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Handbook Update No. 350 relates to the issuance of the revised AG 5 Merger Accounting for Common Control Combinations (AG 5). AG 5 was amended to address stakeholder feedback on outstanding issues identified in the Institute’s 2016 post-implementation review. The key amendments are:
- Scope of AG 5: Clarifying the scope by adding references to the definitions of “business” and “business combination” in HKFRS 3 Business Combinations
- Controlling party and carrying values: Clarifying that judgement is required to determine which controlling parties’ perspective should be used to recognize the net assets of the acquired business or entity, and requiring disclosure of the basis for that determination
- Shares issued as consideration: Requiring disclosure of the measurement approach for shares issued as consideration
- Restating comparatives: Introducing a practical expedient that allows entities not to restate comparatives, unless such restatement is required by applicable laws or regulations
The amendments shall be applied prospectively to common control combinations that occur on or after the beginning of the first annual reporting period beginning on or after 1 January 2028, with early adoption permitted.
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HKFRS 18 webcast #3 Mastering MPMs
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HKFRS 18 Presentation and Disclosure in Financial Statements introduces the new concept of management-defined performance measures (MPMs), together with related new disclosure requirements. This webcast explains the three criteria for identifying an MPM, highlights the disclosure requirements, discusses recent international developments, and outlines key practical considerations for preparers. Through practical examples, the webcast helps entities assess whether commonly used performance measures fall within the scope of the MPMs and prepare for implementation of HKFRS 18.
For further perspectives on HKFRS 18 from an investor point of view, join the CFA Society Hong Kong lunch seminar on 14 October. Nick Anderson, IASB Board member, will explain how the new Standard reshapes the income statement and enhances financial analysis, while HKICPA representatives will share local findings from research on its potential impact on Hong Kong-listed entities and highlight implementation support resources.
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HKIRA Seminar
From compliance to communication (The strategic impact of the latest IFRS and ISSB standards)
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The Hong Kong Investor Relations Association (HKIRA) will hold a seminar on 14 October. Broader in scope than the CFA Society Hong Kong seminar, the session will cover recent IFRS Accounting Standards developments and the practical implementation of IFRS S1 and IFRS S2 for investor relations professionals.
Nick Anderson, IASB Board member, will provide an update on the latest IFRS Accounting Standards developments, including the implementation of IFRS 18 and the IASB’s post-implementation review of lease accounting. The session will also cover guidance on reporting climate-related and other uncertainties, as well as ongoing standard-setting projects. A managing director from a consulting firm will discuss the practical implementation of IFRS S1 and IFRS S2, the challenges and readiness considerations for Hong Kong-listed companies, and how sustainability disclosures strengthen investor trust.
Register now and enjoy a special registration rate by selecting “Non member tickets” and entering the discount code “HKIRASO”.
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IASB decisions on its Equity Method project (September 2026 meeting)
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At its September 2026 meeting, the IASB completed its technical discussions on the Equity Method project. The project will result in a revised IAS 28 Investments in Associates and Joint Ventures, which clarifies how to apply the equity method, reducing diversity in practice. The revised IAS 28 is expected to be issued in the first half of 2027 and will be effective for reporting periods beginning on or after 1 January 2029, with early application permitted.
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IFRS for SMEs Accounting Standard September 2026 Update
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The IFRS for SMEs Accounting Standard September Update is now available. This edition features a spotlight on accounting for agricultural activities, the latest status of the Exposure Draft Consolidation Exception, and resources published to support implementation of the Standard.
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IAASB video series: Audit evidence & risk response
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The International Auditing and Assurance Standards Board (IAASB) is proposing revisions to three foundational International Standards on Auditing, specifically ISA 330, The Auditor’s Responses to Assessed Risks; ISA 500, Audit Evidence; and ISA 520, Analytical Procedures. This four-part video series explores key aspects of the proposals in greater depth.
The Institute invites comments on the IAASB's proposed revisions by 15 November.
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Highlights from the IAASB September meeting
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The IAASB's September meeting focused on the future of auditing and assurance in a rapidly advancing technological environment. Key discussions included:
- Proposed guidance on applying quality management principles in ISQM 1 and ISA 220 when using AI-enabled tools.
- Stakeholder feedback on the 2028-2031 Strategy and Work Plan, including new technologies, implementation support and scalable standards.
- Growing demand for assurance over systems and controls, AI, cybersecurity and technology governance.
- Ongoing joint work with the International Ethics Standards Board for Accountants (IESBA) on the implications of private equity and external investment in accounting firms.
- Proposed revisions to the ISA 500 Series and feedback from the post-implementation review of ISA 540 (revised).
- Global adoption and implementation activities relating to ISSA 5000.
For more details, read the IAASB staff highlights for Days 1-2 and Days 3-4.
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Institute’s Ethics Survey 2026 results
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The Institute’s Ethics Committee has published the findings of the Ethics Survey 2026, which examines how digital transformation, artificial intelligence (AI), evolving professional responsibilities and sustainability initiatives are influencing the ethical attitudes and behaviours of professional accountants in Hong Kong.
The findings highlight the growing importance of professional judgement, competence and the responsible use of technology, while identifying new ethical challenges associated with AI adoption and sustainability reporting. The report also provides valuable insights into how professional accountants respond when ethical issues arise in the workplace.
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The Institute’s Ethics Committee meeting minutes
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Minutes of the 276th 2026 meeting are now available.
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2026 Handbook of the International Code of Ethics for Professional Accountants
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Key takeaways from the IESBA September meeting
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In this video, the IESBA Chair shares highlights from the September Board meeting, where the Board focused on firm culture and governance, technology, and adoption and implementation. Key takeaways include:
- Further progress on a proposed new requirement on firm culture and governance, with an Exposure Draft expected to be approved in December.
- Continued focus on technology, including the ethics implications of AI developments and the independence implications of new alliances between audit firms and technology providers.
- New adoption and implementation initiatives, including measures to simplify access to and use of the Code, and the development of additional guidance and awareness-raising activities for CFOs.
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HKFRS S1 and S2 implementation platform
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You are welcome to submit technical questions related to the implementation of HKFRS S1 and S2. Questions that meet the submission criteria will be considered for discussion at the upcoming meeting.
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Submission to the public consultation on proposed enhancements to tax concession regime for Corporate Treasury Centres in Hong Kong
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Following the Action Plan to Promote the Development of Corporate Treasury Centres (CTC) in Hong Kong, Financial Services and the Treasury Bureau (FSTB) published a consultation paper to invite comments on proposed enhancements to the tax concession regime for Corporate Treasury Centres in Hong Kong on 27 July 2026.
The consultation paper proposed the introduction of a tiered regime for CTC tax concessions to further promote the development of CTCs in Hong Kong, as follows:
- Tier 1: Enhancing the existing regime applicable to all existing qualifying CTCs (QCTCs) and corporations conducting intra-group financing business in Hong Kong.
- Tier 2: Introducing a pre-approval mechanism under which a pre-approved QCTC and its pre-approved associated corporations would be entitled to additional tax benefits or greater flexibilities.
The Institute made a submission to FSTB on 4 September 2026, expressing its support for the Government’s initiative to introduce a new two-tier framework, including a pre-approval mechanism under Tier 2, to attract more multinational groups to establish treasury operations in Hong Kong, and enable existing CTCs to expand their activities. The submission supported most of the specific proposals, while also recommending further enhancements.
The Government aims to issue administrative clarifications on the proposed enhancements by the end of 2026 and introduce the proposed amendments to the Inland Revenue Ordinance into the Legislative Council in the first half of 2027. Since the consultation paper did not specify the effective date of the tiered regime, the Institute suggested that the Government specify that it will take effect from the year of assessment 2026/27 and allow taxpayers to apply for the Tier 2 pre-approval regime upon gazettal of the relevant amendment bill.
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Announcements by the Inland Revenue Department
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Members may wish to be aware of the following matter:
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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/ Counter-terrorist financing (AML/CFT) notices and news
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Business and IP Valuation
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The Pilot Patent Valuation Support Scheme has been launched and announced by Intellectual Property Department (IPD) on 30 September 2026, to support eligible enterprises in obtaining professional quantitative valuations of their patent-related intellectual property assets (https://www.ip.gov.hk/en/ip-trading-centre/policy-initiatives/pilot-patent-valuation-support-scheme/index.html).
We are pleased that HKICPA members who fulfill certain eligibility requirements are named as designated valuation service providers by the IPD. As part of this initiative, the Institute has earlier conducted a survey among its members and compiled a list of members who, based on the information provided, appear to meet the eligibility requirements set out under the Scheme. The list, which may be added to over time, has been published on the Institute’s website, and on the official websites of IPD and the Hong Kong Technology and Innovation Support Centre (HKTISC), as a reference for SMEs seeking valuation professionals for patent and other IP assets. See also the Institute’s press release.
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Publications from other organizations:
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Disclaimer: Some sections contain external links and information from outside sources. We endeavour to link to reputable sources but the Institute is not responsible for the accuracy or content of the external site, and the content does not necessarily represent the views of the Institute. We recommend using your discretion when visiting these links.
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Copyright © 2026 Hong Kong Institute of CPAs. All rights reserved.
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