[ 34 ] A Plus + January 2008

Tech highlights

Audit and assurance

The Institute issues guidance on reporting on general charitable fundraising activities The Institute has issued a circular to provide guidance to practising members in relation to the reporting on general charitable fundraising activities covered by public subscription permits issued by the Social Welfare Department (other than flag days).

The Institute’s auditing and assurance standards committee, in consultation with SWD, considers that the report required under the permit conditions should be a limited assurance engagement to be carried out by practising members under Hong Kong Standard on Assurance Engagements 3000 Assurance Engagements Other Than Audits or Reviews of Historical Financial Information.

An illustrative example is provided, which has been developed in consultation with SWD. Members are reminded to use their professional judgment to ascertain the exact circumstances of each of their engagements.

The Institute comments on IAASB EDs: ISA 510 (redrafted) and ISA 530 (redrafted) The Institute’s submissions to the IAASB on the exposure drafts of proposed ISA 510 (redrafted) Initial Audit Engagements – Opening Balances and ISA 530 (redrafted) Audit Sampling indicate that it is supportive of the redrafting and that, generally, the objectives to be achieved by the auditor, as stated in the proposed redrafted ISAs, are appropriate.

Other comments on significant proposals include:• As regards ISA 510 (redrafted), the Institute agrees with the

IAASB’s proposal to remove the restriction in the extant ISA 510 where the auditor can express an unmodified opinion on the closing financial position of the entity and a qualified or disclaimer of opinion on the results of operations and cash flows.

• As regards ISA 530 (redrafted), the Institute agrees with the IAASB’s proposals to:– Remove material in extant ISA 530 dealing with a

selection of items for testing by means other than sampling to proposed ISA 500 (redrafted) Considering the Relevance and Reliability of Audit Evidence.

TechWatch 62 The latest standards and technical developments

January 2008 + A Plus [ 35 ]

– Require an auditor to obtain a high degree of certainty that a misstatement or deviation is not representative of the population.

– Clarify the responsibilities of the auditor with respect to the projection and evaluation of sample results.In addition, the Institute recommends that examples to

further illustrate what is an anomalous error and work an auditor needs to perform in extant ISA 530 should be elevated to the proposed ISA.

Corporate finance

The Institute comments on proposals for future development of GEMAs reported in TechWatch 59, after conducting a consultation in early 2006 on the way forward for the Growth Enterprise Market, in July 2007, Hong Kong Exchanges and Clearing Ltd. released a follow-up consultation paper on proposals for further developing the GEM as a second board, and positioning it as a stepping stone to the main board.

The Institute believes that the GEM is not attractive to investors and to companies probably because the relatively low level of market activity on the GEM, which in turn, may be due to issues over quality and image, among other things. However, the Institute has reservations about the effectiveness of the latest proposals, to introduce new quantitative requirements for listing on the GEM and streamline the process and procedures for transferring listings to the main board, as a means of re-activating the GEM.

In its submission, the Institute reiterates its earlier view as to the best overall approach for the GEM, namely, to retain the GEM as a second board, without specifically positioning it as a stepping stone to the main board. Instead, more effort and resources should be invested in developing and promoting the GEM’s own brand and establishing a more robust regulatory regime.

Insolvency and corporate restructuring

The ORO invites tenders for taking up the appointment as provisional liquidatorsThe Official Receiver’s Office is inviting practitioners to submit tenders for taking up appointments as provisional liquidators under s.194(1A) of the Companies Ordinance. The deadline for submission is 12 p.m. on 8 January 2008.

The tender form and other relevant documents can be obtained from the ORO, 10th floor, Queensway Government Offices, 66 Queensway, Hong Kong or downloaded from the ORO’s website.

The ORO reviews guidelines for administrative panel of insolvency practitioners for court winding up (“panel A” scheme)The Official Receiver’s Office is initiating a review of the “panel A” scheme guidelines now that the scheme has been operating for over 10 years. The ORO has indicated that during the review, it will not accept or process any new applications to join the panel, although applications for replacements of existing appointment takers and insolvency practitioners may be considered.

Separately, the ORO wishes to remind practitioners that the terms “appointment taker” (or AT) and “insolvency practitioner” (or IP) used in the contact of the panel A scheme are incidental to a firm’s registration.

Quick link

Please refer to the full version of TechWatch 62, available as a

PDF on the Institute’s website:

www.hkicpa.org.hk/professionaltechnical/techwatch

Other updates included in TechWatch 62:• The Institute comments on international pronouncements• The Institute comments on proposals for periodic

financial reporting• Results of the 2007 Best Corporate Governance

Disclosure Awards• Anti-money laundering and anti-terrorist financing• IAASB exposure drafts of ISA 505 (revised and redrafted)

External Confirmations and ISA 620 (revised and redrafted) Using the Work of an Auditor’s Expert – comment due date is 25 January 2008

• Discussion paper Assistance Options to New Applicants and Sponsors in connection with Internal Controls over Financial Reporting – comments due date is 31 January 2008

• Standing committee on company law reform publishes 2006-07 annual report

• Non-statutory guidelines on directors duties revised