Your fortnightly technical updates newsletter (21 February 2024)

Standard setting

Institute live webinars on Hong Kong Financial Reporting Standard (HKFRS) 17 – Insurance Contracts: Audit and Financial Reporting Issues

The Institute will hold two live webinars on 27 March and 20 May to share with participants the significant and challenging issues relating to the transition and implementation of the requirements of HKFRS 17 Insurance Contracts, a new comprehensive accounting standard that became effective on 1 January 2023. These webinars will provide insights from both accounting and auditing perspectives based on the experience gained during the first complete reporting cycle under HKFRS 17.

Webcast: Overview of the forthcoming IFRS Accounting Standard - IFRS 18

In this webcast, International Accounting Standards Board (IASB) technical staff members introduce International Financial Reporting Standards (IFRS) 18 Presentation and Disclosure in the Financial Statements, the forthcoming IFRS Accounting Standard, that will set out the overall requirements for presentation and disclosures in the financial statements. IFRS 18 responds to investors’ demand for better information about companies’ financial performance. It will affect all companies and all investors.

The Institute has also recently published an article to provide an overview of the changes introduced by IFRS 18 and its potential implications on companies.

Webcast series: Proposals in the Exposure Draft Financial Instruments with Characteristics of Equity

In this series of webcasts, IASB technical staff explains the IASB’s proposals to address the following three common practice issues in its Exposure Draft Financial Instruments with Characteristics of Equity – Proposed amendments to International Accounting Standard (IAS) 32 Financial Instruments: Presentation, IFRS 7 Financial Instruments: Disclosures and IAS 1 Presentation of Financial Instruments:

Fixed-for-fixed condition
Effects of laws or regulations on the contractual terms
Obligations to purchase own equity instruments

Invitation to comment

The Institute is seeking comments on the International Auditing and Assurance Standards Board (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 Codeby 8 March.

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. Proposed revisions include:

Clarified auditor responsibilities relating to fraud in an audit;
Emphasized professional skepticism;
Strengthened identification and assessment of risks of material misstatement due to fraud;
Clarified response to fraud or suspected fraud;
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; and
Enhanced audit documentation.

HKICPA resource centre

Access resources and publications at the Institute’s Resource Centre to Auditing and Assurance for technical publications which help you keep updated with the auditing and assurance pronouncements.

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 Expertby 30 March 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. The Exposure Draft proposes a clear framework of expected behaviours and ethics provisions for use by all sustainability assurance practitioners regardless of their professional backgrounds, as well as professional accountants involved in sustainability reporting. Members may be interested in the following resources provided by the IESBA for the proposals:

IESBA global webinars on exposure drafts

Join IESBA for a series of interactive global webinars on the groundbreaking proposals in the Exposure Drafts for the IESSA and ethics standards for sustainability reporting and Using the Work of an External Expert. Register now by clicking the links below:

22 February: Using the Work of an External Expert
27 February or 6 March: Sustainability Exposure Draft

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.

Advocacy and practice development

FSTB’s Consultation Paper on Legislative Proposals to Regulate OTC Trading of VA

On 8 February, the Financial Services and the Treasury Bureau (FSTB) published a consultation paper seeking market feedback on the proposed licensing regime for providers of over-the-counter (OTC) trading services of virtual assets (VA).

The proposals include:

Requiring any person who conducts a business in providing services of spot trade of any VA for money in Hong Kong to be licensed by the Commissioner of Customs and Excise (CCE);
Covering all VA OTC services irrespective of whether the services are provided through a physical outlet and/or other platforms;
Providing powers for CCE to supervise the anti-money laundering (AML) and counter-terrorist financing conduct of licensees, and enforce the statutory and regulatory requirements under the new regime; and
Providing transitional arrangement to facilitate the effective implementation of the regulatory regime.

The deadline for responding to the consultation paper is 12 April. Please refer to the press release for details.

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:

AML notices and news

Industry update

The live webinar organized by FundingReach (iFinGate), RegTech insights for CPAs – Harness Power of RegTech to tackle tightened KYC requirements, will be held on 7 March, and is complimentary for Institute members. Enrol by 1 March.

Sanctions update

Under United Nations Security Council (UNSC) Resolution 2231 (2015), amongst others, the restrictions contained in paragraph 6(c) - (e) of Annex B to the resolution (viz. financial sanctions and travel ban) have ceased to apply and the sanctions list in respect of Iran has been removed from the UNSC webpage (see the 2231 List). The UNSC has also updated its Consolidated Sanctions List. The lists of “individuals and entities” in respect of Iran have similarly been removed from the Commerce and Economic Development Bureau’s webpage.
The List of individuals and entities published under section 29 of the United Nations Sanctions (Democratic Republic of the Congo) Regulation 2019 (Cap.537CJ) was updated on 21 February. See the relevant UNSC press release.
The List of terrorists and terrorist associates designated by the UNSC, published pursuant to the United Nations (Anti-Terrorism Measures) Ordinance (Cap.575) was gazetted on 8 February. See the relevant UNSC press release.
The List of individuals, groups, undertakings and entities published under section 25 of the United Nations Sanctions (ISIL and AI-Qaida) Regulation (Cap.537CB) was updated on 8 February. 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.

Other AML news

Hong Kong Customs detects largest money laundering case on record involving about $14 billion

Useful resources

Publications from other organizations:

Understanding your personality type can make you a more successful entrepreneur. Here's how. by Entrepreneur.com
Market segmentation and pricing: The role of finance by Financial Management
Return-to-office politics: 4 tips for reducing talent attrition by Journal of Accountancy
3 CFO Strategies for Better Annual Reporting Performance: Metric of the Month by CFO.com

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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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