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Handbook Update No. 342 relates to the issuance of Amendments to Greenhouse Gas Emissions Disclosures (Amendments to HKFRS S2 Climate-related Disclosures) in Volume IV.
The amendments:
- clarify that an entity is permitted to limit measurement and disclosure of Scope 3 Category 15 greenhouse gases (GHG) emissions to financed emissions as defined in HKFRS S2;
- permit the use of alternative classification systems to disaggregate information about financed emissions;
- clarify the availability of the jurisdictional relief from using the GHG Protocol Standard, if only part of an entity is required to use a different method for measuring GHG emissions; and
- introduce a jurisdictional relief from using global warming potential values from the latest Intergovernmental Panel on Climate Change Assessment Report for converting GHG emissions.
These amendments are effective for reporting periods beginning on or after 1 January 2027, with early application permitted. The Impact Analysis sets out the high-level details of the amendments and their impact on entities in Hong Kong.
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The Institute is seeking comments on the following consultation documents:
- International Accounting Standards Board’s Exposure Draft Amendments to the Fair Value Option for Investments in Associates and Joint Ventures (Proposed amendments to IAS 28) by 16 March.
- Institute’s Exposure Draft Proposed Amendments to Accounting Guideline 5 (Revised) Merger Accounting for Common Control Combinations by 27 May.
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Educational publication: Financial Reporting Considerations for Closing Out 2025
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The Institute has issued an educational publication titled Financial Reporting Considerations for Closing Out 2025.
This publication aims to provide preparers with key reminders and insights for preparing their 2025 annual financial statements in accordance with HKFRS Accounting Standards. It covers three key areas:
- Amended HKFRS Accounting Standards mandatorily effective on 1 January 2025.
- Topical and emerging topics in relation to evolving tariffs, stablecoins, and relevant IFRS Interpretations Committee’s agenda decisions.
- New and amended HKFRS Accounting Standards issued but not yet effective as of 1 January 2025.
The insights and considerations in this publication are not only pertinent to the 2025 reporting period but also to future reporting periods, assisting preparers in maintaining compliance and staying informed about the latest developments in accounting standards.
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HKFRS 18 Navigator Issue 1: Getting Ready
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To support members in implementing HKFRS 18 Presentation and Disclosure in Financial Statements, the Institute has developed the HKFRS 18 Navigator. The series of targeted newsletters will be rolled out throughout 2026, focusing on critical areas to streamline your preparation. This first issue, Getting Ready has been released. It provides an overview of the major changes introduced by HKFRS 18, their potential impacts, and the initial steps entities should be taking now.
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New educational material to support implementation of the IFRS for SMEs Accounting Standard
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To support SMEs in applying the third edition of the IFRS for SMEs Accounting Standard, the IFRS Foundation has published a webcast on the revised Section 19 Business Combinations and Goodwill, which provides an overview of the key features of the revision.
In addition, a new episode of the IFRS for SMEs Accounting Standard podcast has been released. In the podcast, IASB technical staff and a member of the SME Implementation Group discuss how the standard is being applied and explore how the IFRS Foundation’s educational materials support its implementation.
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Educational publication: Auditing and Ethics Considerations for 2025 Year-end Audits
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This publication outlines focus areas for auditors conducting audits in accordance with Hong Kong Standards on Auditing (HKSAs).
- Accounting estimates: Enhanced focus on auditing accounting estimates under HKSA 540 (Revised).
- IT environment: Requirements under HKSA 315 (Revised 2019) to obtain an understanding of an entity’s IT environment.
- Group audits: Key changes in HKSA 600 (Revised) and the independence requirements for group audits under Section 405 of the HKICPA Code of Ethics for Professional Accountants (Code).
- Expanded PIE definition: Overview of the revised definition of a public interest entity (PIE) in the Code, enhanced auditor’s report disclosures on PIE independence requirements and related amendments to HKSAs.
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These FAQs provide guidance on disclosing the auditor’s signature in the auditor’s report.
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Invitation to comment for PIR of ISA 540 (Revised)
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The Institute invites comments on the International Auditing and Assurance Standards Board’s public consultation survey for post implementation review of ISA 540 (Revised) by 15 May. The survey focuses on three principal areas:
- Overall views on ISA 540 (Revised) Auditing Accounting Estimates and Related Disclosures, including related to non-authoritative guidance and tools that were issued to support implementation of the standard;
- Perceived benefits resulting from implementation of the revised standard; and
- Potential issues, challenges, or impacts experienced or observed relating to ISA 540 (Revised).
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AFRC issues open letter to PIE auditors
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The Accounting and Financial Reporting Council (AFRC) issued an open letter to all PIE auditors serving as reporting accountants for entities seeking initial public offerings. In the letter, the AFRC outlines its key expectations for PIE auditors and emphasizes their indispensable role in maintaining the quality of financial reporting and fostering public trust in Hong Kong’s capital markets.
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AFRC report “Transparency Reports: Building Trust and Unlocking Audit Excellence”
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The AFRC published a report highlighting key insights drawn from transparency reports published by audit firms. The report explains how relevant and meaningful disclosures assists audit committees and investors in making informed decisions regarding auditor appointments, while also supporting the development of high-performing audit teams.
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IFAC Releases Research and Online Resource “Private Equity Investment in Accountancy”
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The International Federation of Accountants (IFAC) has released new global research
analyzing the rapid growth of private equity (PE) investment in professional accountancy firms and its potential implications for the future of the profession. The research assesses key issues related to the impact of PE investment and highlights key takeaways to help accountants understand, evaluate, and guide their PE investment decisions.
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Updated Q&As: HKICPA revisions to the definitions of Listed Entity and Public Interest Entity in the Code
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The Institute has updated the Questions & Answers on the definitions of listed entity and PIE in the Code to provide additional guidance on the following areas:
- Additional ethics and auditing requirements applicable to audits of PIEs under the Code
- Key differences between the PIE definition under the Code and that under the Accounting and Financial Reporting Council Ordinance
- The impact of PIE classification on auditor eligibility and independence requirements
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IESBA video: Decoding Ethics
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The IESBA podcast Decoding Ethics episode 2 explores quantum computing, why it matters now for the accounting profession and how ethical judgment remains central in an accelerating technological landscape.
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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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Securities and Futures Commission (“SFC”) issued the “Report on the 2023/24 thematic cybersecurity review of licensed corporations”.
See the report for more details.
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Award of Contracts by the ORO
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The Official Receiver's Office (ORO) has awarded contracts for the tender for taking up of Appointment as Provisional Liquidators under section 194(1A) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) (Tender Reference: OR/T/2025).
The notice of award of contracts is accessible at the ORO’s website.
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Institute’s response to 2026-27 budget
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The Government’s 2026-2027 Budget included a number of measures in line with proposals by the Institute in its earlier budget submission, including promoting digitalization and the application of artificial intelligence (AI) and quantum computing; promoting commodities trading, including gold trading, through further tax incentives, reviewing and optimizing the tax arrangements for research and development (R&D) expenditure, broadening the scope of qualifying investments eligible for family office tax concessions; supporting the development of the intellectual property (IP) sector by reviewing tax deductions for IP acquisitions; amending the Stamp Duty Ordinance to relax the restrictions on intra-group relief; introducing measures to support Mainland enterprises in using Hong Kong as a platform to “go global”, increasing personal and married person’s allowances, and promoting the “silver economy”. Overall, the Institute considers that the proposals set out in the Budget are concrete and pragmatic, aimed at accelerating Hong Kong’s economic transformation, consolidating Hong Kong’s brand as a world-class financial market and aligning with the national 15th Five-Year Plan to support national development.
The Institute’s president, Stephen Law stated, "We broadly welcome the measures proposed in the Budget, many of which are consistent with the directions recommended by the HKICPA and will help enhance Hong Kong’s long-term competitiveness. We are also pleased to see the gradually improving outlook for public finances. We hope the Government will continue to strike a balance between prudent financial management and investing for the future, driving steady growth in the economy and government revenue, so that the public can share in the fruits of economic success. On the other hand, in the face of increasing global competition, the Government should co-operate with different sectors to continue to boost the financial market, including expanding the range of investment products to consolidate Hong Kong status as an international financial centre”.
While the Institute welcomed the proposal to set up an Advisory Committee on Tax Policy, chaired by the Financial Secretary, to gather views from the commercial, industrial and professional sectors, to reinforce Hong Kong’s economic development, something that the Institute has previously proposed, the Institute continued to advocate for a more comprehensive review of Hong Kong’s tax system. The review should focus on enhancing tax certainty and efficiency, and continuing to explore additional sources of revenue to strengthen the resilience of Hong Kong’s public finances, in the face of challenges such as an ageing population and increasing healthcare and welfare demands. The Institute’s submission also contained specific suggestions for potential revenue-raising measures.
See the Institute’s press release for more details.
Highlighting the Institute’s thought leadership on public finance matters, the Institute’s comments were covered extensively in the media, including China Daily, RTHK, Ming Pao, and more.
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Announcements by the Inland Revenue Department and other Budget-related announcements
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Members may wish to be aware of the following matters:
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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 (AML) notices and news
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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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