Deferral of IFRS/HKFRS 17
On 14 November, the International Accounting Standards Board (IASB) tentatively proposed to defer the effective date for IFRS 17 Insurance Contracts by one year, and extend the temporary exemption for insurers to apply IFRS 9 Financial Instruments to 2022. Following the Hong Kong Institute of CPA’s standard-setting due process, a Hong Kong public consultation on the IASB proposals will commence as soon as the IASB exposes its proposals for comment. The Institute strongly encourages Hong Kong insurers to respond to the Institute’s and/or the IASB’s consultation documents. The Institute may consider roundtable forums for stakeholders to voice their views. The Institute will deliberate whether to defer the effective date of Hong Kong’s equivalent insurance standard, HKFRS 17, once it hears the feedback of Hong Kong stakeholders including insurers and investors, and once the IASB makes its final decisions. The Institute will continue with its education efforts on IFRS/HKFRS 17, and remains committed to continue assessing of implementation develop- ments in Hong Kong, facilitating discussions with the industry, and working together with the industry and the IASB to resolve those challenges.
KPMG suspended in Oman
KPMG Oman has been suspended from auditing listed entities after accounting irregularities were found. The ban, effective for one year, also extends to performing audits on securities firms, insurers and companies regulated by the Capital Market Authority (CMA). The Sultanate of Oman said that action would be taken to protect investors and stakeholders. In a review, the CMA said auditors had “established professional negligence on the path of some audit firms that warranted disciplinary measures against them in the interests of the investors and other stakeholders.” The firm told Arabian Business it is “cooperating with the CMA to resolve these matters.”
Former Malaysian prime minister accused of tampering with audit
Najib Abdul Razak, Malaysia’s former prime minister, has been accused of tampering with the National Audit Department’s audit report on 1Malaysia Development Berhad (1MDB), a government-run strategic development company. The discovery sheds light on Najib, who in 2015 was accused of channelling over RM 2.67 billion (US$638 million) from 1MDB. According to media reports, orders were made by Najib to remove the mention of businessman Low Taek Jho’s name from the final audit during preparation. Low is the beneficiary of numerous discretionary trust assets said by the United States government to originate from payments out of the Malaysian 1MDB fund. Auditor-general Madinah Mohamad, who briefed the Malaysian cabinet on 23 November, says Low’s name was removed to prevent the opposition from using it against the government. Najib, who had a professional relationship with Low, also purportedly ordered that paragraphs containing two versions of 1MDB’s 2014 financial statements be removed from the document. Najib has denied all charges so far.
Deloitte proposes cap on market share
Deloitte’s British unit proposed a market share cap in the United Kingdom’s audit market in its evidence submission to the Competition and Markets Authority’s (CMA) review. The firm says capping the number of clients a firm can audit, especially FTSE 350 clients, would address choice and competition issues, reduce entry barriers for firms beyond the Big Four and reinstate public trust of the audit market. Their announcement came a day after KPMG said it would no longer perform consultancy work for companies if it is also auditing them to “remove the perception of a possible conflict” of interest, according to BBC News.