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Invitation to comment
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The Institute is seeking comments on Proposed Hong Kong Standard on Auditing for Audits of Financial Statements of Less Complex Entities (HKSA for LCE) by 17 November. The proposal is to modify Part A of the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE) issued by the International Auditing and Assurance Standards Board’s (IAASB) regarding the authority of the standard concerning the scope of the proposed HKSA for LCE in a local context, which includes:
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- Refining the classes of entities prohibited from using the proposed HKSA for LCE to entities having public interest characteristics within a Hong Kong context.
- Establishing quantitative thresholds to determine the appropriate use of the proposed HKSA for LCE within a Hong Kong context.
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The IAASB has also issued:
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- ISA for LCE – Authority Supplemental Guidance to help users in determining the appropriate situations to use the ISA for LCE, which further explains matters and circumstances that may be relevant in determining the appropriate use of the ISA for LCE in accordance with Part A of the standard.
- ISA for LCE – Adoption Guide to help jurisdictions adopt the ISA for LCE, which provides valuable insights into the adoption process, highlighting common steps and successful approaches, while also addressing potential challenges.
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HKICPA Audit Practice Manual (APM) (2024 edition)
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The 2024 edition has been updated to align with the requirements of HKSA 600 (Revised), Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors). Other new features include:
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- Updated references or procedures based on the Hong Kong Quality Management Standards (HKSQMs) and HKSA 220 (Revised), Quality Management for an Audit of Financial Statements.
- Introduction of a new example audit engagement file, Danube Travel Group, designed to illustrate the application of selected forms revised in the 2024 edition to perform a group audit engagement under HKSA 600 (Revised).
- Various revisions aimed at enhancing the clarity and specificity of procedures set out in the APM.
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The overall audit approach, including risk assessment as detailed in the APM (2024 edition), remains the same with the previous edition from 2022.
Members may register for the e-learning recording that provides an overview of the HKSA 600 (Revised), explores key changes from current practices and their impact to group audit engagements. Access to the Institute’s resource centre for the pronouncements, guides and articles that are relevant to the standard.
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Empower the audit process with newly updated resources
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A Roadmap of an Audit Engagement published by the Institute provides valuable resources that empower practitioners throughout the audit process. The roadmap outlines the essential steps of the audit engagement journey, offering clarity and direction at every stage. By building on key inspection findings related to the application of auditing and accounting standards identified by the Accounting and Financial Reporting Council (AFRC) in their inspection reports, this roadmap ensures that practitioners are well-equipped to handle the complexities of the audit engagements.
A collection of technical resources and publications is also available at the Institute’s Auditing and Assurance Resource Centre which will keep you updated on the latest auditing and assurance pronouncements.
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Institute webinar series: Towards an effective and efficient audit
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Join the following webinars to refresh and enhance your auditing knowledge. Experienced speakers will highlight key requirements with illustrative examples and discuss common pitfalls identified in recent AFRC inspections.
- 23 October: Auditing sampling and journal entry testing
- 29 October: External confirmations and audit documentation
- 20 November: Auditing opening balances and related parties
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Virtual Conference: Annual Auditing Update 2024: Navigating the evolving landscape together
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Topics covered at the conference on 26 October include:
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- Updates on the IAASB projects on fraud and PIE Track 2 project
- Overview of the proposed HKSA for LCE
- Key changes and requirements of HKSA 600 (Revised)
- Updates on local ethics and International Ethics Standards Board for Accountants’ (IESBA) projects, including the definitions of listed entity and public interest entity and ethics survey observations
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Workshop: Audit of licensed corporations and associated entities of intermediaries
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Join the workshop on 14 November that covers:
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- Overview of the Securities and Futures Ordinance requirements
- Highlights and reminders on HKICPA Practice Note 820 (Revised), The Audit of Licensed Corporations and Associated Entities of Intermediaries
- Latest Securities and Futures (Financial Resources) Rules (FRR) for the preparation of financial returns
- Sharing of latest developments in rules and regulations relevant to audit
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New quality management series: small firm implementation
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To help small firm practitioners implement the new quality management standards, the International Federation of Accountants (IFAC) has released a three-part publication series focusing on providing tips and guidance for practical implementation.
The third installment of the series – Monitoring and Remediation provides tips and guidance for the practical implementation of the monitoring and remediation of a firm’s system of quality management. It includes multiple documentation aids covering annual monitoring and evaluation of the system of quality management, cyclical inspection of completed audits and other engagements and a monitoring and remediation report to assist practitioners. It also continues the case study introduced in the previous installments.
Installment One of the series addressed the mindset change the new standards require and the shift in focus from quality control to quality management. Installment Two covered development of an implementation plan for quality management.
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