the Institute that help firms to implement the new and revised quality management requirements:
Online resource centres are also developed by the Institute and other professional bodies with collections of guidance on the quality management standard:
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Revised standard on risk assessment for 2022 audits
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Hong Kong Standard on Auditing (HKSA) 315 (Revised 2019), Identifying and Assessing the Risks of Material Misstatement is effective for audits of financial statements for periods beginning on or after 15 December 2021. It introduces major changes in the approach to risk identification and assessment which will have far-reaching effects for firms of all sizes.
The following resources provide tips and support for your implementation of HKSA 315 (Revised 2019):
Online resource centres developed by the Institute and other professional bodies with collections of guidance on HKSA 315 (Revised 2019) and its relevant counterparts:
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ICAEW audit and assurance resources
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The ICAEW has the following resources that may be of interest to members:
- The November edition of Audit and Beyond discusses issues on audit quality, a sole practitioner’s approach to ISQM 1, the entity’s IT systems and related risks under ISA 315 (Revised 2019) etc.
- Resources and support tools on auditing accounting estimates under ISA 540 (Revised), such as webcasts and articles with practical illustrations.
- Resource hub on going concern evaluation.
- Summary of links to technical help, webinars, publications and events to all stages of an audit.
Institute members can subscribe to ICAEW’s International Standards platform for free to access a wide range of resources on auditing and ethics.
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Forthcoming key changes to the Code
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An IFAC article discusses key changes to the International Ethics Standards Board for Accountants (IESBA) International Code of Ethics for Professional Accountants (including International Independence Standards), focused on those which are coming into effect from 15 December 2022. They include:
- Revisions to the Non-Assurance Services Provisions of the Code
- Revisions to the Fee-related Provisions of the Code
- Revisions to the Code Addressing the Objectivity of an Engagement Quality Reviewer and Other Appropriate Reviewers
- Revisions to the Definitions of Listed Entity and Public Interest Entity in the Code (not effective until December 2024)
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HKICPA resource centre
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Access resources and publications at the Institute’s revamped Resource Centre to the Code which will keep you updated on the latest ethics pronouncements.
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Revised non-assurance services and fee-related provisions
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The revised non-assurance services and fee-related provisions of the HKICPA Code of Ethics for Professional Accountants (Code) significantly strengthen the guardrails around auditor independence on non-assurance services (NAS) provided to audit clients and fees. The revisions will be effective for periods beginning on or after 15 December 2022; otherwise, they will be effective as of 15 December 2022.
The following resources provide tips and support for your implementation of the revision:
- The Institute’s updated Ethics Circular 1 has incorporated the new and revised NAS provisions aiming at providing guidance to small and medium practitioners including sole practitioners, on their application of the Code to certain NAS and other topical issues.
- The Institute’s e-Learning course provides an overview of the revisions and deeps dives into areas with new requirements.
The Institute’s Resource Centre to the Code contains resources relating to the revisions, including those from the IESBA.
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International Federation of Accountants (IFAC) report - Professional Accountants as Finance and Business Leaders
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At its September 2022 meeting, IFAC’s Professional Accountants in Business (PAIB) Advisory Group considered key trends impacting businesses and public sector organizations globally. The report, Professional Accountants as Finance and Business Leaders, which summarizes the key insights and learnings from the discussions amongst this global group of business and finance leaders, covers the key role of PAIBs in:
- Driving sustainable value creation through an integrated mindset, with a case study on Natura & Co;
- Corporate governance and oversight of sustainability and ESG;
- Sustainable financing;
- Digitalization of finance and accounting, with a case study on Procter & Gamble; and
- The growing B-Corps movement.
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