Your fortnightly technical updates newsletter (18 May 2022)

Standard setting

Live webinar on HKFRS 3 Business Combinations

The live webinar on 21 June will go through the recent amendments to HKFRS 3 which revise the definition of a business and introduce the optional concentration test. Speakers will share with participants the differences in accounting for business combinations and asset acquisitions, as well as common application issues of HKFRS 3. They will also provide an update on the development of related IASB’s projects.

IASB April 2022 podcast & update

The International Accounting Standards Board (IASB) podcast, with its chair and executive technical director highlighting the projects discussed during its April meeting, and a summary of the April meeting, are now available.

HKICPA resource centres

Access resources and publications at the Institute’s revamped Auditing and Assurance Resource Centre which will keep you updated on the latest auditing and assurance pronouncements.

Also visit the Institute’s New and Major Standards Resource Centre for resources on new and major pronouncements that will come into effect soon, including quality management for firms and engagements and HKSA 315 (Revised 2019) Identifying and Assessing the Risks of Material Misstatement.

Recordings of the New Quality Management Standards Series

Register for the e-learning series which covers key requirements, applications and illustrated examples on how small and medium practitioners can meet the requirements of the new quality management standards.

New non-authoritative guidance on fraud in an audit of financial statements

The International Auditing and Assurance Standards Board (IAASB) released a non-authoritative guidance – The Fraud Lens – Interactions Between ISA 240 and Other ISAs that illustrates the relationship and linkages between the captioned auditing standards when planning and performing an audit engagement and reporting thereon.

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:

Quality management: iterating for improvement discusses the new and revised quality management standards aimed at comprehensively and actively managing risks to quality, through greater accountability, improved focus on leadership and culture, and continuous improvement through a required monitoring and remediation feedback loop
What do audit quality risks look like? illustrates examples of external and internal quality risks that auditors should identify and mitigate before significant problems are created
Quality management: what the new standards mean? emphasizes the benefits arising from the new and revised quality management standards which will become effective soon and how they move from a reactive approach to a risk-based proactive managing approach to quality

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

Invitation to comment

The Institute is seeking comments on the following issued by the International Ethics Standards Board for Accountants (IESBA):

Strategy Survey 2022 for the development of the IESBA’s strategy and work plan 2024-2027 by 8 June 2022
Exposure Draft on Proposed Technology-Related Revisions to the International Code of Ethics for Professional Accountants (including International Independence Standards) by 20 May 2022. Members may watch the IESBA’s webinar to understand more on the proposed revisions.

IESBA’s webinar on recent expansion of the definition of a public interest entity

Register for the IESBA's global webianr on 25 May on its recently released pronouncements, revised definitions of a public interest entity (PIE) together with other revisions to the Code. The revised provisions specify a broader list of categories of entities as PIEs whose audits should be subject to additional independence requirements to meet stakeholders’ heightened expectations concerning auditor independence when an entity is a PIE. The revisions will become effective for audits of financial statements for periods beginning on or after 15 December 2024. Early adoption is permitted and encouraged.

Report on IESBA accomplishments for 2020-2021

IESBA released a report – Elevating Ethics and Independence Standards for a Complex World that showcases the significant progress that the IESBA has made on behalf of the public interest, provides an overview of the IESBA’s extensive stakeholder outreach efforts and information about its partnership with the International Federation of Accounts (IFAC) to promote awareness, adoption, and effective implementation of the Code as well as provides an overview of the IESBA’s Consultative Advisory Group.

Benchmarking international independence standards

The IESBA published the Benchmarking International Independence Standards Phase 1 Report: Comparison of IESBA and the U.S. SEC/ PCAOB frameworks to promote awareness and further adoption of the Code. The reportdetails the findings of a study comparing the independence provisions of the Code applicable to audits of financial statements of public interest entities (PIEs) with the relevant rules of the U.S. Securities and Exchange Commission (U.S. SEC) and the US Public Company Accounting Oversight Board (PCAOB). Without making judgements as to the relative merits of the two independence frameworks, the report highlights the similarities and key differences between the Code and the U.S. SEC and PCAOB rules in areas of greatest interest to stakeholders, including the permissibility of non-assurance services to audit clients, fees, long association with an audit client, and business and financial relationships. The IESBA will consider the findings of the benchmarking analysis in developing its 2024-2027 Strategy and Work Plan.

Alongside the detailed report, an abridged report is also published to provide an overview of the main similarities and differences, as well as an additional publication with further information on the background and objectives of the initiative.

Advocacy and practice development

Announcements by the Inland Revenue Department (IRD)

Members may wish to be aware of the following matters:

Annual meeting with the IRD

The annual meeting between representatives of the Institute's Taxation Faculty Executive Committee and the IRD took place on 13 May. At the meeting, the IRD confirmed the extended due dates for lodging profits tax returns for the year of assessment 2021/22. These are:

Accounting date code	Extended due date	Further extended due date if opting for e-filing
"N" code	30 June 2022	14 July 2022
"D" code	30 August 2022	14 September 2022
"M" code	15 November 2022	29 November 2022
"M" code - current year loss cases	31 January 2023	No further extension

The meeting minutes of the 2021 annual meeting are available on the Institute’s website. Please click here for more details.

Announcements by the government

Members may wish to be aware of the following matters:

AML notices

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:

War in Ukraine: Twelve disruptions changing the world from McKinsey & Company
Prepare your company for the next COVID wave from Harvard Business Review
How to effectively fill skill gaps from Financial Management
Meeting the demand for sustainability disclosures and investments from CFO.com

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