Leaf Image

Standard Setting
and Professional Representation

Through involvement in international standard setting, international accounting organizations and forums, responding to consultations, and holding local consultations and outreach activities, the Institute is at the forefront of the development of new standards and legislation, and represents the views and concerns of the Hong Kong profession, ensuring its views are taken into account.

Standard setting

During the financial year, the Institute continued to maintain a webpage for stakeholders to access all of the Standard Setting Department (SSD)’s comment letters, publications and trainings with quick links to other useful resources.

Developments in sustainability reporting

Internationally, the United States Securities and Exchange Commission, European Financial Reporting Advisory Group (EFRAG) and the International Sustainability Standards Board (ISSB) have published their respective draft climate rules and sustainability disclosure standards for consultation with the EFRAG and the ISSB finalizing their respective inaugural sets of sustainability disclosure standards in first half of 2023. The International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants (IESBA) will also be consulting the public on their respective draft sustainability assurance standard and sustainability-related ethical requirements in the second half of 2023.

Local developments have kept pace with international developments. In May 2022, the Financial Services and the Treasury Bureau (FSTB) confirmed the Institute’s role as Hong Kong’s statutory sustainability disclosure standard setter and the Institutes’s Council approved in October 2022 the roadmap for the Institute’s potentially adopting the IFRS Sustainability Disclosure Standards (IFRS SDS) developed by the ISSB as the local sustainability reporting framework, subject to further discussions with relevant parties.

As a first step in implementing the roadmap, the Council of the Institute has expanded the remit of our Financial Reporting Standards Committee (FRSC) from January 2023 to oversee the setting of sustainability disclosure standards accompanied by the creation of a dedicated Sustainability Advisory Panel (SAP) to support the FRSC on the technical aspects of sustainability topics.

The next steps involve the development of an Information Paper explaining the Institute’s role in setting sustainability disclosure standards as well as the rationale for potentially adopting the IFRS SDS as the local reporting framework. The Institute has engaged with various key local and international stakeholders including the SAP, Hong Kong Exchanges and Clearing Ltd. (HKEX), Securities and Futures Commission, the Green and Sustainable Finance Cross-Agency Steering Group, Accounting and Financial Reporting Council, ISSB and other national standard setters throughout the development of the Information Paper to seek views, align direction of travel and garner support. The Information Paper will be released to the public in due course.

Following on from the publication of the two inaugural IFRS SDS in June 2023, we were honoured to be able to invite Sue Lloyd, Vice Chair of the ISSB, to address a select group of key local stakeholders to mark the momentous occasion. As part of our standard setting due process, the final standards will be analyzed against the comments we had previously submitted to assess whether they have been adequately addressed. This analysis will inform the FRSC of the appropriate next steps, including the publication of relevant local sustainability disclosure standards in Hong Kong.

As of the end of the reporting period, the Institute is seeking comments on the ISSB’s consultation on what their priorities should be in the next two years, while the HKEX is seeking comments on their draft enhanced climate disclosure requirements for listed companies. Acknowledging the step change in both the HKEX’s and the IFRS SDS’s disclosure requirements for Hong Kong companies, the Institute has developed a holistic capacity building programme that includes the Qualification Programme, continuing professional development, workshops, thought leadership pieces and the Best Corporate Governance and ESG Awards. This programme aims to enhance stakeholders’ environmental, social and governance (ESG) knowledge and meet market demands and regulatory requirements. Additionally, the Institute is monitoring the ISSB’s capacity building partnership framework which was announced at COP 27, and exploring ways to contribute and leverage it for Hong Kong stakeholders.

Looking ahead, the Institute plans to consult the public on the IAASB’s and the IESBA’s sustainability projects in the second half of 2023 in order to help instil trust in the reported sustainability information through high-quality assurance and embedding ethical behaviour in the related professional engagements.

Educating stakeholders

As part of our continued drive to help small and medium practices (SMPs) implement major new auditing standards, we have published a brand new Quality Management Manual which guides practitioners in applying the suite of quality management standards and an enhanced Audit Practice Manual which incorporates the latest changes in auditing and financial reporting standards in September 2022. This was accompanied by the publication of a list of FAQs on Hong Kong Standard on Quality Management (HKSQM) 1 and HKSQM 2 in October 2022 as well as an alert on specific aspects of HKSQM 1 in March 2023.

The Institute issued five major pieces of accounting guidance during the reporting period. The first one relates to the abolition of the Mandatory Provident Fund (MPF) offsetting arrangement by the Legislative Council in June 2022. The abolition affects all companies that are subject to the local MPF and employment legislations and it has caused considerable debate among local technical specialists on how it should be accounted for. We have been deliberating this issue in earnest with relevant parties and issued an alert in February 2023 to provide directional guidance to stakeholders. This was followed by the publication of comprehensive guidance in July 2023.

The other three pieces of major accounting guidance relate to the Financial Reporting Considerations for Close Out 2022; examples illustrating the recent IFRS Interpretations Committee’s decision on rent concessions; and whether to classify a liability as current or non-current on the balance sheet.

We have also dedicated a significant amount of resources in developing a comprehensive Hong Kong Financial Reporting Standard 17 Insurance Contracts journal entries guide to help preparers and practitioners get to grips with the basics of the standard. The guide was published in June 2023.

Supporting SMPs and enterprises organizations

To enhance our stakeholders’ understanding of various proposed amendments to major standards, we have created concise Cantonese videos to explain the key changes. Additionally, we have simplified the comment submission process by utilizing surveys on key consultations with yes/no questions and an option for additional comments, leading to increased response rates.

We provide ongoing implementation guidance on major new standards through updates to our webpages, including links to relevant new implementation guidance, as well as alert our members to new publications and webinars through newsletters.

The Institute has been a member of the Reference Group for Audits of Less Complex Entities of the IAASB and continues to contribute to relevant discussions on this project.

Regular audit workshops are conducted to provide practical guidance to both audit juniors and audit seniors.

Engaging internationally and enhancing communication

The Institute plays an important role in facilitating dialogue between stakeholders and the international standard-setting bodies, ensuring their views are effectively expressed.

The Institute actively presented and/or participated in the Asian-Oceanian Standard-Setters Group, International Forum of Accounting Standard Setters, World Standard Setters, Accounting Standards Advisory Forum as well as the three countries (China, Japan, Korea) meetings. Despite the restriction on international travels in the early months of the financial year, we have been able to participate virtually on all relevant topics. In June 2023, the Institute participated in the IAASB and IESBA National Standard Setters virtual conference.

During the financial year, the Institute conducted extensive outreach activities with local preparers, practitioners, regulators, government bodies, regional and international standard setters. These activities aimed to gather and share views, influence standard setting at an early stage and throughout the project life cycle. The outreach activities also included discussions of application issues with the aim of publishing guidance to stakeholders to ensure consistency in financial and assurance reporting. Over 12 publications were issued in this financial year covering accounting, sustainability, audit and ethics topics.

We held several roundtables with international standard setters, most notably the one on the ISSB’s agenda consultation, allowing Hong Kong stakeholders to directly reflect their views to the international standard setters.

To highlight common ethical pitfalls to members, we have developed webcasts and case studies for professional accountants in business and those in practice based on real life cases to raise their awareness of certain ethical topics and the corresponding requirements in the Code of Ethics for Professional Accountants.

There are over 33 on-demand e-learnings organized or presented by the SSD available for enrolment.

The SSD continues to actively host the technical query service which is regularly monitored for timeliness and relevance of responses. During the financial year, we handled over 210 queries across accounting, audit and ethics.

We have submitted numerous responses to consultations and invited comments on revisions across accounting, sustainability, audit and ethics in this financial year. The major responses and consultations are listed below.


Audit and assurance


Sustainability reporting


In Hong Kong

The Institute has actively raised and reiterated various important tax-related and other issues during the Hong Kong Chief Executive’s policy addresses and consultations. These include advocating for greater certainty in relation to how the Base Erosion and Profit Shifting 2.0 (BEPS 2.0) initiative will be implemented in Hong Kong, and conducting a more extensive review of the tax system in view of the many changes taking place in the local and international tax landscape in recent years.

The Institute’s Tax Policy and Budget Proposals 2023-24, titled “Reconnect & Renew”, were submitted to the Financial Secretary (FS), and other relevant officials. A press briefing was conducted in January 2023 by the Institute’s President, the Chairman of the Taxation Faculty Executive Committee (TFEC) and the Convenor of the Budget Proposals Task Force (BPTF) to explain the Institute’s main recommendations. Media interviews were held on the day of the budget, and a press release was issued outlining the Institute’s position. An article reflecting the Institute’s view on the proposals in the budget was published in the January 2023 issue of A Plus.

A number of the broad recommendations in the Institute’s budget submission were taken on board by the FS, including funding for hosting large-scale international events and activities to promote high-quality tourism, providing more community relief measures, promotion of the digital economy, support for start-ups and tech ventures, proposing tax incentives for intellectual property business, introducing more policies to encourage foreign investment, supporting community sports participation, improving Hong Kong’s liveability, and promoting the wider adoption of electric vehicles.

The 2023 annual meeting between TFEC representatives and the Commissioner and senior staff of the Inland Revenue Department (IRD) took place in May 2023, with the record of the discussions to be published later in the year. Detailed minutes of the 2022 annual meeting were posted on the Institute’s website during the year.

A new International Tax Task Force (ITTF) was set up in April 2022 to support the TFEC on various international tax topics, make representations and, where appropriate, open up a dialogue with the government on major international tax issues affecting Hong Kong. One of the ITTF’s main objectives is to convey practitioners’ views and concerns regarding how the BEPS 2.0 rules on a global minimum tax will be implemented in Hong Kong and to discuss Hong Kong’s response to inclusion on the European Union’s “grey list” of jurisdictions with certain tax practices that could result in “double non-taxation“. During the financial year, the ITTF held two meetings in July 2022 and April 2023, both involving the IRD. In the first meeting, the parties discussed Hong Kong’s latest position in relation to the implementation of BEPS 2.0 and the development of the foreign-sourced income exemption (FSIE) regime. In the latter meeting, practical implementation issues regarding the refined FSIE regime were discussed. In addition to exchanging views with IRD Deputy Commissioner and officials, the ITTF also provided input into various TFEC submissions to the government during the year.

As in previous years, the Board of Review under the Inland Revenue Ordinance (Cap. 112), which is the first-level appeal tribunal for tax appeals against assessments by the Commissioner of Inland Revenue, invited nominations from among the membership to join the board. The Institute compiled a list of 30 Institute members who wished to be considered and who met the board’s basic requirements for eligibility.

In the Mainland

In September 2022, representatives of the Institute who were nominated by the China Tax Support Group (CTSG), attended the eleventh annual meeting with the State Taxation Administration and discussed issues relating to the Mainland and cross-border taxation affecting Hong Kong. The meeting minutes in Chinese have been published on the Institute’s website.

A conference call with the Ministry of Finance of the People’s Republic of China was held in September 2022 to discuss tax policy issues. Members of the CTSG represented the Institute and participated in for the call.


The Institute representatives participated virtually in the Asia Oceania Tax Consultants’ Association (AOTCA) annual general meeting and conference in November 2022, which was a hybrid event. These two Institute representatives remained as technical advisors on AOTCA’s Technical Committee.

The Institute’s Director of Advocacy and Practice Development (DAPD) joined periodic teleconferences of the Global Accounting Alliance (GAA) Tax Working Group (TWG). The TWG was formally established by the GAA Board in 2009 to share information and best practice on tax matters, as well as to network, and collaborate on important international issues and matters of common concerns. The TWG held its first face-to-face meeting in three years on 24-25 May 2023, in Dublin, Republic of Ireland. DAPD participated in part of the meeting remotely.

Restructuring and insolvency

In Hong Kong

In submissions for the Hong Kong Chief Executive’s policy addresses and consultations, the Institute has highlighted the importance of proceeding with the Companies (Corporate Rescue) Bill, which was first proposed by the Law Reform Commission over 25 years ago, or considering alternative measures, such as allowing for “light touch” provisional liquidations to be used for restructuring purposes.

The second phase of the Companies Registry’s (CR) new public inspection regime was implemented in October 2022, restricting access to personal data made available for public inspection on the Companies Register. In September 2022, the Institute’s Restructuring and Insolvency Faculty Executive Committee (RIFEC) submitted a list of questions to the CR, explaining the concerns and challenges faced by insolvency practitioners (IPs), who need to access the register in company liquidation cases. The CR provided responses to the Institute in November 2022, which were circulated to RIF members via the RIF e-newsletter issued in February 2023. RIFEC continued to communicate with the CR on how to streamline the process for IPs and the CR subsequently provided the contact details of officers whom IPs can contact if they face practical difficulties when conducting company searches.

To help with cross-boundary insolvency work and exchanges with Mainland China, the Institute invited a delegation from the Bankruptcy Affairs Administration of Shenzhen Municipality, to deliver an RIF seminar in April 2023. The Deputy Director, gave an introduction of the department, and gave a brief overview of the operation of the personal bankruptcy system in Shenzhen to RIF members. On a separate occasion, RIFEC representatives met a delegation from Guangdong Insolvency Practitioners Association in April 2023, to exchange ideas and views on the latest developments in cross-border restructuring and insolvency between the Mainland and Hong Kong.

The Institute facilitated communication between the Official Receiver’s Office (ORO) and IPs. The ORO consulted the Institute on the draft revised Rules for Admission of Firms and Persons for Taking-up Appointment of Liquidators, Provisional Liquidators or Special Managers in Non-Summary Court Winding-up Cases (Panel A Rules), and most of RIFEC’s concerns were addressed in the final version. The revised Panel A Rules were subsequently published on the ORO’s website and became effective on 1 March 2023. Timely updates and notices, including ORO circulars and letters to IPs, to keep members apprised of developments in the insolvency field and enable them to take appropriate action as soon as possible, were issued to RIF members and, where relevant, Institute members generally.

The next liaison meeting between the RIFEC and the Official Receiver and other senior staff of the ORO is expected to be held in Q3 2023. Various practical issues faced by IPs will be discussed, and the notes of the meeting will be made available to all RIF members through the RIF e-newsletter, or other channels, after the meeting.


The Institute holds a directorship on the board of INSOL International, as one of the 10 largest member associations. The previous RIFEC chair, Terry Kan, was nominated for a three-year term, commencing November 2019. Although his term officially expired in November 2022, INSOL was conducting a governance review and proposed extending the terms of those directors whose terms had already expired or were nearing expiration, to ensure continuity during the review process. Terry Kan thus remained as the Institute’s nominated director on the INSOL board during the 2022-23 term.

Anti-money laundering and counter-terrorist financing

The Institute continued to work closely with the Narcotics Division of the Security Bureau (NDSB) and FSTB (Financial Services Branch) on follow-up work from the mutual evaluation (ME), conducted by the Financial Action Task Force (FATF) in 2018-19, and preparing for the next ME, covering technical compliance and the effectiveness of the anti-money laundering/counter-terrorist financing (AML/CTF) framework in Hong Kong. While the next on-site ME has recently been deferred to around 2027, due to the delays in the FATF’s work programme caused by the pandemic, between now and the next ME, data gathering and monitoring will need to continue.

The government submitted various updates and progress reports to the FATF, and the Institute provided input for the FATF’s Hong Kong AML/CTF ME follow-up report. In February 2023, the FATF’s report acknowledged Hong Kong’s progress in implementing risk-based AML/CTF supervision for designated non-financial business and profession (DNFBP) sectors, including the accounting profession. The grading of Hong Kong’s compliance with the FATF’s Recommendation 28 regarding the regulation and supervision of DNFBPs was also raised.

While most regulatory functions were transferred to the Accounting and Financial Reporting Council (AFRC) in late 2022, the Institute retained its regulatory role in issuing AML/CTF guidelines under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615). Additionally, the Institute continued its advocacy, education, and member support functions.

To align with recent legislative and regulatory changes, the Institute revised and updated the Guidelines on Anti-Money Laundering and Counter-Terrorist Financing for Professional Accountants. A consultation with members and stakeholders, including the FSTB, AFRC, NDSB, Commerce and Economic Development Bureau, and CR, was conducted, and the revised Guidelines were gazetted on 25 May 2023. The Institute plans to organize events to ensure members understand their AML/CTF obligations under the revised Guidelines. Collaboration with the publisher of the AML procedures manual for accountants is also underway to produce an updated version.

The Institute also contributed to the updating of the Hong Kong Money Laundering and Terrorist Financing Risk Assessment Report, in relation to the accounting sector. This report, the updated version of which was published in July 2022, is a mandatory self-assessment of the AML threats and vulnerabilities in relevant sectors of the local market that members must submit to the FATF and update periodically.

The Institute continued to provide a range of services to assist members and member practices with their AML/CTF compliance, including:

Other consultations on legislation and regulations

The Institute conveyed the views of the profession in numerous representations and submissions issued to different government departments and bureaus, and other local and international bodies. We also responded to a number of public consultations on policy and legislative proposals, as well as participating in soft consultations. Submissions included the following:

Financial Secretary

Financial Services and the Treasury Bureau (Treasury)

Financial Services and the Treasury Bureau (Financial Services)

Hong Kong Exchanges and Clearing

Securities and Futures Commission

Narcotic Divisions, Security Bureau

Inland Revenue Department

Official Receiver’s Office

Persons nominated by the Institute to serve on international organizations as at 30 June 2023

International Federation of Accountants
  • Nancy Tse, Deputy Chair of the Professional Accountants in Business Advisory Group
  • Johnson Kong, Deputy Chair of the Small and Medium Practices Advisory Group
  • Herbert Yung, Technical Advisor to Nancy Tse
  • Frances Chan, Technical Advisor to Johnson Kong
  • Selene Ho, National Standard Setters – International Auditing and Assurance Standards Board (annual meeting also attended by Paul Hebditch as Chair of the Institute’s Auditing and Assurance Standards Committee), and National Standard Setters – International Ethics Standards Board for Accountants (annual meeting also attended by Mary Xuereb as Chair of the Institute’s Ethics Committee)
International Forum of Accounting Standard Setters
  • Gary Stevenson, Institute representative
  • Cecilia Kwei, Institute representative
IFRS World Standard Setters (financial reporting)
  • Gary Stevenson, Institute representative
  • Cecilia Kwei, Institute representative
Asian-Oceanian Standard-Setters Group (financial reporting)
  • Gary Stevenson, Institute representative
  • Cecilia Kwei, Institute representative
Global Accounting Alliance (GAA)
  • Margaret W.S. Chan, Board member
  • Herbert Yung, Alternate Board member to Chief Executive and member of the GAA Sustainability Working Group
  • Kit Wong, Member of the GAA Education Working Group
  • Peter Tisman, Member of the GAA Tax Working Group
INSOL International
  • Terry Kan, Board director
Asia Oceania Tax Consultants’ Association
  • Sarah Chan, Institute representative
  • Edward Lean, Institute representative
Accounting for Sustainability (A4S)
  • Herbert Yung, Institute representative on the A4S’s Accounting Bodies Network