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MEMBERS' HANDBOOK

Handbook Update No. 311 relates to the issuance of Hong Kong Financial Reporting Standard (HKFRS) 18 Presentation and Disclosure in Financial Statements.

HKFRS 18 introduces the following three sets of new requirements to improve entities’ reporting of financial performance and give investors a better basis for analysing and comparing entities:

Presentation of new defined subtotals in the statement of profit or loss;
Disclosures about management-defined performance measures; and
Enhanced requirements for grouping (aggregation and disaggregation) of information.

HKFRS 18 supersedes Hong Kong Accounting Standard (HKAS) 1 Presentation of Financial Statements. Requirements in HKAS 1 that are unchanged have been transferred to HKFRS 18 and other HKFRSs. HKFRS 18 is effective for annual periods beginning on or after 1 January 2027 with earlier application permitted.

Following the issuance of HKFRS 18, the references in Hong Kong Interpretation 5 Presentation of Financial Statements – Classification by the Borrower of a Term Loan that Contains a Repayment on Demand Clause have been updated to reflect the requirements in HKFRS 18.

Update No. 312 amends Chapter A of the Institute’s Code of Ethics for Professional Accountants (Institute’s Code) as a result of the International Ethics Standards Board for Accountants’ (IESBA) Revisions to the Code Addressing Tax Planning and Related Services issued in April 2024.

Update No. 313 includes the following revisions:

Amendments to Chapter A of the Institute’s Code as a result of IESBA Revisions to the Definitions of Listed Entity and Public Interest Entity in the Code (PIE Provisions) issued in April 2022. The Institute’s Ethics Committee has updated Part 4A, Chapter A of the Institute’s Code by adopting the PIE Provisions, and refined the definition of a PIE in paragraph R400.22(b), (c) and (d) by introducing a locally developed paragraph 400.23 A3, taking into account the unique facts and circumstances of Hong Kong. The Basis for Conclusions summarizes the consideration of the Ethics Committee in reaching the conclusions in the PIE Revisions issued by the Institute.

Amendments as a result of the International Auditing and Assurance Standards Board (IAASB) Narrow Scope Amendments to ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements; and ISA 260 (Revised), Communication with Those Charged with Governance, as a Result of the Revisions to the IESBA Code that Require a Firm to Publicly Disclose When a Firm Has Applied the Independence Requirements for PIEs. The IAASB’s narrow scope amendments operationalize changes to the IESBA International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) related to listed and public interest entities by providing a clear mechanism to action the new requirement. Chapter A of the Institute’s Code is based on the IESBA Code. Consequently, HKSA 700 (Revised) and HKSA 260 (Revised) are updated to incorporate these narrow scope amendments. They are effective for audits of financial statements for periods beginning on or after 15 December 2024.

Institute submission

The Institute has submitted its comment letter on the International Accounting Standards Board (IASB) Exposure Draft Business Combinations – Disclosures, Goodwill and Impairment: Proposed amendments to International Financial Reporting Standard (IFRS) 3 Business Combinations and International Accounting Standard 36 Impairment of Assets.

Institute’s Financial Reporting Standards Committee meeting minutes

Minutes of the May 2024 meeting are now available.

IASB publishes its review of impairment requirements relating to financial instruments

The IASB has concluded its Post-implementation Review (PIR) of the impairment requirements in IFRS 9 Financial Instruments. Overall, feedback and research carried out during the PIR show that the impairment requirements in IFRS 9 are working as intended and provide useful information to users of financial instruments. For details, please refer to the Project Summary and Feedback Statement.

In response to the feedback, the IASB will explore whether requirements for modification, derecognition and write-off of financial instruments, and the consequential effects on recognition of expected credit losses, can be clarified as part of its project on Amortised Cost Measurement. Furthermore, the IASB has added a new project to its pipeline to investigate targeted improvements to the credit risk disclosure requirements in IFRS 7 Financial Instruments: Disclosures.

Q2 2024 IFRS Interpretations Committee podcast

In this podcast, the IFRS Interpretations Committee’s Chair Bruce Mackenzie and Member André Besson discuss the decisions made at the June Committee meeting.

IFRS Foundation Conference 2024 - Key highlights

The event held in June 2024 showcased the latest developments from the IASB and the International Sustainability Standards Board (ISSB), as well as insights from industry experts. In addition to the keynote speeches by IASB Chair Andreas Barckow and ISSB Chair Emmanuel Faber, the conference featured sessions on the current projects and future priorities of the two boards, as well as examples of how connectivity between the two boards is achieved and what this means for stakeholders.

Live webinar: Solicitors’ Accounts Rules and PN 840 Reporting Engagements

Join the webinar on 26 August on Solicitors’ Accounts Rules and PN 840 Reporting Engagements. Speakers will:

explain the Solicitors’ Accounts Rules and highlight the common breaches of such obligations;
provide an explanation of the recommended work procedures outlined in PN 840; and
share prevalent challenges and breaches commonly encountered while undertaking engagements to issue an Accountant’s Report.

ISA for LCE Auditor Reporting Supplemental Guidance

The IAASB has released supplemental guidance on auditor reporting which provides assistance for auditors about modifications to the auditor’s report when using the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE). The guidance also includes information on using emphasis of matter and other matter paragraphs, reporting on other information, and reporting on a material uncertainty related to going concern.

The ISA for LCE anticipates relevant local bodies with standard-setting authority to determine quantitative thresholds for use of the ISA for LCE in their respective jurisdictions. In view of this, the Institute’s Auditing and Assurance Standards Committee is considering the applicability of the ISA for LCE in a local context and will follow the due process for adoption in Hong Kong.

IFAC resources & support for SMPs

Access a range of audit and assurance resources developed by the International Federation of Accountants for small- and medium-sized practices (SMPs).

E-learning programme on professional judgment in audit

Join the practical e-learning programme by the Institute of Chartered Accountants in England and Wales (ICAEW) which will enable auditors to exercise good professional judgment as an integral part of the audit process, helping them to effectively record judgments and comply with regulatory guidance, auditing standards and ethical codes.

HKICPA resource centre

The Institute’s Resource Centre to the Code has been updated to incorporate technical resources on Revisions to the Code Addressing Tax Planning and Related Services, which will be effective in July 2025.

The resource centre includes a wide range of resources and publications that will keep you updated on the latest ethics pronouncements.

IFAC resources & support for SMPs

Access a range of ethics resources developed by the International Federation of Accountants for small- and medium-sized practices (SMPs).

The Institute’s Ethics Committee meeting

Minutes of the 263rd meeting are now available.

IESBA meeting highlights and decisions

The IESBA highlights and decisions of its meetings held on 10 to 13 June 2024 are available.

Reminder: Institute workshop on HKEX's Enhanced Climate-Related Disclosures

The Stock Exchange of Hong Kong Limited (HKEX) has recently issued enhanced climate-related disclosures under its environmental, social and governance (ESG) framework and an accompanying “Implementation Guidance for Climate Disclosures under HKEX ESG reporting framework” (IG).

The Institute will hold a face-to-face workshop on 8 August, during which the speakers will provide a brief introduction of the revised requirements and use case studies to cover:

practical application of the revised disclosure requirements and its implementation reliefs; and
considerations for better preparation regarding the revised disclosure requirements and the IG with respect to more challenging or judgmental requirements.

The workshop will be conducted live and will not be recorded, so don't miss out on this unique opportunity and secure your place today.

Best Corporate Governance and ESG Awards 2024

The Best Corporate Governance and ESG Awards (Awards) 2024 is now open for entries.

The Awards reflect the importance of both good corporate governance (CG) and environmental, social and governance (ESG) reporting and practices for listed companies and public sector / not-for-profit organizations (PSOs), and their investors and stakeholders. Through the Awards, the Institute aims to encourage companies and PSOs to achieve high standards of CG and ESG, and to integrate good CG and ESG into their values, strategies and operations.

Listed companies and PSOs that are seeking recognition from their peers and the wider market for their commitment to high-quality, sustainable practices and reporting should consider entering the Awards. Participation is free. Interested organizations are invited to participate in one of the most prestigious and sought-after awards competitions, by submitting an entry form by 9 August.

Click here for more information.

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

FATF publication on high-risk and other monitored jurisdictions

The Financial Action Task Force (FATF) published a statement on 28 June 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, Haiti, Jamaica, Mali, Mozambique, Nigeria, Philippines, Senegal, South Africa, South Sudan, Tanzania, Türkiye and Vietnam have had their progress reviewed by the FATF since February 2024 and updated statements are provided for these jurisdictions. Kenya, Namibia, Syria and Yemen chose to defer reporting. In addition, Monaco and Venezuela have been newly included on the list.

Horizontal Review of Gatekeepers’ Technical Compliance Related to Corruption

Please note that the FATF published its report on Horizontal Review of Gatekeepers’ Technical Compliance Related to Corruption on 8 July. Hong Kong was ranked among the highest levels of technical compliance.

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.

Other AML news

Hong Kong Customs detects case of non-registered precious metals and stones dealer carrying out specified transaction

Publications from other organizations:

Decentralised finance: current landscape and regulatory developments by Hong Kong Academy of Finance
The metaverse: opportunities and challenges for the financial services industry by Hong Kong Academy of Finance
5 steps to build a great company culture that adds bottom-line value from CFO.com
The 20-step guide to rebranding your company online from Entrepreneur.com

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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