Audit and Assurance
Institute’s Audit and Assurance Standards Committee meeting minutes
The minutes from the 364th meeting of the Audit and Assurance Standards Committee held on 25 April are now available.
Annual auditing update 2017
Around 900 members attended the Annual Auditing Update 2017 “Broadening the Horizons” on 21 October. Hot topics discussed include the Institute’s update on the first year of implementing the revised auditor’s report, the use of data analytics in audits, understanding root cause analysis and implementing the new ethical standards on long association and non-compliance with laws and regulations.
This International Auditing and Assurance Standards Board (IAASB)webinar discusses the proposed changes to the International Standard on Quality Control (ISQC 1) which will change the current approach to quality control for firms using the IAASB’s international standards.
Institute’s comment on IASB discussion paper
The Institute commented on the International Accounting Standard Board’s (IASB) discussion paper DP/2017/1 Disclosure Initiative – Principles of Disclosures.
Open invitations to comment
The Institute is seeking comments on the IASB Exposure Drafts ED/2017/5 Accounting Policies and Accounting Estimates and ED/2017/6 Definition of Material. Comments should be submitted by 15 December.
- The IASB published narrow-scope amendments to IFRS 9 Financial Instruments and IAS 28 Investments in Associates and Joint Ventures.
- The IASB Investor Update discusses performance measures, the new revenue standard, and other IASB project updates.
- The IFRS Foundation case study report explains how six companies have improved communication by making more meaningful disclosures in their IFRS financial statements.
- The October IASB Update and the IASB Work Plan are now available.
- New IASB staff webcasts are available now:
- IFRS 9 Financial Instruments highlights key new disclosure requirements, which differ significantly from IAS 39;
- IFRS 16 Leases discusses four implementation questions on lease term requirements.
Professional accountants in business
HKEX reports on listed issuers’ corporate governance practices
The Hong Kong Exchanges and Clearing (HKEX) has recently published the findings of its latest review of listed issuers’ corporate governance practices. The review analysed the disclosures made by 1,428 issuers in their 2016 annual reports, covering the financial period from 1 January to 31 December 2016. Key findings included:
- 34 percent complied with all 78 Code Provisions (CPs) in the corporate governance code and corporate governance report part of the Listing Rules
- 94 percent complied with 75 or more CPs
- Nearly all complied with 70 or more CPs
- Issuers with a larger market capitalization achieved a higher overall compliance rate than those with a smaller market capitalization
Read the report Analysis of Corporate Governance Practice Disclosure in 2016 Annual Reports for further details.
Announcements by the Inland Revenue Department (IRD)
Members may wish to be aware of the following matters:
- The publication of Departmental Interpretation and Practice Notes No. 54 on taxation of aircraft leasing activities
- The Chief Executive’s plan to diversify Hong Kong’s economy and create more opportunities for the city
- A tax summit held to formulate forward-looking tax policies and foster economic development, and the remarks made by the Financial Secretary
- A Legislative Council question on measures to cool down residential property market
- Hong Kong and Switzerland entered into an agreement on automatic exchange of financial account information in tax matters
- Notices on business registration, and changes of addresses
- Fraudulent emails purportedly from the IRD
- Stamp Duty statistics (September 2017)
- List of Qualifying Debt Instruments as at 30 September
- IRD annual report 2016-17
Legislation and other initiatives
Institute comments on AML/CFT Bill and Companies Bill 2017
The Institute issued a submission to the Legislative Council on the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) (Amendment) Bill 2017 and the Companies (Amendment) Bill 2017 on 23 October, and the Institute’s chief executive attended a Bills Committee meeting on 30 October. The submission indicates support for legislative measures to minimize the risk of abuse of Hong Kong’s financial system by money launderers or terrorists. While the Institute believes that anti-money laundering legislation more tailored towards accountants and other “designated non-financial business and professions” would be preferable, the submission notes that amending the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (Cap. 615) should be workable, as long as sufficient clarity and refinements regarding concepts, terminology and scope are provided. At the same time, the submission also draws attention to possible regulatory gaps and proposes various technical and drafting changes.
As regards to the Companies (Amendment) Bill 2017, the Institute considers that, in principle, enhancing the transparency of company ownership and control will help Hong Kong to comply with its international obligation to implement the Recommendations of the Financial Action Task Force.Meanwhile, the submission also seeks more clarity on certain provisions and raises several technical and drafting points.
Anti-money laundering notices
Members should note the following notices and publications in relation to anti-money laundering/counter-financing of terrorism:
- Government notice 7412: An updated list of terrorists and terrorist associates has been specified under the United Nations (Anti-Terrorism Measures) Ordinance.
- Government notice 7654: An updated list of terrorists and terrorist associates has been specified under the United Nations (Anti-Terrorism Measures) Ordinance.
- Legal notice 151: The United Nations Sanctions (Libya) Regulation 2011 (Amendment) Regulation 2017 has been published in the Gazette.
- Specially designated nationals and blocked persons list, published by the United States Treasury’s Office of Foreign Assets Control. More details on the Resource Centre of the Treasury.
Please refer to the full version of TechWatch 181, available as a PDF on the Institute’s website.