NAVIGATION

MEMBERS' HANDBOOK

Handbook Update No. 314 relates to the following areas of Volume II of Members’ Handbook:

(i) Publication of Hong Kong Financial Reporting Standard (HKFRS) 19 Subsidiaries without Public Accountability: Disclosures

HKFRS 19 is a disclosure-only standard. It permits eligible subsidiaries to use HKFRSs with reduced disclosures. It works alongside other HKFRSs. An eligible subsidiary applies the requirements in other HKFRSs except for the disclosure requirements and instead applies the reduced disclosure requirements in HKFRS 19. HKFRS 19 will simplify reporting systems and processes for entities, reducing the costs of preparing eligible subsidiaries’ financial statements while maintaining the usefulness of those financial statements for users. HKFRS 19 is effective for annual periods beginning on or after 1 January 2027 with earlier application permitted.

(ii) The relevant part of Accounting Bulletin 4 Guidance on the Determination of Realised Profits and Losses in the Context of Distributions under the Hong Kong Companies Ordinance is updated to include a reminder for long-term insurers when applying the Accounting Bulletin. Long-term insurers are reminded that certain paragraphs in the Accounting Bulletin are no longer relevant in their determination of realised profits or losses from 1 July 2024 when the Insurance (Amendment) Ordinance 2023 became effective.

Invitation to comment

The Institute is seeking comments on the following International Accounting Standards Board (IASB) Exposure Drafts:

Translation to a Hyperinflationary Presentation Currency (Proposed amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates) by 14 October;
Amendments to IFRS 19 Subsidiaries without Public Accountability: Disclosures by 16 October; and
Climate-related and Other Uncertainties in the Financial Statements by 17 October.

Institute submission

The Institute has submitted its comment letter on the IASB Exposure Draft Contracts for Renewable Electricity (Proposed amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures).

Institute live webinar: Accounting implications of HKFRS 17 Insurance Contracts for non-insurers

HKFRS 17 Insurance Contracts has become effective since 1 January 2023. While some entities might think that HKFRS 17 does not apply to them because they are not insurance companies, this is not always the case. HKFRS 17 is an accounting standard that applies to insurance contracts as a transaction category, regardless of the types of entities issuing them. Therefore, certain contracts issued by non-insurers may fall within the scope of HKFRS 17. Non-insurers must have an adequate understanding of whether the contracts they issue are within the scope of HKFRS 17 to ensure their financial statements comply with HKFRS and avoid audit surprises.

To help non-insurers better understand the accounting implications of HKFRS 17, the Institute will hold a live webinar on 25 September. The speakers will focus on key considerations that non-insurers need to be aware of in determining whether the contracts they issue are subject to the requirements of HKFRS 17.

Institute live webinar: Common application issues of HKFRS 3 Business Combinations

HKFRS 3 Business Combinations specifies how entities account for business combinations, which are often significant transactions for entities involved. These transactions play an important role in the global economy.

The Institute will hold a live webinar on 13 September to discuss the common application issues of HKFRS 3, including:

Identifying a business combination: what is a business?
Identifying the acquirer and determining the acquisition date
Measuring the consideration transferred: how to determine what is part of a business combination?
Recognising and measuring assets acquired and liabilities assumed in a business combination

Webcast: Implementing IFRS 19—Insights from Global Preparers and IASB members

The IASB has published a webcast on implementing IFRS 19 Subsidiaries without Public Accountability: Disclosures. The webcast provides an overview of this new Accounting Standard and its benefits for eligible subsidiaries as well as practical insights into its implementation.

IFRS Interpretations Committee agenda decision

The IFRS Interpretations Committee has published its agenda decision on Disclosure of Revenues and Expenses for Reportable Segments (IFRS 8 Operating Segments).

IASB July 2024 podcast and update

The IASB podcast, highlighting preliminary decisions of the IASB at its July meeting, and a summary of the July meeting, are now available.

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.

2023 Annual Inspection Report

The Accounting and Financial Reporting Council (the AFRC) has published the 2023 Annual Inspection Report which 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.

Regulatory collaboration enhances effectiveness in audit regulation

The AFRC announced that it will continue adopting a coordinated approach with the Ministry of Finance of the People’s Republic of China in strengthening the supervision and management of cross-border audit services and Hong Kong audit firms’ compliance with the relevant regulatory requirements including reporting obligations, cooperation with Mainland audit firms and the safekeeping of audit working papers under the Mainland’s “Interim Provisions on Accounting Firms’ Provision of Auditing Services for the Overseas Listing of Enterprises in Mainland China” and other legislation.

How the new audit standard for less complex entities benefits auditors and the entities they serve

The International Federation of Accountants’ (IFAC) publication delves into several key features of the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE) and highlights the benefits both auditors and the entities they serve.

Five steps accountants must take when adopting AI

This article by the Institute of Chartered Accountants in England and Wales (ICAEW) highlights five areas that accountants need to be aware of to ensure that they can use artificial intelligence (AI) in practice reliably.

The Institute's Auditing and Assurance Standards Committee meeting

Minutes of the 417th meeting are now available.

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.

AFRC expects full compliance by auditors with relevant laws and regulations

This press release by the AFRC emphasizes that all audit firms and their personnel are expected to fulfil the fundamental principle of professional behaviour to comply with all relevant laws and regulations under the Code of Ethics for Professional Accountants.

Accountants & finance function uniquely placed to support ethical integrity and anti-corruption efforts

IFAC, ICAEW and Basel Institute on Governance explored in this webinar the key role that professional accountants play in business, and how to address corruption through an integrated mindset and collaborative approach.

Institute submission

The Institute has submitted its comments on the IFAC Exposure Drafts Proposed Revisions to the International Education Standard (IES) 2, 3, and 4 – Sustainability; and Proposed Revisions to IES 6 – Initial Professional Development – Assessment of Professional Competence that embed sustainability across aspiring professional accountants’ training.

Institute e-learnings: Embarking on the journey of IFRS Sustainability Disclosure Standards

The Institute has recently hosted the following training events that discussed the key concepts, principles and core requirements of the two inaugural IFRS Sustainability Disclosure Standards, namely IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. These events have been recorded as e-learnings for members’ access. Enrol now if you missed these training events:

Part 1: The essentials of IFRS S1 and IFRS S2
Part 2: Dive deeper with a focus on IFRS S2

Webcast: Overview of ESRS–ISSB Standards Interoperability Guidance

The IFRS Foundation has published a webcast that provides an overview of the ESRS–ISSB Standards Interoperability Guidance. Topics covered include:

the background to the publication of the Interoperability Guidance;
common disclosures and the high degree of alignment of climate-related disclosures between the International Sustainability Standards Board (ISSB)’s Standards and European Sustainability Reporting Standards (ESRS);
elements of the disclosures that companies will need to approach in a specific way to comply with both sets of standards; and
incremental disclosures in ESRS.

Q2 2024 ISSB Implementation Insights podcast

This episode covers the key points from the June meeting of the ISSB Transition Implementation Group on IFRS S1 and IFRS S2. It includes implementation questions on the requirement for companies to revise estimates in sustainability-related disclosures when new information becomes available, as well as the requirement for comparative information when there is a change in a company’s composition.

ISSB July 2024 podcast and update

In the podcast, the ISSB chair and vice-chair share insights into recent developments from the ISSB and an update from the ISSB’s July meeting. In addition, a summary of the July meeting is now available.

Announcements by the Stock Exchange of Hong Kong Limited

The HKEX has announced the inclusion of Gold Standard's Verified Emission Reductions (GS-VERs) on the Core Climate platform with effect from 1 August 2024. Gold Standard is a widely adopted carbon credit certification programme. GS-VERs are a form of carbon offset that can be traded on the voluntary market for carbon credits. HKEX's Core Climate is currently the only carbon marketplace that offers Hong Kong Dollar and Renminbi settlement for the trading of international voluntary carbon credits.

Belt and Road Initiative

The 2024 Belt and Road Summit will take place on 11 and 12 September at the Hong Kong Convention and Exhibition Centre. The summit is organized by the Government of the Hong Kong SAR and the Hong Kong Trade Development Council. The summit is an international platform that gathers senior government officials and business leaders from countries and regions along and beyond the Belt and Road to exchange insights on multilateral cooperation and explore business opportunities. Registration for the summit is available on the event website.

Best Corporate Governance and ESG Awards 2024

The Institute is now accepting entries for the Best Corporate Governance and ESG Awards (Awards) 2024.

These prestigious awards recognize listed companies and public sector/ not-for-profit organizations that have demonstrated their commitment to high-quality corporate governance and sustainability practices and reporting. Participation is free, and this is a great opportunity for organizations to be recognized by their peers and the wider market.

The deadline for submissions is 9 August. For more information, please visit the designated webpage.

Announcements by the Inland Revenue Department

Members may wish to be aware of the following matters:

Announcements by the government

Members may wish to be aware of the following matters:

Consultation Conclusions on Legislative Proposal to Implement the Regulatory Regime for Stablecoin Issuers in Hong Kong have been issued by the Financial Services and the Treasury Bureau (FSTB) and Hong Kong Monetary Authority (HKMA). The conclusions set out the result of consultation in a number of areas including a regulatory framework for fiat-referenced stablecoin (FRS) issuers, custody and offering of FRS, and the supervisory and investigative processes of the HKMA. FSTB plans to introduce a bill on implementing the regulatory proposals into Legislative Council later this year.
Judicial appointment
Advance estimates on Gross Domestic Product for second quarter of 2024
Appointments to Advisory Committee of Accounting and Financial Reporting Council
Appointment of Non-Executive Directors of SFC
FS announces reappointment of Chief Executive of HKMA
Digital Policy Office established
Companies Registry releases statistics for first half of 2024
Government launches public consultation for 2024 Policy Address
Visa-free period for holders of HKSAR passports to Thailand extended

Anti-money laundering (AML) notices and news

Anti-money Laundering Procedures Manual for Professional Accountants (Revised 2024)

The 2024 AML Procedures Manual is now available for subscription online. Among other changes, the revised and updated AML procedures manual takes on board relevant amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) and the accompanying changes made to the Guidelines on Anti-Money Laundering and Counter-Terrorist Financing for Professional Accountants, both of which became effective on 1 June 2023.

AML notices:

The List of individuals and entities published under section 31 of the United Nations Sanctions (Yemen) Regulation 2019 (Cap.537CI) was updated on 1 August. See the relevant UNSC press release.
The List of individuals and entities published under section 30 of the United Nations Sanctions (Yemen) Regulation 2019 (Cap.537CI) was updated on 1 August. See the relevant 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:

Man charged by ICAC convicted of conspiracy to launder $125m crime proceeds

Publications from other organizations:

Cyber attacks are inevitable – So stop preparing for if one happens and start preparing for when one will from Entrepreneur.com
Organisational challenges could stall digitisation, CFOs say from Financial Management
Only 1% of CFOs have automated over three quarters of their financial processes: report from CFO.com
Improving enterprise risk management: 5 steps to success 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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