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MEMBERS' HANDBOOK
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Handbook Update No. 322 relates to the issuance of Contracts Referencing Nature-dependent Electricity (Amendments to HKFRS 9 Financial Instruments and HKFRS 7 Financial Instruments: Disclosures). The key areas of the amendments include:
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- clarifying the application of the "own-use" requirements;
- permitting hedge accounting if nature-dependent electricity contracts are used as hedging instruments; and
- adding new disclosure requirements to enable investors to understand the effect of these contracts on a company’s financial performance and cash flows.
The amendments will become effective for annual reporting periods beginning on or after 1 January 2026. Earlier application of the amendments is permitted.
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Handbook Update No. 323 revises Practice Note (PN) 860.1 (Revised), The Audit of Retirement Schemes in Volume III. It is updated to address the implementation of eMPF as a result of the amended Mandatory Provident Fund (MPF) Schemes Ordinance and relevant guidelines.
The updated PN is effective for reporting periods ended on or after 31 December 2024. It is only applicable for MPF schemes which have completed onboarding the eMPF Platform. The extant PN remains applicable for MPF schemes which have not joined the eMPF Platform.
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Educational publication: Financial Reporting Considerations for Closing Out 2024
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The Institute has issued the educational publication Financial Reporting Considerations for Closing Out 2024. This publication aims to provide preparers with key reminders and insights for preparing their 2024 annual financial statements in accordance with HKFRS Accounting Standards. It covers topical financial reporting issues, and highlights major new and amended HKFRS Accounting Standards that will become effective after 2025.
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IASB February 2025 podcast & update
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The International Accounting Standards Board (IASB) podcast, highlighting preliminary decisions of the IASB at its February 2025 meeting, and a summary of the meeting, are now available.
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Updated circular for the New Capital Investment Entrant Scheme
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In January, the Financial Services and the Treasury Bureau and Invest Hong Kong announced the details of various enhancement measures for the New Capital Investment Entrant Scheme, set to take effect from 1 March 2025. Consequently, the Institute has updated Circular on Reporting under Rule 4.2 and Rule 4.4 relating to Net Asset Requirement and Rule 4.6 relating to Investment Requirements of the New Capital Investment Entrant Scheme to reflect the revised requirements.
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Invitation to comment
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The Institute is seeking comments on the International Auditing and Assurance Standards Board (IAASB) Post-Exposure Consultation: Invitation to Comment Before the IAASB Finalizes the Narrow Scope Amendments to the ISQMs and ISAs as a Result of the Revisions to the Definitions of Listed Entity and Public Interest Entity in the IESBA Code by 10 March.
The Institute’s invitation to comment document offers an overview of the potential impact of the consultation, which amends the differential requirements for audits of listed entities in the International Standards on Quality Management (ISQMs) and International Standards on Auditing (ISAs) to apply to publicly traded entities (PTEs). It also adopts the definition of PTE for the ISQMs and ISAs, which is fully aligned with the International Ethics Standards Board for Accountants (IESBA) Code. This approach differs from the proposals in Exposure Draft of the IAASB PIE Track 2 Project, which extended the differential requirements to PIEs.
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AFRC video: Audit focus for 2024 year-end audits
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In October 2024, the Accounting and Financial Reporting Council (AFRC) published the Audit Focus for 2024 year-end audits offering critical reminders for auditors to ensure the quality of year-end audits. This new AFRC video reinforces how audit teams can address potential audit risks arising from external risk factors, while highlighting other critical areas that call for focused attention during the 2024/2025 year-end audits.
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E-learning sessions on industry reporting
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Stay informed about the latest industry updates and auditor reporting requirements by joining our e-learning sessions:
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IAASB videos on ISSA 5000
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Watch the following IAASB Staff Explain videos which address some important questions about International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements:
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Climate and sustainability-related disclosures
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Top leaders in global sustainability standards, regulation, and accounting gathered at an exclusive event to advance climate and sustainability-related reporting. To support ongoing discussions on this critical topic and maintain momentum and action, the International Federation of Accountants (IFAC) has made event recordings available to the public. Watch the series here.
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Governance and controls for sustainability information
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Check out the following IFAC publications on building confidence in sustainability reporting:
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IESBA video on sustainability-related standards
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A video by the IESBA discusses the IESBA and IAASB sustainability-related standards, emphasizing that trust is the foundation of business progress.
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Ethics update in 10 minutes
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Watch the video by the Chartered Accountants Australia and New Zealand, which provides an overview of the changes to the code of ethics for 2025 and what to expect in 2026.
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Stakeholder event—disclosures about transition plans
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IFRS S2 Climate-related Disclosures requires that information be disclosed if an entity has a transition plan. To support this requirement, the IFRS Foundation is developing a guidance document that builds on the disclosure-specific materials authored by the Transition Plan Taskforce (TPT). A virtual stakeholder event was held on 25 February to gather information from stakeholders to inform the work to tailor the TPT materials. Click here to access the recordings, the briefing note and the slide deck.
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GAA guide on nature matters for accountants
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This Global Accounting Alliance (GAA) guide, "Why nature matters to accountants", provides accountants working in business and practice with foundational knowledge and practical actions to begin integrating nature into their work. It explores the financial impact of nature-related issues and includes real-world case studies showcasing best practices, along with a list of resources.
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ISSB February 2025 podcast & update
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In this podcast, the International Sustainability Standards Board (ISSB) Chair and Vice-Chair share updates on capacity building. They also discuss their key takeaways from the February 2025 ISSB meeting and the second joint board session with the IASB. In addition, a summary of the February 2025 meeting is now available.
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News from HKEX
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Hong Kong Stock Exchange (HKEX) will introduce an enhanced securities market stock settlement fee structure in June 2025. The current minimum and maximum stock settlement fee structure will be removed, and the ad valorem rate adjusted to 0.42 bps (0.0042%) for each trade. In addition, the stock settlement fee for eligible market making trades for Exchange Traded Products (ETPs) will be set at a rate of 0.20 bps (0.0020%), removing the minimum and maximum fees. According to HKEX, the enhanced stock settlement fee structure, with lower fee levels, complements the coming implementation of Phase 1 minimum spreads reduction, and will ensure consistent and equitable fee application across all trade sizes while also continuing to provide liquidity to the ETP market.
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Institute’s response to 2025-26 Budget
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The Government’s 2025-2026 Budget included a number of measures in line with proposals by the Institute in its budget submission, including introducing a boundary facilities fee, reviewing tax deduction arrangements for intellectual property-related industries, implementing a series of measures to support research and innovation-driven technological development in Hong Kong, further developing the mega-event economy to revitalize the Hong Kong brand, and promoting the growth of green finance and the further development of green transportation. Overall, the Institute welcomed the Budget’s pragmatic approach to fiscal consolidation while aiming to maintain the quality of public and social services. Meanwhile, the Budget's targeted revenue-generating measures should contribute to financial stability and provide support for sustained economic growth amid global economic and geopolitical challenges.
The Institute’s President, Edward Au stated, "We appreciate the Budget's diversified measures, a number of which align with our recommendations to drive sustainable economic growth. With global economic and geopolitical conditions constantly shifting, it is hoped that the Government will be able to follow through on these plans to keep Hong Kong's economy on track, while making the best use of public resources and maintaining Hong Kong’s competitiveness. Looking ahead, we hope the fiscal deficit will be gradually eliminated, strengthening Hong Kong's long-term financial health”. See the Institute’s press release for more details.
Highlighting the Institute’s thought leadership on public finance matters, the Institute’s comments were covered extensively in the media, including RTHK, Hong Kong Economic Journal, Now News, and more.
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Announcements by the Inland Revenue Department and other Budget-related Announcements
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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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Anti-money Laundering Procedures Manual for Professional Accountants (Revised 2024)
The 2024 AML Procedures Manual is now available for subscription online.
FATF publication on high-risk and other monitored jurisdictions
On 21 February, the Financial Action Task Force (FATF) published a statement regarding high-risk jurisdictions subject to a call for action, calling on its members and all jurisdictions to apply specific measures and actions on Iran, the Democratic People's Republic of Korea and Myanmar.
The FATF also issued a notice on jurisdictions under increased monitoring, referring to other jurisdictions that have been identified to have strategic deficiencies in their AML/ counter-terrorist regimes and that are working with the FATF to address these deficiencies. Bulgaria, Burkina Faso, Cameroon, Croatia, Democratic Republic of Congo, Kenya, Mali, Mozambique, Namibia, Nigeria, Philippines, South Africa, South Sudan, Tanzania, Venezuela and Vietnam had their progress reviewed by the FATF since October 2024 and updated statements are provided for these jurisdictions. Algeria, Angola, Côte d’Ivoire, Haiti, Lebanon, Monaco, Syria and Yemen chose to defer reporting. In addition, Lao PDR and Nepal have been newly included on the list.
Sanctions update
Common compliance findings on AML Guidelines from the AFRC 2023 Annual Inspection Report
We would like to draw the members’ attention about the common findings identified of firms’ compliance with the AML Guidelines and the expectations of the AFRC for firms, stated in its 2023 Annual Inspection Report, issued in July 2024.
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Publications from other organizations:
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Disclaimer: Some sections contain external links and information from outside sources. We endeavour to link to reputable sources but the Institute is not responsible for the accuracy or content of the external site, and the content does not necessarily represent the views of the Institute. We recommend using your discretion when visiting these links.
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