Your fortnightly technical updates newsletter (20 January 2021)

Standard setting

IFRS Interpretations Committee podcast

The December International Financial Reporting Standards (IFRS) Interpretations Committee podcast, highlighting key activities undertaken by the Interpretations Committee to support the consistent application of IFRSs, is now available.

IFRS Foundation education material on going concern

The IFRS Foundation has published educational guidance to highlight relevant requirements in IFRSs for companies to assess their ability to continue as a going concern. The education material aims to support the consistent application of IFRSs, and does not add to or change any existing requirements.

IFRS Foundation webinars on IFRS 9, IFRS 15, and IFRS 16

The IFRS Foundation has organized six webinars in January and February aimed at academics to stimulate research into IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers, and IFRS 16 Leases, and to inform the post-implementation reviews of these standards.  Each webinar will consist of an overview of the standard’s objectives and related research opportunities, followed by questions and answers.

IASB’s webinar on Discussion Paper Business Combinations under Common Control

On 27 January, a webinar by the staff of the International Accounting Standards Board (IASB) on Discussion Paper DP/2020/2 Business Combinations under Common Control will take place. This webinar will provide an overview of the paper, explain the IASB’s preliminary views, and give viewers an opportunity to ask questions. Members can submit their comments on the paper by 5 July. 

Pre-order of Audit Practice Manual (2016 edition) and 2020 update kit

Given recent demand from members who wish to subscribe to the APM now, the Institute is accepting pre-orders for the APM (2016 edition) and 2020 update kit. The pre-order period will close on 27 January with anticipated delivery by the end of February. As this is a limited print run, the Institute does not guarantee the supply of APM (2016 edition) to parties that do not a pre-order.

Webinar on revisions to the Code of Ethics for Professional Accountants to promote the role and mindset expected of professional accountants

Join the webinar on 19 February to learn more about the revisions to the Institute’s Code of Ethics for Professional Accountants (Code) to promote the role and mindset expected of professional accountants. The Deputy Chair of the International Ethics Standards Board for Accountants (IESBA) will discuss the revisions including the relationship between compliance with the Code and a professional accountant’s responsibility to act in the public interest; enhancement to the fundamental principles of the Code etc. The webinar will also provide an overview of the IESBA’s Definitions of Listed Entity and Public Interest Entity Project.

Revision to the Code on objectivity for engagement quality reviewers

The IESBA released revisions to the International Code of Ethics for Professional Accountants (including International Independence Standards) addressing the objectivity of an engagement quality reviewer and other appropriate reviewers. This project dovetailed with the International Auditing and Assurance Standards Board’s development of International Standard on Quality Management (ISQM) 2, Engagement Quality Reviews.

Revisions to the International Integrated Reporting Framework

The International Integrated Reporting Council recently published revisions to the International Integrated Reporting Framework to enable more decision-useful reporting. The revisions focus on a simplification of the required statement of responsibility for the integrated report; improved insight into the quality and integrity of the underlying reporting process; a clearer distinction between outputs and outcomes; and a greater emphasis on the balanced reporting of outcomes and value preservation and erosion scenarios.

Advocacy and practice development

Institute submissions

Response to HKEX’s Concept Paper on Modernising Hong Kong’s IPO Settlement Process 

The Institute issued a submission in response to the Concept Paper, issued by the Stock Exchange of Hong Kong Limited (HKEX), which proposes to introduce a new purpose-built software platform, known as the Fast Interface for New Issuance or “FINI”. The platform will coordinate, streamline and improve workflows between the various parties involved in the settlement process for initial public offerings (IPOs), and so be able to shorten the IPO settlement timetable from the existing “T+5” to “T+1”, in line with other major capital markets.

The Institute’s Corporate Finance Advisory Panel (CFAP), in principle, supports the overall proposal outlined in this Concept Paper and makes certain additional suggestions and observations to HKEX.

Response to SFC Consultation Paper on the Management and Disclosure of Climate-related Risks by Fund Managers 

The Institute issued a submission in response to the Consultation Paper issued by the Securities and Futures Commission (SFC) on the management and disclosure of climate-related risks by fund managers.

The CFAP, in principle, supports the thrust of the proposals, which is to require fund managers of collective investment schemes to be able to assess the potential impact of environmental, social and governance (ESG)-related issues on their business, and to disclose more ESG information, in particular about the management of climate-related risks, to investors. Under the proposals, there will be enhanced standards for “large fund managers”, i.e. those with assets under management of HK$4 billion of more. The CFAP also considers that additional practical guidance should be issued by the SFC to help fund managers to comply the proposed new requirements.

Consultation conclusions

On 31 December, the Hong Kong Monetary Authority (HKMA) issued Consultation Conclusions on its rules on contractual stays on termination rights in financial contracts for authorized institutions. See the press release.

After considering the feedback from respondents, the HKMA set out its responses in the consultation conclusions, and has adopted appropriate refinements in developing the draft Stay Rules. The draft text of the Stay Rules is issued at the same time for industry consultation. The deadline for submission to the HKMA is 31 January.

The Institute issued a response to the original consultation paper in March 2020.

Institute announces proposals for the 2021-22 budget

The Institute held on an online media briefing on 20 January, hosted by the president, the chair of the Taxation Faculty Executive Committee (TFEC) and the convenor of the TFEC’s Budget Proposals Subcommittee, to announce its tax policy and budget proposals 2021-22. Under the title, Preparing for the recovery, the proposals, which have been submitted to the financial secretary, include a range of different measures, aimed at revitalizing the economy, enhancing public finance and taxation, helping citizens and businesses to adapt to the “new normal”, through more extensive digital transformation, as well as measures to improve the local environment and the community’s well-being.

Announcements by the Inland Revenue Department

Members may wish to be aware of the following matters:

• Automatic Exchange of Financial Account Information
  • Inland Revenue Ordinance (Amendment of Section 50A) Notice 2020
  • Inland Revenue Ordinance (Amendment of Schedule 17D) Notice 2020 
  • the relevant new FAQ34 
• Profits tax concessions for insurance-related businesses to commence operation on March 19
• IRD responds to media enquiries on property stamp duty matters arising from intervention into Messrs Wong, Fung & Co
• Business Registration Notice
• Change of Postal Address of Employer
• Legislative Council question on alleviating the financial burdens of members of the public
• Stamp Duty statistics (December 2020)

Announcements by the Government

Members may wish to be aware of the following matter:

• Government extends social distancing measures under Prevention and Control of Disease Ordinance

AML news and notices

Members may be interested in the United Kingdom Government’s recently published updated risk assessment of money laundering and terrorist financing in the UK. Chapter 9 covers accountancy services.

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:

• 3 'Must ask' questions to guide your strategic plans from ThinkAdvisor
• Good leadership is about asking good questions from Harvard Business Review
• The tech that will invade our lives in 2021 from The New York Times
• Finance transformation: How exactly do you start? from Financial Management
• Deterring and detecting fraud at a time of heightened risk from Journal of Accountancy

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