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MEMBERS' HANDBOOK
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Handbook Update No. 315 relates to the following areas of Volume II of Members’ Handbook:
(i) Issuance of Amendments to the Classification and Measurement of Financial Instruments (Amendments to Hong Kong Financial Reporting Standard (HKFRS) 9 Financial Instruments and HKFRS 7 Financial Instruments: Disclosures)
The key areas of the amendments include:
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- clarifying the classification of financial assets with environmental, social and corporate governance (ESG) and other similar features;
- clarifying the date on which a financial asset or financial liability is derecognised;
- introducing an accounting policy option to derecognise financial liabilities that are settled through an electronic payment system before settlement date if specified criteria are met;
- clarifying the requirements for classifying financial assets with non-recourse features and contractually linked instruments; and
- additional disclosure requirements regarding investments in equity instruments designated at fair value through other comprehensive income and financial instruments with contingent features, for example, features tied to ESG-linked targets.
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The amendments will become effective for annual reporting periods beginning on or after 1 January 2026. Earlier application of either all the amendments at the same time or only the amendments related to the classification of financial assets is permitted.
(ii) Hong Kong Accounting Standard 10 Events after the Reporting Period is updated for minor editorial corrections.
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List of new and amended HKFRS
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The Institute has published the list of amended HKFRS and Interpretations that are applicable to accounting periods beginning on or after 1 January 2024.
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Reminder: Institute live webinars on financial reporting
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Don’t miss the following live webinars in September:
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2023 Annual Inspection Report
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The Accounting and Financial Reporting Council’s (the AFRC) 2023 Annual Inspection Report emphasizes the pivotal roles of the firm’s leadership in upholding audit quality and reinforces the importance of continuous learning as a key driver of improvement.
Firms are encouraged to thoroughly review the AFRC report to reflect on their own leadership and culture, identify areas for learning and improvement, and take necessary actions in response to the report’s recommendations. They are also encouraged to leverage the Institute's technical resources, including those available at the Auditing and Assurance Resource Centre and the Roadmap of an Audit Engagement, to gain insights into relevant requirements and effectively implement appropriate actions.
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ICAEW audit and assurance resources
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The Institute of Chartered Accountants in England and Wales (ICAEW) offers the following resources that may be of interest to members:
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- The webinar recording "Making sense of sampling and substantive analytical review" explores robust sampling and effective substantive analytical procedures in the context of revised ISA 315, along with an article which discusses some of the key questions that arose.
- An article that provides reminders on the requirements and practical pointers for engagement quality review for smaller firms.
- An article offering insights and tips for small and mid-sized firms on performing annual appraisals of systems of quality management.
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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.
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Key changes to ethical requirements coming into effect
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An article by the International Federation of Accountants (IFAC) discusses changes to the ethical requirements included in the 2023 Handbook of the International Code of Ethics for Professional Accountants, The key revisions are as follows:
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1. Revisions effective for audits of financial statements for periods beginning on or after 15 December 2023:
- Revisions relating to the definition of engagement team and group audits; and
- The expiration of the “jurisdictional provision” addressing long association of personnel with an audit client
2. Revisions which will become effective on 15 December 2024:
- Revisions to the definition of a “public interest entity” (PIE), “audit client” and “group audit client”; and
- Technology-related revisions
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Firms are encouraged to make use of the technical resources available at the Institute’s Resource Centre to the Code, which will help in understanding the revisions, familiarizing with their implications for audit engagements or professional activities, and preparing for the necessary changes.
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Ethics Survey 2024 findings now available
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The Institute’s Ethics Committee has published the findings from the Ethics Survey conducted between January and February 2024. This survey explored the ethical attitudes of professional accountants in Hong Kong, with a specific focus on their ethical awareness of ethical considerations in the use of technology in the workplace.
The report summarizes the respondents’ attitudes toward using technology at work, their views on ethics, the common ethical challenges they face, and their familiarity with the HKICPA Code of Ethics for Professional Accountants. These findings will provide insights to professional accountants and employers regarding the general ethical challenges in the workplace, as well as those posed by digitalization.
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Webinar series - Perspectives on sustainability disclosure
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In the upcoming Episode 3 of the webinar series, “The value of industry-based disclosures”, International Sustainability Standards Board (ISSB) experts and stakeholders will explore how industry-based disclosures can capture the sustainability-related information that is most likely to be relevant to companies’ financial performance within each industry and therefore benefit investors. Click here to register or view past episodes.
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Webcast: Overview of the ISSB’s two-year work plan
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The IFRS Foundation has published a webcast that discusses the ISSB’s two-year work plan. The webcast also explores the recent developments in the ISSB’s strategic relationships with various organizations to further harmonize the sustainability reporting landscape.
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Institute responds to the HKEX Consultation Paper on Review of Corporate Governance Code and Related Listing Rules (June 2024)
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The Institute issued a Response to the HKEX Consultation Paper on Review of Corporate Governance Code and Related Listing Rules (June 2024). The Institute agreed with most of HKEX’s proposals in the consultation and the overarching objectives to improve and enhance board effectiveness, directors’ training, corporate diversity, transparency and disclosure. The Institute made the following key suggestions on the details of the consultation proposals:
- Regarding the proposal to designate one independent non-executive director (INED) as a Lead INED to enhance engagement with investors and shareholders, the Institute suggested matters that should be covered in proposed guidance for companies on the expected role and functions of a Lead INED.
- Directors who are members of professional or industry bodies with mandatory continuing professional development (CPD) requirements covering relevant areas should be able to count such CPD attendance towards their mandatory training as directors.
- Where a First-time Director ceases to be a director and is appointed director of another (or the same) company within around one year of the cessation, and the individual has already undertaken more than a minimal amount of the required training, that previous training should be taken into account in assessing training compliance for the subsequent office.
- As regards the proposal to introduce a “hard cap” of nine years on the tenure of INEDs, beyond which an INED will no longer be considered to be independent, the Institute suggested that this be introduced as a Corporate Governance Code (Code) Provision, in the first instance.
- While supporting the proposals to strengthen the existing Code requirements on reviewing the effectiveness of companies’ risk management and internal control (RMIC) systems, the Institute sought clarification on wording changes regarding the scope of the annual review of the RMIC system, which appears to narrow the scope of existing Code Provision D.2.2. This requires the RMIC review to assess the adequacy of resources, staff qualifications and experience, training programmes and budget of the issuer’s accounting, internal audit, and financial reporting functions, as well as those relating to the issuer’s ESG performance and reporting.
- The Institute also advocated for a requirement in the Listing Rules (LRs) for companies to engage a full-time qualified accountant (QA) in the senior management, and preferably on the board, similar to a requirement previously in the Main Board and GEM LRs. A contemporary QA’s responsibilities would extend beyond financial reporting and accounting procedures and internal controls, and to encompass oversight of ESG reporting, particularly the financial aspects (and, with the adoption of international sustainability disclosure standards, increased integration of financial and ESG reporting), as well as areas such as anti-money laundering/ counter-terrorist financing controls, tax governance and risk management more generally.
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Announcements by the Inland Revenue Department (IRD)
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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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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.
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Publications from other organizations:
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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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