NAVIGATION

2024 Annual Investigation and Compliance Report

The Accounting and Financial Reporting Council (AFRC) has published the 2024 Annual Investigation and Compliance Report that highlights the significant findings and observations from concluded and ongoing investigations and enquiries for the reporting period ended 31 March 2024.

The Institute’s Financial Reporting Standards Committee meeting minutes

Minutes of the July 2024 meeting is now available.

Reminder: Institute live webinars on financial reporting

Don’t miss the following live webinars in September:

13 September: Common application issues of HKFRS 3 Business Combinations
25 September: Accounting implications of HKFRS 17 Insurance Contracts for non-insurers

Supplementary IASB update August 2024

The International Accounting Standards Board (IASB) has published an update of its discussions relating to the project, Power Purchase Agreements, at its August supplementary meeting.

Auditor’s reporting requirements under the enhanced WPRS

The enhanced Producer Responsibility Scheme on Waste Electrical and Electronic Equipment (WPRS) took effect on 1 July 2024. This enhancement has removed the requirement for suppliers and sellers to provide recycling labels when they distribute and sell regulated electronic equipment. However, the Environmental Protection Department (EPD) of the HKSAR Government has clarified that auditors reporting on the suppliers’ returns under the WPRS must still address the reporting requirements for recycling labels if the returns include quantities of labels reported prior to 1 July 2024. For guidance on this scenario, please refer to Q15 in the EPD's FAQ.

The Institute’s Circular on Reporting under Section 20 of the Product Eco-responsibility (Regulated Electrical Equipment) Regulation (Cap. 603B) offers guidance to practitioners engaged to report on suppliers’ returns under the WPRS. The circular will be updated in due course to reflect the revised requirements of the enhanced WPRS.

Disclosure in the auditor’s report on the application of PIE independence requirements

The International Ethics Standards Board for Accountants (IESBA) recently released an update to its Questions and Answers (Q&As) publication on the IESBA Revisions to the Definitions of Listed Entity and Public Interest Entity (PIE) in the IESBA Code of Ethics. One notable update includes the revision of Q&A 20 on forms of public disclosure of the application of the PIE independence requirements when performing an audit of financial statements. Q&A 20 explains that the International Auditing and Assurance Standards Board (IAASB) has revised ISA 700 (Revised) so that the auditor’s report can be used as a mechanism for firms to comply with the transparency requirement set out in the IESBA PIE revisions.

In July, the Institute released amendments to Chapter A of the HKICPA Code of Ethics for Professional Accountants relating to the PIE revisions including local refinements, as well as the narrow scope amendments to HKSA 700 (Revised) and HKSA 260 (Revised) as a result of the corresponding amendments by the IAASB to operationalize changes to the Code that require a firm to publicly disclose when a firm has applied the independence requirements for PIEs. The PIE revisions and amendments to HKSA 700 (Revised) and HKSA 260 (Revised) are effective for audits of financial statements for periods beginning on or after 15 December 2024.

ISA for LCE authority of the standard supplemental guidance

The IAASB has developed a supplemental guidance to help users in determining the appropriate situations to use the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE). It is particularly beneficial for legislative and regulatory authorities implementing the standard, firms developing related policies or procedures, and auditors determining whether the standard is appropriate to use for a specific engagement.

IAASB Handbook 2023-2024 edition

The 2023-2024 edition of the Handbook of the International Quality Management, Auditing, Review, Other Assurance, and Related Services Pronouncements is now available. This edition includes International Standard on Auditing (ISA) 600 (Revised), Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors) and ISA for LCE.

ICAEW article on auditor obligations in fraud detection

This article by the Institute of Chartered Accountants in England and Wales (ICAEW) themed "Auditor obligations on fraud in the spotlight" highlights the important of auditors in identifying fraud risks. It emphasizes the importance of being aware of how legal requirements and auditing standards guide obligations when reporting suspicions of fraudulent activities.

If you are interested in accessing the ICAEW online audit and assurance resources, please contact Member Engagement Department at me@hkicpa.org.hk for free enrolment on a first-come, first-served basis. Limited spots available. Please note that your name and email address will be shared with the ICAEW for communication purposes.

IESBA revised Q&As on PIE Provisions

The IESBA recently released an update to its Questions and Answers (Q&As) publication to the Revisions to the Definitions of Listed Entity and Public Interest Entity (PIE) in the IESBA Code of Ethics. The update introduces two revisions to the Q&As:

A new Q&A addressing the scenario where a jurisdiction either lacks a PIE definition or has excluded one or more of the mandatory categories in the IESBA PIE definition.
An amendment to align with the revisions to ISA 700 (Revised) arising from Track 1 of the IAASB’s project to use the auditor’s report to enhance transparency about the relevant ethical requirements for independence applied for certain entities, such as PIEs, when performing an audit of financial statements.

IESBA Handbook 2024 edition

The IESBA released the 2024 Handbook of the International Code of Ethics for Professional Accountants (including International Independence Standards) which includes:

The revisions relating to the definition of a public interest entity which, among other matters, specifies a broader list of mandatory public interest entity categories.
Changes to the definitions of “audit client” and “group audit client” in the Glossary arising from the approved revisions to the definitions of listed entity and public interest entity.
Technology-related provisions of the Code.

ICAEW article on navigating AI

In this article themed “What are the main ethical challenges of implementing AI?”, the ICAEW highlights three key ethical challenges leaders face when implementing AI, including misuse or inappropriate use of AI, treatment of copyrighted material, and hallucinations (where AI outputs may be unreliable).

The Institute’s Ethics Committee meeting

Minutes of the 264th meeting are now available.

HKICPA resource centre

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

IFRS Foundation and International Sustainability Standards Board (ISSB) at Climate Week New York City

The IFRS Foundation is hosting several events during Climate Week New York City, from 22 to 29 September. Taking place on 25 September, the session themed Sustainability disclosure in practice: insights on the adoption and implementation of the ISSB Standards will bring together preparers, investors and participants from the wider sustainability practitioner community to share insights from their implementation journeys and perspectives on progress to date in applying the ISSB Standards. The session is available for both in-person and online participation. Click here to register.

Joint announcement by the HKEX and Securities and Futures Commission

The HKEX and Securities and Futures Commission have issued a Joint Announcement in relation to Temporary Modifications to Requirements for Specialist Technology Companies and De-SPAC Transactions. The modifications include reductions in the initial market capitalization thresholds for the listing of Specialist Technology Companies (STCs), and changes to the minimum independent third party investment requirement and independence requirement for third party investors in De-SPAC transactions. Effective from 1 September, the temporary requirement changes intend to provide a viable listing pathway for new economy companies with high growth potential, and to mitigate the risk and difficulty in valuing STCs in De-SPAC transactions.

Joint Climate Finance Conference

The Hong Kong Monetary Authority and Dubai Financial Services Authority are co-organizing a Joint Climate Finance Conference in Hong Kong on 16 September. Interested parties can register on the conference website.

Charging of ad valorem fees in compulsory winding-up and bankruptcy cases

Following a recent Court of Appeal case confirming the automatic and mandatory nature of ad valorem (AV) fees, the Official Receiver has implemented immediate changes to its practice regarding the collection of AV fees in compulsory winding-up and bankruptcy proceedings.

For further details, please refer to the circular from the Official Receiver’s Office.

Upcoming conferences

Singapore Insolvency Conference 2024

The Institute is a supporting partner for the conference taking place in Singapore on 9-10 October. Members of the Institute’s Restructuring and Insolvency Faculty (RIF) and Institute members can enjoy the special enrolment rate for members of the Restructuring and Insolvency Organisations Forum.

Hong Kong Regional Restructuring and Insolvency Conference

The Institute is a supporting organization for this International Insolvency Institute’s one-day conference, set to take place in Hong Kong on 1 November, featuring a lineup of prominent and high-profile speakers. Members of the Institute’s RIF can enjoy the discounted “member” rate for enrolment (with an early bird rate until 30 September).

Announcements by the Inland Revenue Department

Members may wish to be aware of the following matters:

Announcements by the government

Members may wish to be aware of the following matters:

Anti-money laundering (AML) notices and news

AML notices:

The List of terrorists and terrorist associates designated by the United Nations Security Council, published pursuant to the United Nations (Anti-Terrorism Measures) Ordinance (Cap. 575) was gazetted on 26 August. See the relevant UNSC press release.
The List of individuals, groups, undertakings and entities published under section 25 of the United Nations Sanctions (ISIL and Al-Qaida) Regulation (Cap. 537CB) was updated on 26 August.
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.

Publications from other organizations:

5 proven strategies for retaining your best customers from Entrepreneur.com
6 steps to create a successful ERP implementation from Financial Management
The power of payment data to enhance CFO decision making from CFO.com
3 ways to use generative AI to save time today from Journal of Accountancy

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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