Update no. 278 contains the updated Statement 1.102 Corporate Practices (Model Articles of Association) (Revised October 2022) and Statement 1.103 Corporate Practices (Professional Indemnity) Rules (Revised October 2022).
Update no. 279 contains the following updates to Volume II of the Members’ Handbook:
- The Glossary of Terms Relating to Hong Kong Financial Reporting Standards (HKFRS) has been updated to incorporate the consequential amendments arising from standards and amendments that are effective for accounting periods beginning on or after 1 January 2023, and is now included in Section 2 of Volume II.
- HKFRS included in Section 1 of Volume II have been updated with editorial corrections.
Update no. 280 includes:
- Revision to relevant ethics and auditing pronouncements in Volume I and Volume III respectively, as a result of the Financial Reporting Council (Amendment) Ordinance 2021 which expanded the Accounting and Financial Reporting Council’s statutory functions to include the issuance of practising certificates to CPAs; registration of accounting practice units and local public interest entity auditors; and inspection, investigation and discipline of the accounting profession with effect from 1 October 2022. The Corporate Practice (Registration) Rules was repealed on 1 October 2022.
- Revision to Practice Note 851 (Revised) Reporting on the Annual Financial Reports of Non-governmental Organizations to align the requirements of the current version of Lump Sum Grant Manual issued by the Social Welfare Department (SWD) of the Hong Kong government; update the example engagement letter and example report to align with Hong Kong Standard on Assurance Engagements 3000 (Revised) Assurance Engagements Other than Audits or Reviews of Historical Financial Information and SWD’s proposed assurance opinion; and include recommended procedures for reporting on the annual financial report of a non-governmental organization.
Invitation to comment
The Institute is seeking comments on the International Accounting Standards Board (IASB) exposure draft Third edition of the IFRS for SMEs Accounting Standard by 16 January 2023.
List of new and amended HKFRS
The Institute has published the list of amended HKFRSs that are applicable to accounting periods beginning on or after 1 January 2022.
IASB September 2022 podcast and update
In a podcast, IASB Chair Andreas Barckow and Executive Technical Director Nili Shah talk through the highlights from the September 2022 IASB meeting. Topics discussed include goodwill and impairment, financial instruments with characteristics of equity, rate-regulated activities, primary financial statements and equity method. A meeting summary is also available.
IASB webinar on Primary Financial Statements project
A webinar provides the latest updates on the IASB’s Primary Financial Statements project, including on the IASB’s tentative decisions up to September 2022.
IASB webcasts on Dynamic Risk Management project
IASB technical staff have produced a series of eight webcasts to explain the Dynamic Risk Management project based on the IASB’s tentative decisions to date. The project’s aim is to get companies to reflect better in their financial statements how interest rate risk management affects the amount, timing and uncertainty of future cash flows.
IFRS Interpretations Committee September 2022 Update
The International Financial Reporting Standards (IFRS) Interpretations Committee Update provides a summary of discussions at its September meeting.
IFRS for SMEs Accounting Standard September 2022 Update
The latest IFRS for SMEs Accounting Standard Update, which summarizes the news, events and other information about the IFRS for SMEs Accounting Standard and related SME activities, is now available.
IFRS Foundation’s World Standard-setters Conference 2022: a summary
The IFRS Foundation has published a summary of its World Standard-setters Conference which was held on 26-27 September 2022. The summary includes updates from both the IASB and the International Sustainability Standards Board (ISSB).
Auditing and assurance
Revisions to Auditing and Assurance Technical Bulletin
The Institute has revised AATB 3 Implementation Guidance on Revised Hong Kong Standard on Investment Circular Reporting Engagements (HKSIR) 400 Comfort Letters and Due Diligence Meetings to provide guidance to assist reporting accountants to determine whether an engagement in accordance with HKSIR 400 (Revised) is appropriate with respect to an issuer’s transaction. A marked-up version identifying the amendments to AATB 3 is also available.
Implementing your system of quality management by 15 December 2022
In less than two-months time, firms will be required to have designed and implemented a system of quality management that complies with Hong Kong Standard on Quality Management 1 Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements which will be effective from 15 December 2022.
HKICPA Quality Management Manual
The Institute’s Quality Management Manual offers steps an audit firm needs to take to implement the requirements of the new and revised quality management standards. The manual itself will not be sufficient in ensuring the audit firm is in compliance with the requirements. Instead, it helps the audit firm to develop a customized system of quality management (SOQM), identify and assess quality risks for the audit firm, tailor and document the audit firm’s quality management policies and procedures, monitor and identify deficiencies in the audit firm’s SOQM and remediate them on a timely basis. The manual comprises of:
- Guidance notes on the requirements of the new and revised quality management standards and how to implement them in practice
- A pre-populated Risk Assessment Tool with over 100 examples of risks for firms to customize and add their own risks based on a firm’s assessment and circumstances
- Forms, checklists and worksheets to help implement the SOQM
- Sample policies and procedures to address potential quality risks
Members may also register for the e-learning recordings on the new quality management standards series to better understand the key requirements, applications and illustrated examples on how small and medium practitioners can meet the new requirements.
Revised standard on risk assessment for 2022 audits
Hong Kong Standard on Auditing (HKSA) 315 (Revised 2019) Identifying and Assessing the Risks of Material Misstatement is effective for audits of financial statements for periods beginning on or after 15 December 2021. It introduces major changes in approach to risk identification and assessment which will have far-reaching effects for firms of all sizes.
HKICPA Audit Practice Manual (2022 edition)
The 2022 edition is updated to reflect the new and revised requirements of HKSA 315 (Revised) Identifying and Assessing the Risks of Material Misstatement which is effective for audits of financial statements for periods beginning on or after 15 December 2021. Guidance notes, audit programmes and checklists, and the example audit engagement file accompanying the manual has also been updated for the latest auditing, financial reporting and other relevant disclosure requirements.
Members may also register for the e-learning recording that provides an overview of the key changes and a deep dive on the requirements of HKSA 315 (Revised 2019), and its implications on auditing which help practitioners plan ahead of audits with year ends on or after December 2022.
The Institute has submitted its comment letter on the International Auditing and Assurance Standards Board’s (IAASB) proposed narrow scope amendments to ISA 700 (Revised) Forming an Opinion and Reporting on Financial Statements, and ISA 260 (Revised) Communication with Those Charged with Governance, as a result of the revisions to the International Ethics Standards Board for Accountants’ (IESBA) International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) that require a firm to publicly disclose when a firm has applied the independence requirements for PIEs.
The Institute’s Auditing and Assurance Standards Committee meeting minutes
Minutes of the 402nd meeting is now available.
IAASB, IESBA welcome IOSCO statement of support for developing standards relating to assurance of sustainability-related information
This article covers the International Organization of Securities Commission’s (IOSCO) recognition of support and encouragement for the IAASB’s and IESBA’s work on developing standards relating to assurance of sustainability-related information. The IAASB and IESBA will continue to closely collaborate with IOSCO and other regulatory and standard-setting bodies to inform the development of robust standards that foster independent, high-quality engagements and globally consistent practices.
Ethics article on responding to NOCLAR by PAIBs
The Institute has published an article exploring the responsibilities of professional accountants in business (PAIBs) to respond to non-compliance with laws and regulations (NOCLAR) in accordance with the response framework set out in the Code of Ethics for Professional Accountants (Code) with illustrative scenarios applicable to PAIBs.
The Institute’s Ethics Committee meeting minutes
Minutes of the 251st meeting is now available.
IESBA staff and JICPA issue joint guidance illustrating application of IESBA Code to technology-related scenarios
Ethical Leadership In a Digital Era: Applying the IESBA Code to Selected Technology-Related Scenarios, released by the IESBA staff and the Japanese Institute of Certified Public Accountants (JICPA), provides seven hypothetical scenarios to illustrate how professional accountants can navigate practical issues in ethical leadership when using or implementing technology. Each scenario highlights the application of specific requirements and guidance in the IESBA Code, in particular those related to compliance with the fundamental principles of ethics, and auditor independence.
IESBA Handbook 2022 edition
The 2022 edition of the Handbook of the International Code of Ethics for Professional Accountants (including International Independence Standards) is now available. It replaces the 2021 edition and incorporates the following revisions that will become effective in December 2022:
- The revisions to the non-assurance services and fee-related provisions of the Code.
- The revisions to address the objectivity of an engagement quality reviewer and other appropriate reviewers.
- The quality management-related conforming amendments to the Code that were issued as a result of the finalization of the IAASB’s suite of quality management standards.
G7 reiterates commitment to mandatory climate disclosures and welcomes the ISSB’s work on global baseline
The G7 finance ministers and central bank governors have issued a statement on climate issues in which they reiterate their commitment to move towards mandatory climate-related financial disclosures and welcome the ISSB’s work to develop a truly global baseline of sustainability disclosures to inform investment decisions.
ISSB September 2022 meeting podcast and update
The ISSB podcast, with its chair and vice-chair discussing highlights from its September meeting, and a summary of the September meeting, are now available.
Announcements by the Inland Revenue Department (IRD)
Members may wish to be aware of the following matters:
- Notify IRD promptly of change of address.
- Businessman convicted of omitting company turnover and property rental income.
- Government starts legislation process to give effect to Multilateral Convention to implement tax treaty-related measures to prevent base erosion and profit shifting in Hong Kong.
- Financial Services and the Treasury Bureau, and Development and Reform Commission of Guangdong Province jointly organize seminar on offshore RMB bond financing in support of Greater Bay Area’s development.
- Interest on tax reserve certificates.
- IRD’s circular letter to tax representatives – final extended due date for “D” Code Returns.
- Stamp Duty statistics.
Electronic filing of profits tax return
With effect from 1 April 2022, profits tax returns can be furnished by service providers. Corporations and partnerships satisfying the conditions specified by the Commissioner of Inland Revenue can file their profits tax returns for any year of assessment from 2016/17 to 2021/22, and attach supplementary forms to profits tax returns S1, S2, S3 and S4 electronically under eTAX, either directly by themselves or through service providers. Please visit the IRD’s website for details.
Legislation and other initiatives
Announcements by the government
Members may wish to be aware of the following matters:
- Chief Executive’s speech in delivering “The Chief Executive’s 2022 Policy Address” to the Legislative Council.
- Speech by the Financial Secretary at Financial Services/Business Professional Services/FinTech Day of Investment Promotion Week.
- “Archives 50 Years” – a journey through Hong Kong's history and development.
- Terms of non-permanent CFA judges extended.
- Hong Kong Monetary Authority, banking and stored value facility sectors support the launch of Scameter to fight against fraud.
- The Environmental Protection Department announces special arrangement for Ex-gratia Payment Scheme for Phasing Out Euro IV Diesel Commercial Vehicles.
- Police launch “Scam Alert Subscription” on Anti-Deception Coordination Centre website.
- Resumption of airmail services to Australia, Brazil, Cyprus, France, Israel, Latvia, Malta, Mauritius, Mexico, Peru, United Arab Emirates and United States.
- The United Nations Sanctions (Libya) Regulation 2019 (Amendment) Regulation 2022 was gazetted on 14 October.
- The list of individuals and entities published under section 15 of the United Nations Sanctions (Mali) Regulation 2019 (Cap. 537CL) was updated on 6 October.
- The list of individuals and entities published under (i) section 31 of the United Nations Sanctions (Yemen) Regulation 2019 (Cap. 537CI); and (ii) section 30 of the United Nations Sanctions (Yemen) Regulation 2019 (Cap. 537CI) were updated on 6 October.
- 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 webpage.
Please refer to the full versions of Technical News on the Institute’s website: www.hkicpa.org.hk