Your fortnightly technical updates newsletter (20 March 2024)

A Roadmap of an Audit Engagement

The Institute has specially designed A Roadmap of an Audit Engagement to help your pursuit of excellence in audit engagements. The resources outlines the essential steps of an audit engagement journey and highlights relevant technical resources offered by the Institute and other professional bodies that correspond to the key inspection findings related to the application of auditing and accounting standards identified by the Accounting and Financial Reporting Council (AFRC) in their inspection reports. Explore now.

Standard setting

Invitation to comment

The Institute is seeking comments on the International Accounting Standards Board Exposure Draft Business Combinations—Disclosures, Goodwill and Impairment by 3 June.

IFRS Interpretations Committee March 2024 Update

The International Financial Reporting Standards (IFRS) Interpretations Committee Update provides a summary of discussions at its March meeting.

Invitation to comment

The Institute is seeking comments on the International Auditing and Assurance Standards Board (IAASB) Exposure Draft on 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. These proposed revisions significantly strengthen the IAASB’s standard on auditors’ responsibilities related to fraud by defining the expectations in relation to fraud, delineating more robust procedures, and increasing transparency about the auditors’ responsibilities and fraud-related procedures in the auditor’s report.

Workshop for audit managers/seniors in-charge (Re-run)

Tailored for audit managers or seniors in-charge with more than two years of auditing experience, the Institute’s workshop held across 15, 29 and 30 April focuses on advanced auditing topics such as risk assessment procedures, auditing accounting estimates and going concern assessment. Auditing concepts, practical skills, as well as recent practice experience relevant to participants will also be shared.

New video series and global webinar on ISA for LCE

In December 2023, the IAASB released the new standard for audits of smaller and less complex entities (the ISA for LCE). New resources are available from the IAASB to help understand the standard:

three-part video series which details important aspects of the standard: Exploring the Benefits, A Closer Look at Applicability and Use and A Step-by-Step Walkthrough
A global webinar on 3 April on an overview of the ISA for LCE

The IAASB will also issue supplementary guidance, a fact sheet on adoption, and a first-time implementation guide in 2024, which will be available on the IAASB webpage for ISA for LCE.

ISA 315: Assembling the building blocks

Read the article by the Institute of Chartered Accountants in England and Wales (ICAEW) which outlines some of the main benefits and opportunities of embracing the revised ISA 315.

HKICPA resource centre

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

HKICPA Proposed Revisions to the Definitions of Listed Entity and Public Interest Entity in the Code

Share your comments on the Institute’s Proposed Revisions to the Definitions of Listed Entity and Public Interest Entity in the Code. The proposal incorporates changes resulting from the final pronouncement issued by the International Ethics Standards Board for Accountants (IESBA) in April 2022, with local refinements to define a public interest entity (PIE) more explicitly to align with the circumstances in Hong Kong.

Notably, the proposal incorporates the following additional PIE categories in the Institute’s Code of Ethics for Professional Accountants, taking into account the specific context of Hong Kong:

MPF schemes registered under the MPF Ordinance.
ORSO schemes registered under the ORSO Ordinance with total assets exceeding HK$100 million by reference to the most recent set of audited financial statements.

Watch the video to understand the proposed revisions and submit your insights by 27 April.

Invitation to comment to IESBA exposure drafts

The Institute is seeking comments on the following exposure drafts issued by the IESBA:

Using the Work of an External Expert by 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. Watch the IESBA’s webinar to understand more about the exposure draft.

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. It 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 following resources are relevant to the proposals:

Summary of prohibitions for audits of PIEs

IESBA’s Summary of Prohibitions in the IESBA Code Applicable to Audits of PIEs highlights non-assurance services, relationships, interests, or circumstances that are prohibited for PIE audits.

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.

Live webinars: Embarking on the journey of IFRS Sustainability Disclosure Standards

The Institute is holding a series of webinars to explain the key concepts, principles and core requirements of the two inaugural IFRS Sustainability Disclosure Standards, namely IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. The webinars will also include illustrative examples to enhance understanding.

2 May: The essentials of IFRS S1 and IFRS S2
20 June: Dive deeper with a focus on IFRS S2

Educational guidance on sustainability reporting

To enhance comprehension and foster awareness of important concepts related to the IFRS S1 and IFRS S2, the Institute has prepared the following guidance:

ISSB March 2024 podcast & update

The International Sustainability Standards Board (ISSB) podcast features its chair and vice-chair discussing their key takeaways from three meetings in March, including the ISSB meeting, the Sustainability Standards Advisory Forum meeting and the Transition Implementation Group meeting on IFRS S1 and IFRS S2.

The podcast also provides an update on the IFRS Sustainability Disclosure Taxonomy and the ISSB’s work with jurisdictions around the world as they consider adopting or using the ISSB Standards. In addition, a summary of the March meeting is now available.

Advocacy and practice development

Announcements by the Inland Revenue Department

Members may wish to be aware of the following matters:

Anti-money laundering (AML) notices and news

FATF publication on high-risk and other monitored jurisdictions

The Financial Action Task Force (FATF) published a statement on 23 February 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 AML/ counter-terrorist regimes and that are working with the FATF to address these deficiencies. Barbados, Bulgaria, Burkina Faso, Croatia, Democratic Republic of Congo, Gibraltar, Jamaica, Mali, Mozambique, Nigeria, Philippines, Senegal, South Africa, South Sudan, Tanzania, Türkiye, UAE, and Uganda have had their progress reviewed by the FATF since October 2023 and updated statements are provided for these jurisdictions. Cameroon, Haiti, Syria, Vietnam and Yemen chose to defer reporting. In addition, Kenya and Namibia have been newly included on the list.

AML notices

The List of individuals and entities published under section 31 of the United Nations Sanctions (Democratic People’s Republic of Korea) Regulation (Cap.537AE) was updated on 9 March. 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.

Useful resources

Publications from other organizations:

The secret sauce to entrepreneurial success – Why your business needs a diverse team now! from Entrepreneur.com
5 steps to transition to a subscription-based business model from Financial Management
Psychological safety: Creating a workplace where all thrive from Journal of Accountancy
Companies shine spotlight on AI ethics from CFO.com

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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