NAVIGATION

MEMBERS' HANDBOOK

Handbook Update No. 320 revises practice notes (PN) 620.2 (Revised) and 810.2 (Revised) in Members’ Handbook Volume III. They are updated for reporting in relation to the implementation of the risk-based capital (RBC) regime as a result of the Insurance (Amendment) Ordinance 2023 and the relevant subsidiary legislation which became effective on 1 July 2024.

Under the RBC regime, an authorized insurer is required to submit an auditor’s report on the specified forms included in the annual returns to the Insurance Authority. Guidance on this assurance reporting in accordance with HKSAE 3000 (Revised) is now provided in PN 810.2 (Revised).

Invitation to comment

The Institute is seeking comments on the IFRS Foundation Exposure Draft Proposed Amendments to the IFRS Foundation Due Process Handbook by 14 February.

List of new and amended HKFRS

The Institute has published the list of amended Hong Kong Financial Reporting Standards (HKFRS) and Interpretations that are applicable to December 2024 year-end.

The Institute’s Financial Reporting Standards Committee meeting minutes

Minutes of the December 2024 meeting is now available.

Final call: Institute live webinar on accounting updates for SMEs

Join us for the live webinar on 21 January, where speakers will provide updates on accounting developments relevant to SMEs. Topics include the key features of HKFRS 19 Subsidiaries without Public Accountability: Disclosures and the upcoming third edition of IFRS for SMEs Accounting Standard.

IASB December 2024 podcast & update

The International Accounting Standards Board (IASB) podcast, highlighting preliminary decisions of the IASB at its December 2024 meeting and what stakeholders can expect in 2025, and a summary of the meeting, are now available.

AFRC publication on root cause analysis and remediation

The Accounting and Financial Reporting Council (AFRC) has released its Inspection Insights – Root Cause Analysis and Remediation: A Call to Action for Quality Improvement. The report shares observations on how PIE auditors subject to the AFRC 2023 inspections had performed root cause analysis of the identified deficiencies and responded by designing and implementing remedial actions. The AFRC observed that firms with proactive leadership are more pronounced in fostering a culture of continuous improvement and thus have invested more time and resources in developing quality remediation plans.

Year-end audit preparation

The following publications and resources will be helpful for practitioners preparing for the annual audit for the year ended on or after 31 December 2024.

The AFRC Audit Focus for 2024 year-end audits provides guidance to auditors in effectively identifying and responding to the elevated risks in financial reporting and auditing created by the current uncertain economic conditions. It also provides critical reminders to auditors to ensure audit quality for the upcoming year-end audits.
Practitioners performing group audit engagements for the year ended on or after 31 December 2024 should adopt HKSA 600 (Revised). This updated standard introduces significant changes to the auditor's responsibilities, emphasizing a proactive and risk-based approach to group audits. To ensure an effective implementation, practitioners can refer to the Institute’s updated Audit Practice Manual (2024 edition) and other resources relevant to the application of HKSA 600 (Revised) which are available at the Institute’s resource centre. Additionally, practitioners should note that revisions related to the definition of engagement team and group audits in the HKICA Code of Ethics for Professional Accountants (Code) will take effect concurrently with the effective date of HKSA 600 (Revised).

IAASB approved revised ISA 570 and a new audit project

In December 2024, the International Auditing and Assurance Standards Board (IAASB) made significant strides in enhancing auditing standards.

The final text of International Standard on Auditing (ISA) 570 (Revised 2024), Going Concern was approved. Among others, the revised standard aims to strengthen the auditor’s evaluation of management’s assessment of going concern and enhance transparency with respect to the auditor’s responsibilities and work related to going concern in the auditor’s report. The IAASB anticipates to publish the final standard in Q2 2025 with an effective date set for audits of financial statements for periods beginning on or after 15 December 2026. The Institute will follow its due process for the convergence and adoption of the standard.
A new project proposal on Audit Evidence and Risk Response was approved. The project aims to improve audit quality through revisions to some auditing standards, namely ISA 330, ISA 500 and ISA 520. The IAASB anticipates an exposure draft by December 2025.

The Institute’s Auditing and Assurance Standards Committee meeting minutes

Minutes of the 422ndmeeting are now available.

Upcoming changes to ethical standards

The following summarizes upcoming changes to the Code that members should prepare for in relation to the new and revised ethical requirements:

Revisions to the Code Relating to the Definition of Engagement Team and Group Audits: Effective for audits of financial statements for periods beginning on or after 15 December 2023.
Technology-related Revisions to the Code: Updates to the Independence Standards will take effect for audits and reviews of financial statements for periods beginning on or after 15 December 2024. Additional revisions to the ethical provisions of the Code will be effective from 15 December 2024. Join the Institute’s e-learning to explore these revisions and prepare for the changes.
Revisions to the Definitions of Listed Entity and Public Interest Entity in the Code: Effective for audits of financial statements for periods beginning on or after 15 December 2024. The Institute’s Ethics Committee, in adopting the revised PIE definition and related provisions, has incorporated local refinements to ensure the definitions are relevant for implementation in Hong Kong. Access the video to learn more about these important changes.
Revisions to the Code Addressing Tax Planning and Related Services: New provisions concerning tax planning and related services will become effective on or after 1 July 2025. Join the Institute’s e-learning to gain insights into these changes and be well-prepared.

Read this article for highlights on the above changes. To learn more about the new and revised requirements, explore the resources available at the Institute’s Ethics Resource Centre.

The Institute’s Ethics Committee meeting minutes

Minutes of the 266^th meeting are now available.

IESBA meeting summary

The highlights and decisions from the IESBA meeting held in December 2024 are now available.

Final call: Institute live webinar on HKFRS S1 and S2 – Charting Sustainability Reporting in Hong Kong

Don’t miss the free webinar on 16 January, where the speaker will discuss:

The development journey of the HKFRS Sustainability Disclosure Standards (HKFRS SDS) – HKFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and HKFRS S2 Climate-related Disclosures;
Key feedback from local consultations;
The Institute’s response to the feedback received and rationale for aligning HKFRS S1 and S2 in full with the International Sustainability Standards Board (ISSB) Standards; and
The impact of the HKFRS SDS on entities in Hong Kong, including the details of its application as outlined in the Hong Kong Roadmap.

Registration is open until 13 January and is on a first-come, first-served basis.

ISSB December 2023 podcast & update

In this ISSB podcast, the Chairman and Vice-Chairman discuss their key takeaways from the December 2024 meeting and the ISSB Investor Advisory Group meeting. They also look back at the progress made in 2024 and share their priorities for 2025. In addition, a summary of the December 2024 meeting is now available.

Exchange Publishes Consultation Paper on Proposals to Optimize IPO Price Discovery and Open Market Requirements

On 19 December 2024, the Stock Exchange of Hong Kong Limited (Exchange), published a consultation paper seeking market feedback on proposals to:

Optimize the price discovery process for Initial Public Offers (IPOs) to increase the participation of “price setting” investors
Review open market requirements, ensuring issuers will have sufficient shares in public hands that are available for trading at listing

The submission deadline is 19 March. Please refer to the press release for details.

Exchange publishes conclusions on Corporate Governance Code enhancements

On 19 December 2024, the Exchange published the conclusions on the captioned consultation. The Exchange advised that all proposals to be implemented are to enhance the Corporate Governance Code and related Listing Rules.

The Institute made a submission to the Exchange on 16 August 2024, generally supporting the overarching objectives to improve board effectiveness and independence, enhance training for directors of Hong Kong listed companies, and also strengthen corporate diversity, transparency and disclosure. The submission supported most of the specific proposals, with some exception and qualifications.

The new requirements will come into effect on 1 July 2025, with transitional arrangements for the caps on “overboarding” and INED tenure. The Exchange will publish updated guidance in the first half of 2025 to assist issuers’ compliance with the new requirements. Please refer to the press release for details.

Announcements by the Inland Revenue Department (IRD)

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 individuals and entities published under section 43 of the United Nations Sanctions (Libya) Regulation 2019 (Cap. 537CF) was updated on 21 December 2024. See the related UNSC press release.
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.

Other AML news:

警方以欺騙手段取得財產及洗黑錢等罪拘124人涉案金額近七千萬

Publications from other organizations:

What CFOs should know about the state of the AI market from CFO.com
5 rule-bending AI hacks to make your mornings more productive and profitable from Entrepreneur.com
Artificial intelligence ROI exceeds expectations for many from Financial Management
Gravitating to gen AI: CPA leaders show increased interest from Journal of Accountancy
The six habits of highly successful chief risk officers by McKinsey & Company

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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