Your fortnightly technical updates newsletter (23 March 2022)

Members' Handbook

Update No. 272 relates to amendments to Preface to Hong Kong Financial Reporting Standards (HKFRS) and Preface to HKFRS for Private Entities.

The Preface to HKFRS is revised to incorporate the due process of the Small and Medium-sized Entity Financial Reporting Framework and Financial Reporting Standard and post-implementation review policies. The Preface to HKFRS for Private Entities is revised to remove references to the Institute’s Standards & Quality Accountability Board that was disbanded a few years ago, to update terminologies to align it with those used by the International Accounting Standards Board (IASB) and to reflect that the due process of the HKFRS for Private Entities follows that of the HKFRS.

The update also contains an editorial correction to HKAS 24 Related Party Disclosures and the inclusion of a reminder when applying Accounting Bulletin 4 Guidance on the Determination of Realised Profits and Losses in the Context of Distributions under the Hong Kong Companies Ordinance.

Standard setting

Publication: Financial Reporting Considerations for Closing Out 2021

The Institute has issued the publication Financial Reporting Considerations for Closing Out 2021 which highlights key accounting considerations for entities preparing their December 2021 financial statements. The publication discusses new and revised HKFRS mandatorily effective from 1 January 2021, agenda decisions issued by the IFRS Interpretations Committee in 2021 that are relevant to Hong Kong entities, COVID-19-related financial reporting considerations and climate-related reporting. The considerations highlighted in the publication are also relevant for financial years ending after December 2021.

Workshops on HKFRS 17 Insurance Contracts

The Institute will hold a series of face-to-face workshops in May for professionals who have acquired an understanding of the basic principles of HKFRS 17 and now wish to develop a working knowledge of the standard.

16 May: General insurance – Deep dive application
17 May: General insurance – Reinsurance, presentation and disclosures, interaction with other standards
23 May: Life insurance – Deep dive application
24 May: Life insurance – Reinsurance, contract boundary, presentation and disclosures

E-learning: Year-end Financial Reporting Reminders for 2021

In this e-learning session, speakers share their insights on common application issues that warrant specific attention for 2021 financial statements. They also highlight new and amended HKFRS that are effective for 2021, and amendments to HKFRS that have been issued in 2021 but have yet to come into effect.

Speech by IASB Chairman at ICGN conference

Andreas Barckow, Chair of the IASB, delivered the keynote speech at the International Corporate Governance Network’s (ICGN) Global Sustainability Standards: Convergence and the Future event on 16 March 2022. He discussed what the IASB already has in place on accounting for sustainability-related matters in the financial statements and where the IASB may go in the future.

Update on impact of coronavirus outbreak on audits and auditors

The Institute’s Standard Setting Department has put together an Alert highlighting the key matters that auditors should consider that have been included in various publications issued by the Institute, international standard setters and other professional accountancy bodies since the pandemic began. Auditors should consider the areas highlighted in these publications amongst others when conducting their 2021 financial year-end audit engagements.

Live virtual workshops: New quality management standards series

Join the series in April to learn key requirements, applications and illustrated examples on how small and medium practitioners could meet the requirements of the new quality management standards.

Recording of virtual workshop on HKSA 315 (Revised 2019) Identifying and Assessing the Risks of Material Misstatement – Key requirements and implications on auditing

A recording is now available of the virtual workshop that provides an overview of the key changes and a deep dive on the requirements of the revised standard, and its implications on auditing which helps auditors to plan ahead of audits with year ends on or after December 2022.

Auditing and Assurance Standards Committee meeting minutes

Minutes of the 397th meeting is now available.

ICAEW audit and assurance resources

The Institute of Chartered Accountants in England and Wales (ICAEW) has the following resources that may be of interest to members:

Fraud risk factors in a financial statement audit webinar on 31 March for practical hints and tips to aid small and medium sized audit firms in assessing and responding to the risk of fraud
War in Ukraine: the auditing implications – this publication gives an overview of the key areas auditors may need to consider where one or more components of group audits are located in Ukraine, Russia or Belarus
Root cause analysis: finding the way and Resourcing root cause analysis – these articles explain the increasingly importance of root cause analysis (RCA) for audit firms to help identify the root cause(s) of the identified deficiencies for remediation under the new quality management standards and explore the respective benefits of keeping the RCA in-house and resourcing it externally
Resources and an online event series to help audit firms prepare for new quality management standards
Resource hub on articles, helpsheets and other practical resources and tools to support the implementation of ISA 540 (Revised)

Institute members can also subscribe to ICAEW’s International Standards for free to access a wide range of resources on auditing and ethics.

Invitation to comment

The Institute is seeking comments on the following International Ethics Standards Board for Accountants’ (IESBA) Exposure Drafts:

Proposed Revisions to the Code Relating to the Definition of Engagement Team and Group Audits by 30 April 2022
Proposed Technology-Related Revisions to the Code by 20 May 2022 (members may register for the IESBA’s webinar on 5 April to understand more on the proposed revisions to the Code)

Ethics Committee meeting minutes

Minutes of the 249th meeting is now available.

IESBA Global roundtables on enhancing ethics considerations relating to tax planning and related services

The IESBA will hold a series of three global virtual roundtables in April to obtain stakeholder feedback on matters relating to the development of an ethics standard addressing the provision of tax planning and related services by professional accountants in business and professional accountants in public practice. Register your interest by 31 March 2022.

Exploring the IESBA Code, A Focus on Technology – Artificial Intelligence

This news instalment of Exploring the Code by the International Federation of Accountants and IESBA highlights the application of the Code, in particular, the relevance of the Code’s fundamental principles and its conceptual framework to addressing ethics issues that might arise when artificial intelligence (AI) is used or implemented by professional accountants. Specifically, the installment sets out an AI scenario to assist accountants in identifying, evaluating and addressing threats to compliance with the Code’s fundamental principles.

IESBA March board meeting

The audio recording of the IESBA March board meeting is now available.

Advocacy and practice development

INSOL London 2022

The next INSOL Conference will be a physical event held in London from 26 to 28 June. An early bird rate is available to those registering before 25 March.

Details of the Conference are available at https://events.insol.org/website/6198/home/.

Update on tax filing due dates from Inland Revenue Department (IRD)

Given the impact of the fifth wave of the pandemic, and the resulting challenges faced by members and practitioners, the Institute has been communicating with the IRD and requested extensions of upcoming profits tax, salaries tax and other filing due dates, as well as asking for clear and early guidance on flexibility around other tax deadlines.

We are pleased to see that the IRD has responded favourably to some of the main requests made by the Institute and other stakeholders, and has announced arrangements for certain longer extended tax due dates, in particular, under the Block Extension Scheme for taxpayers who are represented. A quick summary of the arrangements was provided in a message to members. Further details are contained in the Circular Letter to Tax Representatives – Block Extension Scheme for Lodgement of 2021/22 Tax Returns.

Announcements by the IRD

Members may wish to be aware of the following matters:

Announcements by the government

Members may wish to be aware of the following matters:

AML notices

FATF publication on high-risk and other monitored jurisdictions

The Financial Action Task Force (FATF) published a statement on 4 March regarding high risk jurisdictions subject to a call for action, calling on its members and all jurisdictions to continue to apply specific measures and actions on Iran and the Democratic People's Republic of Korea.

The FATF also issued a notice on jurisdictions under increased monitoring, referring to other jurisdictions that have been identified to have strategic anti-money laundering/ counter-terrorist strategic deficiencies and that are working with the FATF to address these deficiencies. Following recent reviews, Zimbabwe is no longer subject to increased monitoring and updated statements are provided for some of the remaining 22 jurisdictions on the list. In addition, United Arab Emirates has been newly included on the list.

Sanctions

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:

COSO tips: Developing agility in a changing environment from Financial Management
Why business transformation projects fail by ICAEW
Using automation to supercharge FP&A teams from CFO.com
The rise of the social pillar: The ‘S’ in ESG by CPA Canada
There are 4 types of bosses. Here’s the one you want to work for – and why experts say they’re the most successful from CNBC
A positive attitude starts with math from Journal of Accountancy

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