Your fortnightly technical updates newsletter (5 July 2023)

Standard setting

Invitation to comment

The Institute is seeking comments on the International Accounting Standards Board (IASB) Request for Information Post-implementation Review of IFRS 15 Revenue from Contracts with Customers by 18 September.

Educational publication: Accounting implications of the abolition of the MPF-LSP offsetting mechanism in Hong Kong

The Institute has published comprehensive guidance for the accounting implications of the abolition of the Mandatory Provident Fund (MPF)-Long Service Payment (LSP) offsetting mechanism (the Abolition). The guidance provides a detailed discussion of the background of the issue, the two acceptable accounting approaches, disclosures, time allowed to implement the guidance, and illustrative examples.

Educational publication: Illustrative examples on Amendments to HKAS 1 Presentation of Financial Statements

The Institute has issued an educational publication highlighting the key changes from the current Hong Kong Accounting Standard 1 Presentation of Financial Statements due to the two recent amendments, Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants. The publication provides examples to illustrate the application of the amendments in classifying some common loan arrangements as current or non-current in Hong Kong. Both amendments are to be applied as a package and will become effective on 1 January 2024.

IASB Chair at the IFRS Foundation Conference: Communicating with investors in uncertain times

The IASB chair delivered a speech on the role of financial reporting in uncertain times and how the IASB is supporting companies to ensure that investors' information needs are met.

IASB June 2023 podcast & update

The IASB podcast, with its vice-chair and executive technical director highlighting the projects discussed during its June meeting, and a summary of the June meeting, are now available.

IFRS for SMEs Accounting Standard June Update

The IFRS for SMEs Accounting Standard June Update is now available.

Invitation to comment

The Institute is seeking comments on the International Auditing and Assurance Standards Board (IAASB) Exposure Draft Proposed International Standard on Auditing (ISA) 570 (Revised 202X), Going Concern and Proposed Conforming and Consequential Amendments to Other ISAs by 24 July.

The proposed revisions aim to:

Promote consistent practice and behaviour and facilitate effective responses to identified risks of material misstatement related to going concern;
Strengthen the auditor’s evaluation of management’s assessment of going concern, including reinforcing the importance, throughout the audit, of the appropriate exercise of professional skepticism; and
Enhance transparency with respect to the auditor’s responsibilities and work related to going concern where appropriate, including strengthening communications and reporting requirements.

Watch the IAASB’s three-part series videos which explain the proposed changes to the going concern standard:

HKICPA video and survey on proposed ISA 570 (Revised 202X)

The Institute has prepared an introductory video in Cantonese with English terminologies to provide an overview of the proposed ISA 570 (Revised 202X). Watch the video and view the presentation slides to learn more.

The Institute is interested in hearing your views about the IAASB’s proposed ISA 570 (Revised 202X), Going Concern. You are invited to take a survey which consists of yes/no questions in response to the key attributes of the proposals. The survey takes around twenty minutes to complete and will close on 17 July. Click here to begin the survey.

New e-learning programmes

New Reporting Requirements for licensed insurance broker companies features a speaker from the Insurance Authority who highlights requirements of the Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules and shares regulatory experiences and observations on the reporting by auditors under the Rules. It also includes a Q&A session to address commonly seen questions or scenarios.
Reviewing valuations in audits gives an overview of valuation techniques commonly used for financial reporting purposes and discusses procedures auditors can apply when reviewing valuations, with reference to illustrative examples. Practical tips and common pitfalls are also shared to help participants handle application issues.
Application of HKICPA Audit Practice Manual (2022 edition) provides an overview and walkthrough on the use of the manual from audit planning to completion. The speaker discusses the approach applied in the manual to an audit of financial statements; the application of selected audit programmes and how they address certain requirements of HKSAs. The programme aims to refresh participants’ core auditing knowledge and promote the effective use of the manual.

Call to action for sustainability reporting and assurance

Along the issuance of the two sustainability standards by the International Sustainability Standards Board (ISSB), the International Federation of Accountants has released the following materials to aid professional accountants in delivering high-quality sustainability-related reporting and assurance services.

Institute submission

The Institute has submitted its comment letter on the International Ethics Standards Board for Accountants (IESBA) Consultation Paper, Proposed IESBA Strategy and Work Plan, 2024 – 2047.

ISSB issues inaugural global sustainability disclosure standards

The ISSB issued its inaugural standards - IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures on 26 June. The standards aim to improve trust and confidence in company disclosures about sustainability to inform investment decisions and create a common language for disclosing the effect of climate-related risks and opportunities on a company’s prospects. The ISSB chair officially launched the standards at the IFRS Foundation Conference in his speech titled ‘A new common language to build more resilient economics’.

Following the issuance of IFRS S1 and S2, the Institute, as the statutory sustainability standard setter in Hong Kong, issued an alert which outlines the Institute’s roadmap for developing sustainability disclosure standards for the accounting profession in Hong Kong.

Supporting materials for IFRS Sustainability Disclosure Standards

In these two ISSB webcasts, the ISSB vice-chair explains how IFRS S1 and IFRS S2 work together, and how IFRS S2 builds on the requirements in IFRS S1 by setting out requirements for a company to disclose both cross-industry and industry-specific information about climate-related risks and opportunities. In addition, the ISSB has published an article that highlights ten things to know about the first two ISSB standards.

Advocacy and practice development

HKEX’S New IPO Settlement Platform to Launch in October

On 28 June, Hong Kong Exchanges and Clearing Limited (HKEX) announced the launch of FINI (Fast Interface for New Issuance), the new IPO settlement platform, in October 2023. FINI aims to modernize and digitalize Hong Kong’s IPO settlement process, driving efficiency and supporting the long term development of Hong Kong as a capital raising centre. Please refer to the press release for details.

In January 2021, the Institute issued a submission in response to the Concept Paper issued by the HKEX. In principle, the Institute indicated its support for the introduction of FINI. At the same time, we requested the HKEX to continue to communicate and work with market participants and regulators to ensure the feasibility and practicality of the new system. Training for different stakeholders and adequate pilot testing of the system should be conducted to ensure a smooth rollout.

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:

Anti-money laundering (AML) notices and news

AML workshops and live webinar

The Institute’s Revised Guidelines on Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) for Professional Accountants were gazetted on 25 May 2023 and became effective on 1 June 2023. Accordingly, AML workshops (in English) exploring the latest updates and practical guidance to facilitate compliance with AML/CFT requirements will be held on 10 August (Part I) and 22 August (Part II) respectively.

In addition, a live webinar (in Cantonese) will be conducted on 16 August to discuss the main changes in the revised AML/CFT guidelines and their implications for members.

Members may wish to enrol in these events.

The Institute is also working with the publishers to produce an updated, online edition of the Anti-money laundering procedures manual for accountants, which is expected to be ready by the end of the third quarter 2023.

FATF publication on high-risk and other monitored jurisdictions

The Financial Action Task Force (FATF) published a statement on 23 June regarding high risk jurisdictions subject to a call for action, calling on its members and all jurisdictions to apply specific measures and actions on Iran, the Democratic People's Republic of Korea and Myanmar.

The FATF also issued a notice on jurisdictions under increased monitoring, referring to other jurisdictions that have been identified to have strategic deficiencies in their anti-money laundering/ counter-terrorist regimes and that are working with the FATF to address these deficiencies. Albania, Barbados, Burkina Faso, Cayman Islands, Democratic Republic of Congo, Gibraltar, Jamaica, Jordan, Mali, Mozambique, Panama, Philippines, Senegal, South Africa, South Sudan, Türkiye, UAE, and Uganda had their progress reviewed by the FATF since February 2023 and updated statements are provided for these jurisdictions. In addition, Cameroon, Croatia and Vietnam have been newly included on the list.

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

Chief value officer – the important evolution of the CFO by ACCA
4 tactics for CFOs to navigate economic uncertainty from CFO.com
9 approaches to maximise productivity at work from Financial Management
Financial literacy for SMEs: a lifeline to the lifeblood of the global economy by IFAC

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.

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