Hong Kong Institute of Certified Public Accountants

Under the Accounting and Financial Reporting Council Ordinance of 2021, the Accounting and Financial Reporting Council (AFRC) is responsible for all quality assurance (QA) review functions in Hong Kong S.A.R. The QA system in place is reported to be aligned with SMO 1 requirements.

Prior to October 2019, HKICPA was responsible for implementing QA review procedures. In this former capacity, HKICPA had a Practice Review Program to assess compliance of its members with all applicable professional standards and legal requirements during the performance of their audit work. HKICPA issued an annual report on all QA activities and also adopted quality control standards requiring firms to implement a system of quality control in line with the then Hong Kong Standard on Quality Control 1 (HKSQC 1), which is converged with the then ISQC 1. HKICPA retains its responsibility to set relevant audit standards, and this now includes the adoption of the Hong Kong Standard on Quality Management (HKSQM) which is converged with the respective ISQMs. To support implementation, HKICPA has developed a QM Manual, hosted relevant trainings, and maintained a resource center to support members.

HKICPA continues to offer relevant CPD around quality assurance and related standards.

Current Status: Sustain

Under the Professional Accountants Ordinance, the Hong Kong Institute of Certified Public Accountants (HKICPA) is responsible for setting initial professional development (IPD) and continuing professional development (CPD) requirements for all professional accountants in Hong Kong S.A.R. This function is conducted under the oversight of the Accounting and Financial Reporting Council (AFRC)

HKICPA states it has adopted the latest IES requirements across its educational programs and requirements. The revised version of its CPA Qualification Program (QP) has now been fully implemented. The QP comprises three levels namely Associate Level, Professional Level, and Capstone. After completing the Capstone level, there is a final examination. Individuals are also required to accumulate at least three years relevant working experience set under the Practical Experience Framework. Individuals who wish to practice as auditors (CPA Practicing) are required to satisfy up to four-years of full-time approved work experience and pass relevant Practicing Certificate examinations in auditing, local law, and taxation (if not qualified through the QP).

To ensure its QP maintains relevancy, HKICPA reports that it routinely conducts a peer review of QP’s alignment with the IES and is benchmarked to several qualifications of other leading professional accountancy organizations. The next review will be conducted in 2023 following delays due to the COVID-19 pandemic.

Regarding CPD, HKICPA reports that the revised IES 7 became effective in January 2020. On an annual basis, HKICPA puts on 800 different training sessions for its members. HKICPA also offers specific training which include the following: “Training by Competencies”; “Specialist Qualifications and Designations”; and “Specialist Training Programs” on topics such as insolvency, taxation, financial controllership, and business valuation.

Current Status: Sustain

Under the Accounting and Financial Reporting Ordinance of 2021, the Accounting and Financial Reporting Council (AFRC) is responsible for overseeing audit standard-setting activities. Under AFRC oversight, the Hong Kong Institute of Certified Public Accountants (HKICPA) continues to set audit standards.

The Hong Kong Standards on Auditing are issued by the Auditing and Assurance Standards Committee of HKICPA and have been continuously updated and converged with the ISA issued by the IAASB since 2005. HKICPA has procedures to review and monitor new and revised pronouncements issued by the IAASB to ensure auditing standards in Hong Kong S.A.R. are kept up to date.

To support its members with the implementation of HKSA, HKICPA has published technical bulletins and guidance for members through the HKICPA website and other publications. Other efforts by HKICPA include organizing technical seminars, forums, and holding an Annual Auditing Conference to raise awareness of auditing standards. HKICPA participates in the international standard-setting process by reviewing IAASB agenda materials, responding to IAASB exposure drafts, ITCs, and participating in National Standard-Setter’s meetings and other roundtables/forums.

Current Status: Sustain

Under the Accounting and Financial Reporting Ordinance of 2021, the Accounting and Financial Reporting Council (AFRC) is responsible for overseeing the setting of ethical standards and related requirements. Under AFRC oversight, the Hong Kong Institute of Certified Public Accountants (HKICPA) continues to set ethical requirements.

The HKICPA has issued a Code of Ethics that, as of 2023, is converged with the 2022 International Code of Ethics issued by IESBA, with additional materials included to address specific local requirements and provide guidance on insolvency, liquidation, and anti-money laundering.

HKICPA monitors and provides regular updates to members on pronouncements made by the IESBA through technical updates and ensuring the topic of ethics is included into its initial professional development and continuing professional development programs. The institute also provides further guidance and assistance to members and stakeholders via its technical enquiry system, the HKICPA magazine, bi-annual ethics survey, education videos, case studies and its website.

HKICPA is active in the international standard-setting process as it reviews and responds to exposure drafts issued by the IESBA and actively participates in the National Standard-Setters meetings and other roundtables and forums.

Current Status: Sustain

The Hong Kong S.A.R. government has not adopted IPSAS as the standards to be applied for public sector entities. Under the Public Finance Ordinance (CAP 2), public sector entities in Hong Kong S.A.R. apply national standards on a cash and accrual-basis.

HKICPA reports that it uses its best efforts to facilitate dialogue around IPSAS as a suitable framework for robust and transparent public sector accounting.

Current Status: Sustain

Under the Accounting and Financial Reporting Council Ordinance of 2021, the Accounting and Financial Reporting Council (AFRC) is responsible for investigation and disciplinary procedures for all professional accountants in Hong Kong S.A.R. The I&D system in Hong Kong S.A.R. is stated to be aligned with SMO 6 requirements.

Previously, I&D was carried out by the Hong Kong Institute of Certified Public Accountants (HKICPA), and it had an I&D process is in line with the requirements of SMO 6. For example, HKICPA’s Regulatory Accountability Board would conduct an annual review of its compliance department to assess adherence to HKICPA’s established procedures when handling complaints, investigation and disciplinary cases. HKICPA would also publish all investigations and disciplinary results on the HKICPA website.

Going forward, HKICPA’s responsibility around enforcement will only apply to its students, and it will continue to apply the SMO 6 best practices where relevant.

Current Status: Sustain

Under the Accounting and Financial Reporting Ordinance of 2021, the Accounting and Financial Reporting Council (AFRC) is responsible for overseeing the setting of financial reporting standards. Under AFRC oversight, the Hong Kong Institute of Certified Public Accountants (HKICPA) continues to set financial reporting standards.

HKICPA develops and issues Hong Kong Financial Reporting Standards (HKFRS), which are converged with the International Financial Reporting Standards (IFRS) and are to be applied in the preparation of annual financial statements by most companies. Listed companies, banks, and insurance companies (i.e., public interest entities) must follow HKFRS. Small- and Medium- sized Entities (SME) have the option of applying the HKFRS for Private Entities, which is virtually identical to the IFRS for SMEs. HKICPA monitors new pronouncements and revisions issued by the IASB to ensure that standards in Hong Kong S.A.R. are continuously updated.

Activities to support members include updating relevant standards in its Members’ Handbook and disseminating pronouncements issued by the IASB via technical publications; organizing regular technical seminars and workshops on IFRS; and incorporating the standards in initial professional development and continuing professional development training material.

HKICPA participates in the international standard-setting process by responding to exposure drafts issued by the IASB and gathers views on proposed standards via events such as roundtables, individual outreach events, and an Annual Accounting Update. HKICPA also participates in the international standard-setting process by joining regional and international standard setting forums and undertaking research on IASB projects that are pertinent to Hong Kong S.A.R.

Current Status: Sustain