Your fortnightly technical updates newsletter (16 November 2022)

Offline Members' Handbook

Due to system limitations, the offline version of the Members’ Handbook is updated only up to Update No. 272 (March 2022) and does not reflect any subsequent updates. The offline version will be decommissioned in Q4 2022.

Please refer to the online Members’ Handbook for the latest version. The online version can also be downloaded for offline use.

Standard setting

Live webinar: Year-end Financial Reporting Reminders for 2022

The live webinar on 17 January 2023 will cover the key financial reporting considerations for preparing the December 2022 financial statements. These include new and amended Hong Kong Financial Reporting Standards (HKFRSs) that are effective for 2022, IFRS Interpretations Committee agenda decisions that are relevant to Hong Kong, and amendments to HKFRSs that have been issued but are not yet effective. The speaker will also share common application issues of HKFRS 9 Financial Instruments, HKFRS 15 Revenue from Contracts with Customers and HKFRS 16 Leases, including common pitfalls identified through the recent Accounting and Financial Reporting Council inspections.

Reminder: Institute live webinars on financial reporting in December

Join the following live webinars in December to stay updated:

Invitation to comments

The Institute is seeking comments on International Auditing and Assurance Standards Board’s (IAASB) Exposure Draft on proposed changes to International Standard on Auditing (ISA) 500 (Revised), Audit Evidence and proposed conforming and consequential amendments to other ISAs by 24 March 2023. Among others, the proposed changes:

Provide a principles-based approach to considering and making judgments about information intended to be used as audit evidence and evaluating whether sufficient appropriate audit evidence has been obtained;
Modernize ISA 500 to be adaptable to the current business and audit environment, while considering scalability for different circumstances, including the entity and the auditor’s use of technology, such as automated tools and techniques; and
Emphasize the role of professional skepticism when making judgments about information intended to be used as audit evidence and evaluating the audit evidence obtained.

Workshops and webinars on auditing and assurance

The live webinar titled “Industry update relating to licensed corporations” on 6 December covers the latest Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) regulatory developments relevant to the securities sector, as well as findings and observations on AML/CFT identified by the Securities and Futures Commission from their inspections of and enforcement actions against licensed corporations.

One month to the effective date of the new quality management standards

Today marks the one-month countdown to 15 December 2022, by which firms will need to have designed and implemented a system of quality management (SOQM) that complies with Hong Kong Standard on Quality Management (HKSQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements.

Below is a list of resources that help firms to implement the new and revised quality management requirements:

The Institute’s Quality Management Manual comprises a pre-populated Risk Assessment Tool with over 100 examples of risks for firms to customize and add their own risks based on their assessment and circumstances.
The Institute’s E-Learning series highlights the key requirements and provides practical applications and illustrated examples on how small and medium practitioners can meet the new requirements.
The Institute’s Frequently Asked Questions lists out common questions and responses in relation to the design and implementation of the firm’s SOQM.
The Institute’s Alert includes a 5-minute sound clip sharing by the former Chair of the IAASB on how a sole practitioner should identify the quality risks and responses for his/her firm; and an illustrative risk assessment process for the governance and leadership component of a firm’s SOQM.
The recorded panel discussions prepared by the International Federation of Accountants (IFAC) discuss how firms are planning its implementation, share practical examples, tips and suggested good practices.
In this article by the Institute of Chartered Accountants in England and Wales (ICAEW), a practitioner explains his firm’s strategy for the SOQM implementation, and how root cause analysis training can be tailored to individual businesses.

Online resource centres developed by the Institute and other professional bodies with collections of guidance on the quality management standard:

Revised standard on risk assessment for 2022 audits

Hong Kong Standard on Auditing (HKSA) 315 (Revised 2019), Identifying and Assessing the Risks of Material Misstatement is effective for audits of financial statements for periods beginning on or after 15 December 2021. It introduces major changes in the approach to risk identification and assessment which will have far-reaching effects for firms of all sizes.

The following resources provide tips and support for your implementation of HKSA 315 (Revised 2019):

The Institute’s Audit Practice Manual (2022 edition) has been updated to addresses the new and revised requirements of HKSA 315 (Revised 2019).
The Institute’s E-learning course on HKSA 315 (Revised 2019) provides a deep dive into the new and revised requirements and discusses their implementation within auditing.
CPA Canada’s publication Briefing for management and those charged with governance assists practitioners to explain the changes to their audit clients.

Online resource centres developed by the Institute and other professional bodies with collections of guidance on HKSA 315 (Revised 2019) and its relevant counterparts:

HKICPA resource centre

Access resources and publications at the Institute’s revamped Resource Centre to the Code which will keep you updated on the latest ethics pronouncements.

Revised non-assurance services and fee-related provisions

The revised non-assurance services and fee-related provisions of the Code of Ethics for Professional Accountants (Code) significantly strengthen the guardrails around auditor independence in two important areas that have the potential to create incentives influencing auditor behavior— non-assurance services (NAS) provided to audit clients and fees. The revisions will be effective for periods beginning on or after 15 December 2022; otherwise, they will be effective as of 15 December 2022.

The following resources provide tips and support for your implementation of the revision:

The Institute’s updated Ethics Circular 1 has incorporated the new and revised NAS provisions aiming at providing guidance to small and medium practitioners including sole practitioners, on their application of the Code to certain NAS and other topical issues.
The Institute’s e-learning course, titled “Revised non-assurance services and fee-related provisions of the Code of Ethics for Professional Accountants” provides an overview of the revisions and deeps dives into areas such as the new self-review threat prohibition for public interest entities audit clients; self-interest threats created by fees paid by an audit client; strengthened provisions regarding relative size of fees to the firm from a particular audit client, etc.

The Institute’s Resource Centre to the Code contains resources relating to the revisions, including those from the International Ethics Standards Board for Accountants.

ISSB at COP27 podcast

The International Sustainability Standards Board (ISSB) podcast, which provides highlights from the United Nations Climate Change Conference this year (COP27), is now available. These include ISSB announcements made at COP27, support for scalability and proportionality and collaboration on capacity building, and expectations over the next 12 months.

Supplementary ISSB Update November 2022

The ISSB Update provides a summary of discussions at its 1-3 November meeting. Topics discussed include general sustainability-related disclosures and climate-related disclosures.

Advocacy and practice development

Announcements by the Inland Revenue Department (IRD)

Members may wish to be aware of the following matters:

Relocation of IRD

The IRD, currently accommodated in Revenue Tower, Wanchai, will be relocated to the new Inland Revenue Centre at 5 Concorde Road, Kai Tak, Kowloon by phases in late 2022/ early 2023.

To mark the 25th Anniversary of the establishment of the HKSAR and the 75th Anniversary of the IRD, an exhibition with the theme "Past and Future" will be held from 19 December 2022 to 31 January 2023 on G/F of Inland Revenue Centre. The exhibition promises visitors a tour through the past, present and future of the IRD. All members of the public are welcome to the exhibition.

Please click here for more details on the relocation as well as the exhibition.

Announcements by the government

Members may wish to be aware of the following matters:

Anti-money laundering (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:

Why it’s essential for CEOs to believe when others are drowning in doubt from Chief Executive
Decision-making tips to improve your work performance from In the Black
How ethical accounting protects consumers and encourages growth from Bloomberg Tax
Firms must open clients’ eyes to cyber risks by AICPA

Install the HKICPA Events app

Disclaimer: Some sections contain information from outside sources. We endeavour to link to reputable sources but the Institute is not responsible for the accuracy of the content and the content does not necessarily represent the views of the Institute.

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