Consultation Paper on Financial Reporting by Private Companies

(A) Summary

The consultation period expired on 30 September 2008 and a total of 122 written comment letters and responses to questionnaires were received. Six have indicated non-disclosure.

The Financial Reporting Standards Committee (FRSC) at its meeting in November 2008 has considered the comment letters received and noted that most of the comments received confirmed general support for providing relief to private companies from applying full HKFRSs and providing an option to large private companies to choose a simpler reporting framework. However, diverse opinions were expressed in terms of how these might be achieved.

The Chairman of the FRSC advised that the diverse opinions expressed is understandable given that the Consultation Paper did not set out clear recommendations, but merely asked for views based on several options. Furthermore, the IASB ED on IFRS for SMEs in existence at the time of consulting was rather complicated and at that time did not appear to provide an easy answer. This position is expected to change. The limitation of the cost based SME-FRF & FRS when applying it to a large private entity was also not highlighted sufficiently. With hindsight, it was generally agreed that the Consultation Paper was premature. In anticipation of the release of IFRS for Private Entities (name changed from IFRS for SMEs) by the end of 2008, the FRSC decided at its November 2008 meeting to defer the discussion of the way forward in respect of the private company financial reporting framework.

The FRSC meeting summaries are posted at the Institute's website. Click here to view the November 2008 meeting summary.

(B) Comment letters received