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Your fortnightly technical updates newsletter (19 July 2023)
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Invitation to comment on the prescription of specific CPD requirements for Responsible Persons of registered PIE auditors
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The Institute is seeking comments on the proposed changes to Statement 1.500 Continuing Professional Development to prescribe specific Continuing Professional Development (CPD) requirements for Responsible Persons of registered Public Interest Entity (PIE) auditors by 30 July. Please refer to the Invitation to comment for the background and details of the proposal.
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Members' Handbook
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Update No. 296 includes:
- Revisions to relevant pronouncements as a result of amendments to the “Guidelines on Anti-Money Laundering and Counter-Terrorist Financing for Professional Accountants” in Chapter F of the Code of Ethics for Professional Accountants effective on 1 June 2023.
- Discardment or relocation of relevant pronouncements within Volume III of the Members’ Handbook from Section 2 (Pronouncements issued but not yet effective) to Section 1 (Pronouncements currently effective) as a result of conforming and consequential amendments of the new and quality management standards becoming effective for audits and reviews of financial statements for periods beginning on or after 15 December 2022.
- Discardment of PN 851, Review of the Annual Financial Reports of Non-governmental Organisations and is replaced by PN 851 (Revised), Reporting on the Annual Financial Reports of Non-governmental Organisations issued in September 2022 which is effective for reporting periods ended on or after 31 March 2023.
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Standard setting
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Institute roundtable on IASB’s Request for Information on Post-implementation Review of IFRS 9 Financial Instruments - Impairment
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The Institute will be holding a virtual roundtable on 14 August to obtain feedback from stakeholders on the International Accounting Standards Board (IASB)’s Request for Information (RFI) on Post-implementation Review of IFRS 9 Financial Instruments - Impairment. Representatives from the IASB will be present to explain the key areas in the RFI and interact directly with participants at the roundtable. Members and other interested parties are invited to join the roundtable to express their views on the RFI for the IASB’s future improvements to the impairment requirements of IFRS 9. Register to reserve your place by 8 August.
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Institute submission
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The Institute has submitted its comment letter on the IASB Exposure Draft Amendments to the Classification and Measurement of Financial Assets (Proposed amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures).
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The Institute’s Financial Reporting Standards Committee meeting minutes
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Minutes of the June 2023 meeting is now available.
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Q2 2023 IFRS Interpretations Committee podcast
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In this podcast, the IFRS Interpretations Committee Chair and member of the IASB Bruce Mackenzie joins Committee members Karen Higgins and Donné Sephton to discuss activities to support consistent application of IFRS Accounting Standards in the second quarter of 2023.
Topics discussed include the application of the ‘own use’ exemption in IFRS 9 Financial Instruments and the accounting for hyperinflation in specific circumstances.
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IFRS Accounting Standards educational material: the effects of climate-related matters on financial statements
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The IFRS Foundation has updated its educational material developed to help companies determine how to consider climate-related matters when preparing their financial statements applying IFRS Accounting Standards.
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Invitation to comment
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The Institute is seeking comments on the International Auditing and Assurance Standards Board (IAASB) Exposure Draft on the 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:
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HKICPA video and survey on proposed ISA 570 (Revised 202X)
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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.
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New quality management series: small firm implementation
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To help small firm practitioners implement the new quality management standards, the International Federation of Accountants (IFAC) has released a three-part publication series focusing on providing tips and guidance for practical implementation.
The second installment of the series – Developing a detailed implementation plan provides a step approach to identifying your quality objectives; completing your quality risk assessment process; identifying existing, or creating new, responses to those quality risks; and implementing, documenting, and communicating your system of quality management.
Click here for the first installment of the series released in October 2022 that addresses the mindset change the new standards require and the shift in focus from quality control to quality management.
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How to use technology throughout the audit process
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Audit teams face a growing array of new technology. This interactive graphic by the Institute of Chartered Accountants in England and Wales (ICAEW) provides examples of the tools that will make audits more effective and efficient from start to finish.
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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The Institute’s Auditing and Assurance Standards Committee meeting
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Minutes of the 408th meeting is now available.
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HKICPA’s ethics educational video on bias
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Watch the educational video produced by the Institute highlighting the role and mindset expected of professional accountants with a focus on “bias” in the context of the Code.
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HKICPA resource centre
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Access resources and publications at the Institute’s Resource Centre to the Code which will keep you updated on the latest ethics pronouncements.
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IESBA emphasizes the critical importance of ethical behavior for all professional accountants
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This news by the International Ethics Standards Board for Accountants (IESBA) mentions that recent events in a number of major jurisdictions involving professional accountants have raised concerns with many stakeholders and the public about whether the accountants’ conduct was straightforward and honest, free from conflicts of interest, in accordance with confidentiality requirements, or in the public interest.
The Chair of the IESBA emphasizes that ethics is fundamental to public trust in the work of all professional accountants and it must always be at the heart of their judgments, decisions, and actions when performing professional activities or services. In addition, the high-quality ethics standards in the Code are a cornerstone to ethical behavior in business and organizations, and they underpin the accountancy profession’s longstanding good reputation. It is therefore crucial that all accountants fully understand and comply with all their ethical obligations under the Code.
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Applying the Code’s conceptual framework to independence
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This publication by the staff of the IESBA and the Australian Accounting Professional & Ethical Standards Board describes key technology-related provisions of the International Code of Ethics for Professional Accountants (including International Independence Standards) (Code) and provides auditors with three practical examples involving technology-related non-assurance services to illustrate how to apply the Code’s requirements with respect to independence.
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The Institute’s Ethics Committee meeting
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Minutes of the 256th meeting is now available.
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Survey: the ISSB Knowledge Hub
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The ISSB Knowledge Hub will be a free online resource for preparers, designed to help them understand and get ready for applying IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. It will incorporate an easy-to-navigate and searchable repository of resources which will be developed by the IFRS Foundation and its partners. These resources include case studies, good practice guidance, webinars and an e-learning platform.
The exposure draft consultation feedback for IFRS S1 and IFRS S2 included requests for a new capacity building programme, illustrative guidance, case studies, examples, training and other resources. The IFRS Foundation is seeking additional feedback and requests on the capacity-building priorities that different stakeholders have, any specific focus areas or topics that are of interest (linked to IFRS S1 and IFRS S2), or other suggestions on how the IFRS Foundation can support preparers and others. Click here to begin the survey.
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HKICPA Resource Centre
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Access the Institute’s Sustainability Standards Resource Centre for the professional standards, technical publications and reference materials relevant to sustainability reporting, assurance and ethics.
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Advocacy and practice development
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HKEX concludes consultation on Proposals to Expand the Paperless Listing Regime
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On 30 June, the Stock Exchange of Hong Kong Limited (HKEX) released consultation conclusions on the proposals to expand the Paperless Listing Regime and other Rule Amendments.
The Institute issued a submission in response to this consultation on 28 February. In principle, we support the HKEX’s proposals on the basis that they could improve the market efficiency and lower costs to issuers in company administration and reduce the use of paper. At the same time, we also raised concerns and suggestions to the HKEX to accommodate the needs of some retail investors, particularly elderly investors, who may face difficulties in transitioning to a full paperless regime, in its proposals.
Please refer to the press release for details.
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HSIC concludes consultation on Eligibility of Foreign Companies to the HSI
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On 7 July, Hang Seng Indexes Company Limited (HSIC) released consultation conclusions on the eligibility of foreign companies to be included in the Hang Seng Index (HSI), as well as the review results of the seven industry groups for the HSI constituent selection and the number of “Hong Kong” constituents in the HSI.
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Best Corporate Governance and ESG Awards 2023
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The Best Corporate Governance and ESG Awards ("Awards") 2023 have recently been launched.
The Awards reflect the importance of both good corporate governance (CG) and ESG reporting and practices for listed companies and public sector / not-for-profit organizations (“PSOs”), and for their investors and stakeholders. Through the Awards, we hope to encourage companies and PSOs to achieve high standards of CG and ESG, and to take steps to integrate CG and ESG considerations into their values, strategy and operations.
Listed companies and PSOs that are looking for opportunities to be recognized by their peers and the wider market for their commitment to sustainable development are encouraged to enter the Awards. There is no entry fee. Interested organizations are invited to participate in one of the most prestigious and sought-after awards competitions in Hong Kong by submitting an entry form by 3 August 2023.
Kindly click here for more information.
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Bankruptcy and Companies Legislation (Miscellaneous Amendments) Ordinance 2023
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The Institute has received a letter from the Official Receiver’s Office (ORO), advising that the Bankruptcy and Companies Legislation (Miscellaneous Amendments) Ordinance 2023 (Amendments Ordinance) was enacted by the Legislative Council on 12 July and will be published in the Gazette on 21 July.
The Amendments Ordinance mainly serves to amend the Bankruptcy Ordinance (BO)(Cap. 6), the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) and their subsidiary legislation to:
- facilitate the submission of certain documents to the Official Receiver by electronic means;
- change the publication requirements for various notices;
- facilitate the sending of proxies by electronic means; and
- make other miscellaneous and related amendments.
Further details are contained in the letter, and any questions on the matter should be addressed to oroadmin@oro.gov.hk.
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ORO tender notice
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The ORO has issued a tender notice to invite interested practitioners to submit tenders for taking up of appointments as provisional trustees under section 12(1A) of the Bankruptcy Ordinance (Cap. 6). The contractual period will be two years ending on 31 December 2025. The deadline for submission of tenders is 12:00 noon, 1 August, 2023. More details are available at: https://www.oro.gov.hk/eng/announcements/tender.html.
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Reminder on profits tax return filing requirements
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The Inland Revenue Department (IRD) asks taxpayers to take note of the following new filing requirements when filing profits tax returns this year:
- If taxpayers have any gross income during the basis period, they must submit a profits tax return together with all supporting documents (including financial statements and a tax computation). Small corporations and businesses with gross income not exceeding HK$2 million will no longer be permitted to file their profits tax returns without supporting documents.
- Where appropriate, taxpayers are required to electronically file (e-file) all relevant supplementary forms and other forms to be furnished with the profits tax return under the eTAX services provided at GovHK.
Furthermore, the IRD has already enhanced the eTAX services to enable more corporations and businesses (excluding sole proprietorship businesses) to voluntarily e-file their profits tax returns, together with financial statements and tax computations, in inline eXtensible Business Reporting Language (iXBRL) format. As an alternative to paper filing of profits tax return, taxpayers are encouraged to participate in voluntary e-filing through the eTAX platform, which will also enable them to enjoy a further one-month extension of the filing deadline.
For details on the new filing requirements, please visit the IRD’s website. For enquiries on the eTAX services, you may contact the eTAX Helpdesk Hotline at 183 2011. For enquiries in relation to the use of the IRD iXBRL Data Preparation Tools, you may contact the IRD at ixbrl_reporting@ird.gov.hk or access e-Appointment to book a specific timeslot in advance. The IRD will contact you by phone at the booked timeslot.
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Announcements by the IRD
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Members may wish to be aware of the following matters:
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Announcements by the government
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Members may wish to be aware of the following matters:
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Anti-money laundering (AML) notices and news
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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.
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.
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Useful resources
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Publications from other organizations:
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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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