NAVIGATION

MEMBERS' HANDBOOK

Handbook Update No. 316 relates to the following areas of Volume II of Members’ Handbook:

(i) Issuance of Annual Improvements to HKFRS Accounting Standards — Volume 11, which consists of narrow-scope or minor amendments to the following accounting standards and accompanying guidance:

Hong Kong Financial Reporting Standard (HKFRS) 1 First-time Adoption of Hong Kong Financial Reporting Standards
HKFRS 7 Financial Instruments: Disclosures
Guidance on Implementing HKFRS 7 Financial Instruments: Disclosures
HKFRS 9 Financial Instruments
HKFRS 10 Consolidated Financial Statements
Hong Kong Accounting Standard 7 Statement of Cash Flows

The amendments will become effective for annual reporting periods beginning on or after 1 January 2026. Earlier application is permitted.

(ii) Accounting Guideline (AG) 7 Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars has been revised to align the references and terminologies in AG 7 with the Hong Kong Financial Reporting Standards and the Hong Kong Listing Rules. The revised AG 7 is effective upon issuance.

Institute live webinars on Hong Kong Risk-based Capital (HKRBC): Key Features, Participating (Par) Fund Management and Implementation Issues (Part 1 and Part 2)

The HKRBC for Hong Kong insurance industry came into operation on 1 July 2024. The Institute is holding two informative live webinars to update participants on the latest developments, including Par Fund Management and the key challenges associated with HKRBC compliance. These webinars aim to equip participants with knowledge and insights from both accounting and actuarial perspectives to ensure effective implementation of the HKRBC.

Details of the webinars are as follows:

Part 1: 10 October 2024, 12:30 p.m. to 2:00 p.m.
Part 2: 15 November 2024, 1:00 p.m. to 2:00 p.m.

Invitation to comment

The Institute is seeking comments on Proposed Hong Kong Standard on Auditing for Audits of Financial Statements of Less Complex Entities (HKSA for LCE) by 17 November. The proposal is to modify Part A of the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE) issued by the International Auditing and Assurance Standards Board’s (IAASB) regarding the authority of the standard concerning the scope of the proposed HKSA for LCE in a local context, which includes:

Refining the classes of entities prohibited from using the proposed HKSA for LCE to entities having public interest characteristics within a Hong Kong context.
Establishing quantitative thresholds to determine the appropriate use of the proposed HKSA for LCE within a Hong Kong context.

The IAASB has also issued The International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE) – Authority Supplemental Guidance to help users in determining the appropriate situations to use the ISA for LCE, which further explains matters and circumstances that may be relevant in determining the appropriate use of the ISA for LCE in accordance with Part A of the standard.

Empower the audit process with newly updated resources

The Institute has updated A Roadmap of an Audit Engagement to provide valuable resources that empower practitioners throughout the audit process. The roadmap outlines the essential steps of the audit engagement journey, offering clarity and direction at every stage. By building on key inspection findings related to the application of auditing and accounting standards identified by the Accounting and Financial Reporting Council (AFRC) in their inspection reports, this roadmap ensures that practitioners are well-equipped to handle the complexities of the audit engagements.

A collection of technical resources and publications is also available at the Institute’s Auditing and Assurance Resource Centre which will keep you updated on the latest auditing and assurance pronouncements.

HKICPA webinar series: Towards an effective and efficient audit

Participate in the webinars scheduled on 23 October, focusing on audit sampling and journal entry testing, and 29 October, which will delve into external confirmations and audit documentation. Speakers will highlight and elaborate on relevant requirements with illustrative examples. They will also discuss some of the pitfalls identified recent AFRC inspections.

Virtual Conference: Annual Auditing Update 2024: Navigating the evolving landscape together

Topics covered at the conference on 26 October include:

Updates on the IAASB projects on fraud and PIE Track 2 project.
Overview of the proposed HKSA for LCE
Key changes and requirements of HKSA 600 (Revised), Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors)
Updates on local ethics and International Ethics Standards Board for Accountants’ (IESBA) projects, including the definitions of listed entity and public interest entity and ethics survey observations.

Maintaining the quality of cross-border audit services

The AFRC emphasized in its press statement that maintaining a high level of audit quality remains the AFRC’s foremost priority. Regarding cross-border audit services, the AFRC and the Ministry of Finance of the People’s Republic of China share a strategic interest in further strengthening their regulatory cooperation based on close mutual support and reliance.

Balancing effectiveness and timeliness in audit and assurances standard setting

The IAASB released a public report that offers a comprehensive overview of the IAASB’s progress in addressing key public interest issues and reiterates its strategic direction to continue bolstering confidence in audits and assurance engagements. Key highlights of the report include the following aspects:

Global adoption of IAASB Standards
Project timelines and milestones
Transition to the next strategic phase
Advancements in organizational structure
Outreach and collaboration

ICAEW publications

The Institute of Chartered Accountants in England and Wales (ICAEW) has released the following two publications:

The sustainability assurance and reporting landscape

This article provides an overview of sustainability reporting and assurance developments with the primer on new and emerging regulations, standards and support resources. The global sustainability assurance standard proposed by the IAASB which is expected to be finalized in September, will be particularly important for auditors undertaking assurance engagements related to disclosures on environmental, social and governance (ESG) factors, certain aspects of climate and sustainability more broadly.

Applying a forensic lens to audits

In this article, auditors and forensic specialists share insights on how audit quality can benefit from the use of forensic capabilities and techniques. It suggests auditors to take a more forensic-like perspective to enhance their professional scepticism when considering the potential for fraud.

If you are interested in accessing the ICAEW’s 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. Spots are limited. Please note that your name and email address will be shared with the ICAEW for communication purposes.

The Institute's Auditing and Assurance Standards Committee meeting

Minutes of the 418^th meeting are now available.

Live webinar: Tax planning revisions to the Code and implications in tax practice

Join the webinar on 5 November to understand the key changes to the Code of Ethics for Professional Accountants; and implications of the revisions in tax practice.

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.

HKICPA Exposure Drafts HKFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and HKFRS S2 Climate-related Disclosures

The Financial Reporting Standards Committee of the HKICPA is seeking comments on the Exposure Draft HKFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and Exposure Draft HKFRS S2 Climate-related Disclosures (HK EDs) by 27 October 2024.

The Institute has prepared an Explanatory Memorandum (EM) to accompany the HK EDs. The EM explains the history of development of the HK EDs, the reasons for full convergence with IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures, the consultation questions and next steps. The EM also contains a number of FAQs and high-level summaries of key comments received from previous local consultations on the IFRS S1 and S2 and how those comments have been addressed.

Forthcoming HKEX summits

The HKEX is hosting two summits focused on fixed income and currency (FIC). The HKEX FIC Summit Europe will take place in London on 25 September, while the HKEX FIC Summit APAC will be held in Hong Kong on 15 October. The summits will explore the opportunities within the FIC markets and provide current perspectives and valuable insights from market experts worldwide, with an emphasis this year on China’s FIC market. Registration is now open on the respective websites.

Announcements by the government

Members may wish to be aware of the following matters:

Anti-money laundering (AML) notices and news

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.

Publications from other organizations:

5 strategies that helped me achieve 10x returns on my marketing efforts from Entrepreneur.com
Is your company prepared for a data breach? from Financial Management
5 future of finance event takeaways for CFOs from CFO.com
Sustainable services: CPAs positioned for burst in opportunities 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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