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Your fortnightly technical updates newsletter (7 February 2024) |
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Members' Handbook |
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Update No. 305 includes revisions to the Hong Kong Standards on Quality Management, Auditing, Review, Other Assurance, and Related Services Pronouncements to:
- Update the illustrative auditor’s reports as a result of the narrow-scope amendments made to Hong Kong Accounting Standard (HKAS) 1 Presentation of Financial Statements.
- Align with the 2022 Handbook of International Quality Management, Auditing, Review, Other Assurance, and Related Services Pronouncements issued by the International Auditing and Assurance Standards Board (IAASB) and other housekeeping changes.
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Standard setting |
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E-learnings on new and amended HKFRS |
The Institute recently hosted the following training events that discussed new and amended Hong Kong Financial Reporting Standards (HKFRS) applicable to accounting periods beginning on or after 1 January 2023, as well as HKFRS amendments that will become effective in 2024. These events have been recorded as e-learnings for members’ access. Enrol now if you missed these training events:
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IASB January 2024 podcast & update |
The International Accounting Standards Board (IASB) podcast, with its chair, vice-chair and executive technical director highlighting the projects discussed during its January meeting, and a summary of the January meeting, are now available. |
Q4 2023 IFRS Interpretations Committee podcast |
In this podcast, the International Financial Reporting Standards (IFRS) Interpretations Committee Chair joins two Committee members to talk about the decisions made at the November meeting. Topics discussed include climate-related commitments in IAS 37 Provisions, Contingent Liabilities and Contingent Assets; and disclosure of revenues and expenses for reportable segments in IFRS 8 Operating Segments. |
IFRS Interpretations Committee agenda decision |
The IFRS Interpretations Committee has published its agenda decision on Merger between a Parent and its Subsidiary in Separate Financial Statements (IAS 27 Separate Financial Statements). |
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Invitation to comment |
The Institute is seeking comments on the IAASB Exposure Drafts on: Proposed Narrow Scope Amendments to International Standards on Quality Management (ISQMs); International Standards on Auditing (ISAs); and International Standard on Review Engagements (ISRE) 2400 (Revised), Engagements to Review Historical Financial Statement as a Result of the Revisions to the Definitions of Listed Entity and Public Interest Entity (PIE) in the IESBA Code by 8 March 2024. Key proposed revisions include extending the scope of the entities included under the ISQMs and the ISAs such that they will be subject to:
- Engagement quality reviews;
- Providing transparency in the auditor’s report on specific aspects of the audit, including auditor independence, communicating key audit matters, and the engagement partner’s name; and
- Communicating with those charged with governance to help them fulfill their responsibility overseeing the financial reporting process, (e.g., communicating about quality management and auditor independence).
Proposed International Standard on Auditing 240 (Revised), The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements and Proposed Conforming and Consequential Amendments to Other ISAs by 5 May 2024. Key proposed revisions include:
- Clarified auditor responsibilities relating to fraud in an audit.
- Emphasized professional skepticism to ensure auditors remain alert to possible fraud and exercise professional skepticism throughout an audit.
- Strengthened identification and assessment of risks of material misstatement due to fraud.
- Clarified response to fraud or suspected fraud identified during the audit.
- Increased ongoing communication with management and those charged with governance about fraud.
- Increased transparency about auditors’ responsibilities and fraud-related procedures in the auditor’s report.
- Enhanced audit documentation requirements about fraud-related procedures.
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Continuing Professional Development as a Key to Improving Audit Quality in Hong Kong |
The Accounting and Financial Reporting Council highlighted in its publication the importance of continuing professional development (CPD) in ensuring audit quality and improving staff retention. It points out that with the development of new technologies such as artificial intelligence, the increasing need for environmental, social and governance (ESG) and climate expertise, and continuing changes in accounting and auditing standards, firms are presented with enormous business opportunities if they focus on CPD as a strategic component of the delivery of high-quality audits and talent management. |
Implications for IAASB Standards of the IFRS Foundation’s Recent Updates to its Trademark Guidelines Relating to Standards Issued by the IAASB |
The publication by the IAASB clarified that unless otherwise indicated, any reference in the 2022 IAASB Handbook to IFRSs or IASs is intended to refer to IFRS Accounting Standards. The IAASB plans to include in the next edition of its Handbook updates to the illustrative auditor reports in the ISAs and the illustrative practitioner reports where the fact pattern indicates that the entity’s financial statements have been prepared in accordance with IFRSs to refer to “IFRS Accounting Standards as issued by the International Accounting Standards Board”, among others. |
IAASB eNews |
The IAASB latest eNews is now available, highlighting various activities going on in and around the IAASB. |
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Invitation to comment |
The Institute is seeking comments on the following Exposure Drafts issued by the International Ethics Standards Board for Accountants (IESBA) on: Using the Work of an External Expert by 30 March 2024 which proposes an ethical framework to guide professional accountants or sustainability assurance practitioners, as applicable, in evaluating whether an external expert has the necessary competence, capabilities and objectivity in order to use that expert’s work for the intended purposes. The proposals also include provisions to aid in applying the Code’s conceptual framework when using the work of an external expert. International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA) and Other Revisions to the Code Relating to Sustainability Assurance and Reporting by 10 April 2024. The Exposure Draft proposes a clear framework of expected behaviors and ethics provisions for use by all sustainability assurance practitioners regardless of their professional backgrounds, as well as professional accountants involved in sustainability reporting. The goal of these standards is to mitigate greenwashing and elevate the quality of sustainability information, thereby fostering greater public and institutional trust in sustainability reporting and assurance. Members may be interested in the following resources provided by the IESBA for the proposals:
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Your opinion counts! Take the HKICPA Ethics Survey 2024 |
The Institute’s Ethics Survey 2024 will close on 9 February 2024! Tell us your ethical attitudes regarding the use of technology when carrying out professional activities, and the potential implications on their compliance with the fundamental principles of the HKICPA Code of Ethics for Professional Accountants (Code). Spend less than 10 minutes to complete the survey before it ends. |
HKICPA resource centre |
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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New resource on emissions reporting using GRI and ISSB Standards |
The Global Reporting Initiative (GRI) and the IFRS Foundation have jointly published a new analysis and mapping resource: Interoperability considerations for GHG emissions when applying GRI Standards and International Sustainability Standards Board (ISSB) standards. The publication illustrates the areas of interoperability a company should consider when measuring and disclosing Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions in accordance with both GRI 305: Emissions 2016 and IFRS S2 Climate-related Disclosures. |
Joint IASB–ISSB January 2024 podcast & update |
The International Sustainability Standards Board (ISSB) podcast, featuring its chair and vice-chair, discusses the latest developments from the ISSB, including priorities for 2024 and an update on recent progress on technical work. Additionally, IASB vice-chair and ISSB vice-chair share their reflections on the inaugural joint IASB-ISSB technical meeting held in January in a special podcast episode. A summary of the Joint IASB–ISSB meeting is also available. |
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Advocacy and practice development |
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Institute issues submission on HKEX’s consultation on Severe Weather Trading of Hong Kong Securities and Derivatives Markets |
The Institute issued a submission in response to Hong Kong Exchange and Clearing Limited (the Exchange)’s Consultation Paper seeking market views on proposals to maintain normal operations of the Hong Kong (HK) securities and derivatives markets during severe weather (SW) conditions. In principle, the Institute supports the Exchange’s proposals, especially given that most major markets, including those in Mainland China and United States, do maintain market trading during SW conditions. The Institute generally agrees that a change to the existing SW arrangements in HK should be considered to enhance HK’s competitiveness and help reinforce the attraction of HK’s markets to investors. The Institute also suggested that the Exchange consult the market on the detailed Listing Rule (LR) changes later when they have been formulated. Please refer to the submission for further details. |
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Exchange Publishes Results of Review of Issuers’ 2022 Annual Reports |
On 26 January, the Exchange published a report on the findings and recommendations of its annual review of issuers’ annual reports for the 2022 financial year-end. The Exchange’s comments are summarised below:
- High compliance rates with the LRs in respect of issuers’ annual report disclosure
- Overall improvement noted in disclosure and compliance of money lending transactions
- Deficiencies in internal controls remained a common underlying reason for modification of audit opinion by auditors and delay in financial reporting
- Recommendations made included those in respect of financial reporting and related controls, disclosure on material lending transactions and financial statement disclosure
Please refer to the press release and the Report for details. |
Revised Structure of the Appendices to the LRs |
In June 2023, the Exchange published the consultation conclusions to its consultation paper on the expansion of the paperless listing regime. As proposed in the consultation, the Exchange has, among other changes, revised the structure of the appendices to LRs. Under the new structure, the appendices are arranged according to themes, one of which is Corporate Governance / Environmental, Social and Governance. The Corporate Governance is now at Appendix C1 and the Environmental, Social and Governance Reporting Guide is now at Appendix C2 (in both the Main Board and GEM LRs). The changes came into effect on 31 December 2023. Please refer to the revised structure for further details. |
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Revision of standard rates of fees under the Panel A Scheme |
The Official Receiver’s Office reviewed and revised the standard rates of fees at Annex C to the “Panel A” Rules, which had not been changed for a number of years. The revised rates will be phased over the next five years, commencing from 1 February 2024. |
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Announcements by the Inland Revenue Department |
Members may wish to be aware of the following matters:
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Announcements by the government |
Members may wish to be aware of the following matters:
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Anti-money laundering (AML) notices and news |
Industry update FundingReach (iFinGate) will organize a live webinar – RegTech insights for CPAs – Harness Power of RegTech to tackle tightened KYC requirements on 7 March, which is complimentary for Institute members. Please feel free to enrol. Sanctions update
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Useful resources |
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Publications from other organizations: |
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