2025 Issue 1 Volume 21 DRIVING BUSINESS SUCCESS FINANCE LEADERS TURNING TO AI How finance leaders can effectively manage the adoption of artificial intelligence THINGS TO WATCH IN 2025 Key areas accountants should pay attention to this year SECOND OPINIONS What’s on your radar for 2025? PLUS: A strong commitment to sustainability has presented the Institute and its members a major opportunity to evolve, says Edward Au, the Institute’s new President TRANSFORMING WITH THE TIMES
PRESIDENT’S MESSAGE APLUS DEAR MEMBERS 2025 Issue 1 1 Edward Au, President “ Our focus will be on enhancing the profession’s capacity to support sustainability initiatives and ensuring that our members are well-equipped to navigate the evolving landscape of sustainability standards.” It is with deep honour and great enthusiasm that I address the readers of A Plus for the first time as the President of the Institute. I want to extend my sincere thanks to the Council and our members for your trust and confidence. Since I took on this significant role in November 2024, considerable developments have occurred, signifying an exciting and transformative era for our profession and Hong Kong’s broader financial landscape. One of the most significant milestones has been the publication of the Hong Kong Financial Reporting Standards S1 and S2 (HKFRS SDS) in full alignment with the standards issued by the International Sustainability Standards Board, with an effective date of 1 August 2025. These new standards are a monumental step and represent our commitment to being among the first jurisdictions to align local sustainability reporting standards with international best practices, as set out in the government’s Roadmap on Sustainability Disclosure in Hong Kong, ensuring that Hong Kong remains at the forefront of global financial reporting. In January, the Institute had the privilege of participating in the prestigious Asian Financial Forum (AFF). This event provided an invaluable platform for the Institute to showcase Hong Kong’s progress in sustainability reporting standard setting and capacity building. It was a moment of pride for us to demonstrate our dedication to sustainability and to share our journey at the event, which attracted about 3,600 policymakers and business leaders from around 50 countries and regions. A highlight of the AFF for me was the honour of participating in a panel session titled “Global Spectrum – Setting Global Milestone in Sustainability.” This panel was led by Janey Lai, Chief Executive Officer of the Accounting and Financial Reporting Council, and I was privileged to be joined by Sue Lloyd, Vice Chair of the International Sustainability Standards Board, and Justin Wu, Managing Director, Head of Climate Change Asia Pacific, Global Sustainability, at HSBC. In addition to discussing the importance of the HKFRS SDS in providing a robust framework for sustainability disclosures, I also shared my vision for the Institute in the year ahead. Our focus will be on enhancing the profession’s capacity to support sustainability initiatives and ensuring that our members are well-equipped to navigate the evolving landscape of sustainability standards. We will continue to collaborate with international standard-setters and local stakeholders to refine and advance our reporting frameworks, ensuring that Hong Kong remains a leader in sustainable finance. Indeed, collaboration is an important theme for Institute in the year to come. Earlier in December 2024, we were honoured to host esteemed guests from the International Accounting Standards Board (IASB), Dr. Andreas Barckow, Chair of the IASB, Dr. Jianqiao Lu, IASB member and Roanne Hasegawa, IASB technical staff, at our event IASB Update – Here to Listen, Not to Preach. Over 100 participants, including senior representatives from regulators, investors, technical experts, and C-suite executives, joined us for a day filled with engaging discussions and valuable insights about IASB’s latest projects. The event underscored our important role in driving collaboration to contribute to Hong Kong’s financial integrity. Another event I had the privilege of taking part in, was a company visit to Deloitte from over 100 BAFS students and teachers from 20 schools under the Institute’s Accounting in Action initiative for the academic year. It was a delightful crossover of my two roles and the activity symbolized one of the Institute’s key focus areas – talent engagement. I look forward to more exciting opportunities and events to engage with our future talents. I encourage you to read this issue’s exclusive interview to learn more about my hopes and vision for the year ahead. In the interview, I discuss our strategic priorities, the challenges we face, and the opportunities that lie ahead. Your engagement and feedback are crucial as we embark on this journey together. As we celebrate the Year of the Snake this Chinese New Year, may this festive season bring you and your loved ones joy, prosperity, and good health. Let us embrace the qualities of the snake – agility, determination, and ingenuity – as we navigate the year ahead. May you find success in all your endeavours, and may our collective efforts lead to a brighter, more sustainable future for the profession and our city.
CONTENTS 2025 Issue 1 NEWS 01 President’s message 04 Institute news 07 Business news FEATURES 08 Embracing a transformative shift: Interview with Edward Au The Institute’s new President on the commitment to enable and empower members, particularly after the publication of the HKFRS Sustainability Disclosure Standards 14 Adopting AI: How finance leaders can steer their organizations to success Institute members share insight into how finance leaders can effectively manage AI adoption and manage the risks 20 Key areas accountants should pay attention to in 2025 Accounting areas that Institute members should watch out for in the year ahead, from AI and professional development, to the CPA pipeline SHORT PROFILES 30 Q&A with a PAIB Sammi Leung, Head of Structured Capital Markets Asia, Global Markets at BNP Paribas 31 Q&A with a PAIP Cliff Lam, Director at AlixPartners 42 Young member of the month Landico Wong, Senior Sustainability Manager at DFI Retail Group COLUMNS 27 Thought leadership: Tomáš Kment and KT Law The Director of Administration and Facilities, Palasino Group, a.s. and the Chief Financial Officer and Company Secretary at Palasino Holdings Limited on embracing sustainability as a midcap company 28 Second opinions What’s on your radar for 2025? A look at how finance leaders should approach artificial intelligence (AI), or Generative AI, enterprise-wide or within the finance function 30 Q&A with a PAIB 31 Q&A with a PAIP 14 Adopting AI: How finance leaders can steer their organizations to success
DRIVING BUSINESS SUCCESS About our name A Plus stands for Accounting Plus. It represents a profession that is rich in career options, stays relevant amid rapid changes, and adds value to business. This magazine strives to present the global mindset and varied expertise of Institute members – Accountants Plus. Editor Gerry Ho Email: gerry.ho@mandl.asia Managing Editor Jemelyn Yadao Contributor Jolene Otremba Registered Office 2/F Wang Kee Building, 252 Hennessy Road, Wanchai, Hong Kong Advertising enquiries Advertising Director Derek Tsang Email: derektsang@mandl.asia ISSN 1815-3380 President Edward Au Vice Presidents Stephen Law Jasmine Lee Chief Executive and Registrar Margaret W. S. Chan Director of Corporate Communications Rebecca Tam Publication Manager Michael Wong Editorial Coordinator Maggie Tam Office Address 37/F, Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong Tel: (852) 2287-7228 Fax: (852) 2865-6603 Member and Student Services Counter 27/F, Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong Website: www.hkicpa.org.hk Email: hkicpa@hkicpa.org.hk 44 Institute insights: HKICPA and ACCA partnership: Unlocking global professional opportunities How the HKICPA and ACCA collaboration can elevate members’ careers, helping them thrive in a rapidly evolving business landscape SOURCE 32 Recent developments in sustainability disclosure standards in Hong Kong T he journey to aligning local sustainability disclosure requirements with the ISSB Standards 33 Strengthening financial reporting for climate-related and other uncertainties A summary of the Institute’s response to the IASB Exposure Draft 34 Intellectual propertyrelated tax incentives in Hong Kong and Singapore The patent box regime and how it compares with Singapore’s IPrelated incentive 42Young member of the month A Plus is the official magazine of the Hong Kong Institute of Certified Public Accountants. The Institute retains copyright in all material published in the magazine. No part of this magazine may be reproduced without the permission of the Institute. The views expressed in the magazine are not necessarily shared by the Institute or the publisher. The Institute, the publisher and authors accept no responsibilities for loss resulting from any person acting, or refraining from acting, because of views expressed or advertisements appearing in the magazine. © Hong Kong Institute of Certified Public Accountants 2025 Issue 1. The digital version is distributed to around 48,000 members, and around 12,000 students of the Institute and over 2,000 business stakeholders every quarterly. 20Key areas accountants should pay attention to in 2025 Top 10 areas that Institute members should keep an eye on this year to navigate challenges and grow in their careers 37 IT Conference 2024: “Innovation through new intelligence – Harnessing AI to revolutionize accounting practices” L ast year’s IT Conference explored the transformative potential of AI in reshaping the accounting profession 38 Hong Kong’s licensing regime for virtual assets A n overview of the rigourous regulations for virtual asset trading platforms 40 Technical news
Following the Hong Kong government’s publication of the Roadmap on Sustainability Disclosure in Hong Kong on 10 December 2024 (see our response here), the Institute published the HKFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and HKFRS S2 Climaterelated Disclosures (HKFRS Sustainability Disclosure Standards or HKFRS SDS) on 12 December 2024. The HKFRS SDS are fully aligned with the IFRS Sustainability Disclosure Standards (ISSB Standards), with an effective date of 1 August 2025. “The publication of the HKFRS SDS marks an important milestone in the sustainability development journey in Hong Kong. The HKFRS SDS provides a standardized framework for enhancing the consistency and comparability of corporates’ sustainability reports. The HKFRS SDS is fully aligned with the lSSB Standards; this is critical to maintaining and enhancing Hong Kong’s competitiveness in international capital markets. The HKICPA will dedicate its efforts in the coming year to capacity building to enable the successful implementation of the HKFRS SDS. We will also continue to contribute to the holistic development of the local sustainability reporting ecosystem in order to solidify Hong Kong’s status as a leading international financial centre and a green and sustainable finance hub,” said Institute President Edward Au. As part of the Institute’s continued commitment to contribute to capacity building and to address key comments raised by stakeholders, the Institute is developing a comprehensive sustainability capacity building programme to help stakeholders understand the impact of the HKFRS SDS and to facilitate the application of the standards. Read the press release and this issue’s source article on page 32 to learn more about HKFRS SDS. Institute announces tax policy and proposals for 2025-26 Budget Under the theme “Building a sustainable future – fiscal stability, and economic and social development,” the Institute put forward proposals for the government’s 2025-26 budget under four main themes, covering “driving economic growth and stimulating investment”, “attracting and retaining talent”, “sustaining public finances”, and “sustainable development”, to help Hong Kong start a new chapter and cement its position as one of the best places in the world to live, work and visit. A press briefing was held on 23 January to announce the proposals. Read the budget proposals and the press release to learn more. New Institute leadership elected Au Chun Hing, Edward was elected the Institute’s President for the 2024/25 Council, following the 52nd annual general meeting (AGM) held on 28 November 2024, and Law Cheuk Kin, Stephen, JP and Lee Shun Yi, Jasmine as Vice-Presidents. Click here for the full composition of the Council. The minutes from the Institute’s 52nd AGM are now available. Institute participates in Asian Financial Forum 2025 The Institute participated in the Asian Financial Forum 2025 on 1314 January, to promote Hong Kong’s sustainable development and the NEWS Institute news Business news 4 2025 Issue 1 The HKICPA introduces HKFRS S1 and HKFRS S2 (From left to right) Margaret Chan, Institute Chief Executive and Registrar; Stephen Law, Vice-President; Edward Au, President; and Jasmine Lee, Vice-President at the AGM on 28 November 2024.
APLUS implementation of the HKFRS SDS. On day one of the forum, President Edward Au participated in the panel discussion titled “Setting Global Milestones in Sustainability”, under the Global Spectrum seminar series, sharing insights on the importance of the HKFRS SDS and how enterprises can be assisted in implementing these standards. To showcase its journey in setting HKFRS SDS, the Institute had also set up a booth to engage with participants of the forum. Read the press release for more details. Best Corporate Governance and ESG Awards 2024 The winners of the Best Corporate Governance and ESG Awards 2024 were announced at a press briefing on 21 November 2024, with a record 38 companies and public sector organizations recognized for their outstanding efforts. Among the winners were five first-time awardees and three new winners of the Most Sustainable Companies and Organizations Awards. The full awardee list can be found in the Judges’ Report and the press release. The presentation luncheon ceremony, featuring Carlson Tong, Chairman of Hong Kong Exchanges and Clearing Limited as the guest of honour, took place on 25 November 2024. Click to see the photos and press release. Alongside the awards, the Institute conducted research on the prevalence and quality of information technology and cybersecurity-related disclosures in annual and sustainability or ESG reports, among the 82 Hang Seng Index companies. Read the cybersecurity report for insights into this research. Annual report 2024 published Themed “Building Community,” the Annual Report 2024 highlights our commitment to fostering a valued and connected environment for our members and stakeholders. Read the report to learn more about our various efforts and initiatives for building a more cohesive community, as well as our significant milestones and achievements in 2024. Annual dinner 2024 With the theme “Building Community: Engage, Embrace, Elevate,” the annual dinner 2024 saw over 350 members and guests gathered to connect and celebrate our shared journey over the past year on 22 November 2024. Christopher Hui, Secretary for Financial Services and the Treasury, was the guest of honour. See the photos and video highlights. Strategic agreement for accounting On 11 December 2024, the Institute signed the Strategic Agreement for Developing Guangdong-Hong Kong-Macau Accounting Industry (2024) with the Guangdong Institute of Certified Public Accountants, Hong Kong Association of Registered Public Interest Entity Auditors, and the Union of Associations of Professional Accountants of Macau, to deepen collaboration in five key areas. Through the agreement, the participants seek to jointly facilitate the high-quality development of the accounting profession, participate in the development of the “Belt & Road Initiative”, and to contribute to the development of the Guangdong-Hong Kong-Macau Greater Bay Area. Read the press release to learn more. MoU signed between HKICPA and BICPA The HKICPA and the Beijing Institute of Certified Public Accountants (BICPA) renewed their Memorandum of Understanding (MoU) on 4 December 2024 to foster cooperation in member services, professional knowledge exchange, and talent cultivation, strengthening exchanges between the accounting professions in Beijing and Hong Kong. Learn more from the press release. Council meeting minutes The abridged minutes from the October and November 2024 Council meetings are now available. Institute President Edward Au spoke on the the importance of HKFRS SDS in a panel discussion at the Asian Financial Forum 2025. 2025 Issue 1 5
Unlock your sustainability potential with our new initiatives! Sustainability Information Centre A revamped hub for easy access to the latest sustainability developments, thought leadership, and learning resources. 1-2-7 Sustainability Capacity Building Framework Enhance your sustainability knowledge with our new capacity-building framework, focusing on IFRS S1 and S2*. Sustainability Community Connect with like-minded professionals and stay informed on sustainability trends and regulations. Enjoy priority access to newsletters, articles, events, webinars, and exclusive training sessions. Explore these initiatives and elevate your sustainability journey with us! * Some courses are approved under HKMA’s Pilot Green and Sustainable Finance Capacity Building Support Scheme. Please visit here for more details.
NEWS Business 2030 The target date the Hong Kong Monetary Authority (HKMA) is urging banks to achieve net zero emissions in their own operations; and in financed emissions by 2050. As part of the “Banking for Net Zero” initiative, the HKMA is emphasizing the urgency for banks to take decisive and focused measures to reduce financed emissions and gradually eliminate high-emission assets. Hong Kong’s unemployment rate for the October to December 2024 period, stood at 3.1 percent, the Census and Statistics Department announced, unchanged from the September to November 2024 figure. The underemployment rate also remained consistent at 1.1 percent. Labour and Welfare Secretary Chris Sun highlighted that unemployment rates in industries such as manufacturing, finance, social work, and arts and entertainment had improved compared to the previous period. 2025 Issue 1 7 24% Hong Kong’s crypto adoption rate, according to a CoinDesk report. This places the city in the mid-tier category globally, trailing behind markets like Thailand (43 percent) and India (32 percent). While 50 percent of Hong Kong respondents believe crypto will play a significant role in the future financial ecosystem, trust issues remain a major hurdle. About 33 percent of non-users cite security concerns, including risks of hacking and fraud, as reasons for their reluctance. Fewer than 1 in 10 organizations in the Asia Pacific region have robust AI governance structures, according to a Deloitte report, AI at a Crossroads: Building Trust as the Path to Scale. The survey of nearly 900 senior leaders across 13 Asia Pacific countries highlighted that mature AI governance frameworks lead to a 28 percent increase in AI adoption among staff and nearly 5 percent higher revenue growth. The number of overseas and Mainland companies that set up or expanded their operations in Hong Kong in 2024, bringing a record HK$67.7 billion in investments in 2024. This marks a 10 percent increase in total investment compared to 2023. These companies are expected to create 6,864 job opportunities in the city during their first year of operation. The activity was led by sectors such as innovation and technology, financial services and fintech, family offices, tourism and hospitality, and business and professional services. 539 APLUS <10% – Michael Schrage, a research fellow with the MIT Sloan School of Management’s Initiative on the Digital Economy, told Fortune. “The ongoing ‘Compound AI’ revolution, which involves approaching AI tasks by combining multiple interacting components, will increasingly transform the CFO role into that of an AI-powered chief capital officer. This is an analytics-driven shift that isn’t optional but imperative for enterprise growth.” 145,053 The number of new local companies registered in Hong Kong in 2024, raising the total number of companies registered under the Companies Ordinance to 1.46 million. According to the Companies Registry, this marks an increase of 29,736 local firms compared to 2023, setting a record high. Additionally, 1,079 nonHong Kong companies registered new places of business within the city during the same period. 44% The percentage of Hong Kong companies expressing a negative outlook for the coming year, according to a survey by the Hong Kong General Chamber of Commerce in December 2024. This marks the most pessimistic sentiment among businesses in half a decade. The survey involved 219 businesses across various sectors. Notably, the research began just before Donald Trump’s victory in the U.S. presidential election, a development that has added to global unpredictability.
PROFILE Edward Au EMBRACING A TRAN 8 2025 Issue 1
APLUS Hong Kong became one of the first jurisdictions to align local sustainability requirements with the International Sustainability Standards Board’s (ISSB) sustainability disclosure standards, with the Institute playing a crucial role. The Institute’s new President, Edward Au, talks to Jemelyn Yadao about the mission to empower members to take on sustainability leadership, and how he sees the profession advancing to another level Edward Au is in the business of transforming companies. He understands more than most that getting a company listed is about more than raising capital. “I get to see the bigger picture. Initial public offerings represent a turning point in terms of scaling and competing on a global stage. After listing, it’s the beginning of a brand new world for a company,” he says. After being involved in many company transformations, Au, the Hong Kong Institute of CPAs’ new President, is now contributing to the next major stage in the Institute’s transformation – one which sees its role as Hong Kong’s sustainability reporting standard setter become more publicized, and its efforts to support members’ development intensify. Its work in establishing Hong Kong’s sustainability reporting standards has been advancing steadily. After conducting extensive stakeholder engagement, the Institute on 12 December 2024 published HKFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and HKFRS S2 Climate-related Disclosures (HKFRS Sustainability Disclosure Standards or HKFRS SDS). Fully aligned with the IFRS Sustainability Disclosure Standards (ISSB Standards), HKFRS SDS are effective from 1 August 2025. “It’s definitely a key milestone for Hong Kong and it’s great that I get to experience it as the Institute’s President,” says Au. He says the focus of the Institute this year is on capacity building, and ensuring implementation support activities are up and running. For example, it organized a live public briefing on HKFRS S1 and S2 covering the development journey of the HKFRS SDS and its impact on Hong Kong entities in mid-January. “The next steps are about equipping accountants with the necessary knowledge and experience in order to Photography by Calvin Sit Interview with Edward Au, the Institute’s new President NSFORMATIVE SHIFT 2025 Issue 1 9
PROFILE Edward Au drive this forward not just for Hong Kong, but also for counterparts in the Greater Bay Area (GBA). As Hong Kong is part of the first batch of jurisdictions that have aligned with the ISSB Standards, Hong Kong accountants can play a big role in bridging the knowledge gap between sustainability reporting standards in the Mainland, and such standards outside the Mainland,” says Au, adding that sustainability disclosure standards in the Mainland are still evolving. Last year, the Institute launched the 1-2-7 Sustainability Capacity Building Framework (1-2-7 Framework), a training curriculum designed to assist members in progressing their sustainability learning. “1-2-7 Framework covers everything from basic 101 knowledge to practical implementation at different levels. The Institute is now looking to further enhance the content of the framework by making sure it is aligned with the ISSB Partnership Framework for Capacity Building, and therefore international requirements,” says Au. An implementation support platform and the Sustainability Community were also introduced. The support platform enables stakeholders to submit technical questions for discussion and can be leveraged by the Institute to relay any Hong Kong-specific issues to the ISSB. The Sustainability Community, meanwhile, was created to bring together sustainability practitioners, within and beyond the Institute’s membership, in a central hub to exchange knowledge and best practices. Both the platform and the community are a testament to the Institute’s commitment to empowering and enabling its members, notes Au. “We really strive to engage and support our members from different angles, whether it is through the community initiative, the FAQs platform to address concerns, or the live briefings to explain how this is going to impact disclosures,” he says. Au points out that the publication of the government’s Roadmap on Sustainability Disclosure in Hong Kong in December 2024 was another key development, and will serve as a guide for the Institute on the timeline for the implementation of the HKFRS SDS. The roadmap also highlights another critical component of a comprehensive ecosystem that supports sustainability disclosures, and another area in which the accounting profession can play a leading, proactive role – sustainability assurance. “With more companies in Hong Kong adopting sustainability reporting standards under a phased-in approach, the demand for assurance, and ensuring sustainability data is reliable and relevant, will only grow in the future, and this is an opportunity for the profession,” says Au. “Although Hong Kong’s sustainability assurance regulatory regime will be left with the Accounting and Financial Reporting Council, the Institute will definitely support the implementation of those assurance standards. The ultimate goal is to enable our members, and contribute towards Hong Kong to become an international green and sustainable finance hub.” The Institute aims to publish the final local assurance and ethics standards before the end of 2025. Creating GBA opportunities Au, who is Deloitte China Southern Region Managing Partner, believes the profession is at a pivotal juncture presenting it with both challenges and opportunities. With that, one of his priorities this year as President is to focus on enhancing global connections and maintaining partnerships with international counterparts. He also sees a need to help members navigate the evolving global interconnectedness. “Accountants have a key role to play in bringing quality companies from China out into the rest of the world, and also attracting international companies or investors to Hong Kong,” he says. “We should also continue to exhibit Hong Kong’s accounting excellence on a global stage.” Helping members to seize career and business development opportunities in the GBA is also important to Au, who wants to see a boost in Hong Kong CPAs’ value proposition in the Mainland. Further collaborating with Mainland accounting bodies, and helping members connect with peers in Mainland GBA cities, will be key to identifying opportunities for Institute members, he says, “whether it’s in audit, tax advisory, mergers and acquisitions (M&A), or sustainability.” The Institute will keep pushing for preferential policies in the “ With more companies in Hong Kong adopting sustainability reporting standards under a phased-in approach, the demand for assurance, and ensuring sustainability data is reliable and relevant, will only grow in the future, and this is an opportunity for the profession.” 10 2025 Issue 1
APLUS Edward Au is Deloitte China Southern Region Managing Partner, with a focus on the development of the practice in the Greater Bay Area. He was co-leader of the firm’s National Public Offering Group. GBA for Hong Kong CPAs. For example, it will continue to keep in close contact with GBA Mainland cities as it strives for “early and pilot implementation” of policies to support career development of Hong Kong’s CPAs in the GBA, notes Au. “In the long run, we advocate the launch of the GBA CPA Qualification Examination, allowing Hong Kong’s practising CPAs to be partners of non-audit businesses of accounting firms in GBA Mainland cities, and to include Hong Kong CPAs into the Catalogue of Overseas High-end Talents of GBA Mainland cities,” Au says. With a GDP of close to US$ 2 trillion in 2023, the GBA has seen continuing policy-driven integration. More interconnection within the GBA is expected, and Au sees accountants playing a part in this. “Hong Kong plays a great role in the GBA, and with accounting being the business language of the world, Hong Kong accountants can help further drive integration of the GBA cities,” he says. Engaging talent With the evolving needs of business, including the increasing demand for sustainable development, Au says another priority is to ensure a steady supply of skilled accountants. “Talent is key to all aspects in terms of development. So it’s important to find ways to get the next generation of talent to embrace the profession and to push forward the economy. We need to fill the talent gaps, ensuring a sustainable future for our profession,” he says. Following the Chief Executive’s third Policy Address last October, the Institute was pleased to see that the government adopted its proposal 2025 Issue 1 11
PROFILE Edward Au At the Asian Financial Forum 2025 on 13 January, Au shared the importance of HKFRS Sustainability Disclosure Standards, and spoke on assisting enterprises in implementing the standards. 12 2025 Issue 1
APLUS On 12 December 2024, the Institute published HKFRS S1 General Requirements for Disclosure of Sustainabilityrelated Financial Information and HKFRS S2 Climate-related Disclosures (HKFRS SDS). The HKFRS SDS are fully aligned with the IFRS Sustainability Disclosure Standards, with an effective date of 1 August 2025. . of updating the government’s “Talent List” to attract talents from more professional service sectors. It had advocated for the inclusion of the accounting profession in the Talent List with the goal of addressing the talent shortage in the profession. “We look forward to the government expanding the talent pool for the profession to maintain service quality. An important aspect of this initiative is that it will bring in people from different backgrounds. Having people from diverse backgrounds and cultures working together, making great things and coming up with new ideas can move the profession forward,” says Au. While government support is welcomed, Au points out that the Institute has long played its part to support talent attraction, mentioning its collaborations with the education sector, including the Education Bureau, schools and tertiary institutions. The goal, he says, is to encourage the next generation to start a CPA career by helping them understand how the profession has contributed to the development of Hong Kong’s economy in the past, and how it will continue to do so in the future. “This will give them a sense of purpose, as they start to realize how the profession is driving Hong Kong’s economy and Hong Kong’s role as an international financial centre.” A promising career Au’s unique perspective of transformation extends beyond his work, and is something he applies when appreciating films. “Many people watch movies as a way to relax or have fun, but when I watch a movie, I transform myself into the characters played by the actors, so that I can experience those different roles and perspectives, and understand the meaning behind the film,” he says. Similar to characters in the film world, there is no shortage of roles played by CPAs. Au is adamant that drawing attention to this is one of the best ways for the profession to attract talent. “We must emphasize the diversity of accountants in terms of their careers. Other than an auditor and tax consultant, you can be an M&A advisor, a forensic accountant or a sustainability expert. With a professional accounting background there’s a wide range of roles open to you, including CEO,” he says. “The Institute will continue to focus on branding, so that the next generation of talent can acknowledge the promise that comes with these roles.” Indeed, another path that those with an accounting background can take is IPO advisory, which Au has been associated with ever since he started working as an auditor in 1993. “China was opening up and allowed the first batch of stateowned enterprises to get listed in Hong Kong, one of them being Tsingtao Brewery,” he recalls. “My first project when I joined the firm was a B-share listing in China, and that was really interesting for me.” Au says he quickly discovered the real purpose behind the work he was doing. “Besides supporting fundraising, I could help the company to transform and expand their operations. I knew that working in IPOs and the capital market was something I wanted to go into because I could support company transformations and support the growth of the company. Having such a mission is both eye-opening and really meaningful,” he adds. A new level of opportunities When thinking about the future of the Institute, Au is full of optimism, particularly as its crucial role in the development and implementation of the local sustainability reporting standards goes further. A proud commitment to sustainability has presented both the Institute and its members a major opportunity to evolve, he notes. “Sustainability itself is transforming and is only part of a business transformation. In a company’s business transformation there are different ingredients coming into it, and I think accountants can play a role in these areas too,” says Au. Members should also embrace the opportunity to work with different professionals, he adds, such as engineers and building surveyors, when it comes to measuring and disclosing information. As the Institute continues to fulfil its new role, Au believes this year will see the Institute redoubling its efforts to empower, enable and engage members, the “Three Es” as he calls it. “For example, ever-changing technology forces us to reimagine the things we have done in the past and in the future, so we need to constantly adapt ourselves. The Institute can empower and enable members with digital tools to work efficiently and move with the times,” he says. With the focus on sustainability reporting standards, and also member engagement, empowerment, and enablement, Au has been given another purpose. “We can support members wholeheartedly to move to another level, to ‘transform’ with the times, and to contribute even more to Hong Kong and its economy.” “ We must emphasize the diversity of accountants in terms of their careers. The Institute will continue to focus on branding, so that the next generation of talent can acknowledge the promise that comes with these roles.” 2025 Issue 1 13
TECHNOLOGY Integrating GenAI Illustrations by Gianfranco Bonadies While usage of generative artificial intelligence (GenAI), a branch of AI technology that can produce various types of content in response to a user’s prompt or request, is not as ubiquitous in the workplace as it is in headlines, 23 percent of organizations were already using GenAI or had active plans to do so, according to Thomson Reuters Institute’s 2024 Generative AI in Professional Services report. As organizations evolve, and make the move to integrate AI or GenAI technology into workflows, chief financial officers, as the strategic partners that chief executive officers rely on, are expected to lead the charge in ensuring successful navigation through this technological revolution. However, the rise of publicly available GenAI models, like ChatGPT, has placed finance leaders at a crossroads. While some perceive it as a threat that could automate away human workers, others recognize its potential to enhance the finance function. Stephen Lo, CFO at Prenetics and a member of the Hong Kong Institute of CPAs, captures this sentiment succinctly: “This is the most empowering moment for me personally as a CFO. GenAI provides a framework that makes me a lot more effective as an executive.” This perspective highlights the strategic opportunity for finance leaders to champion AI adoption across their organizations. The benefits of embracing GenAI are substantial, particularly in boosting productivity. Finance teams can generate business reports, emails, and complex Excel models far more efficiently. “We’re talking about 3x, 4x efficiency gains,” says Lo. Jason Wong, Head of Finance at YUU Rewards, and an Institute member, emphasizes two key benefits: “The first one is predictive modelling using advanced scenario and impact analysis. And number two, automating mundane transactional processes to improve efficiency and effectiveness of financial reporting to enable more time on narrative and interpretation.” Beyond individual productivity, GenAI can enhance collaboration and communication throughout the organization. Lo explains that GenAI enhances collaboration by creating a common language, improving efficiency in meetings, and facilitating better knowledge sharing. It allows employees to conduct research before discussions, leading to more informed conversations. Additionally, it helps break down organizational siloes, making collaboration easier for everyone, not just finance teams. “Collaboration will become much easier because it’s not just for the CFO, but for everyone I work with,” he says. “Leaders in organizations need to embrace the technology and basically just admit that it needs to be in every single part of the operation, both in-house and in customer-facing operations,” says ADOPTING AI: How finance leaders can steer their organizations to success Rapid advancements in GenAI have ushered in a transformative era, compelling companies to embrace it as a competitive advantage and finance leaders to take decisive action. Jolene Otremba finds out how finance leaders should effectively manage AI adoption “ This is the most empowering moment for me personally as a CFO. GenAI provides a framework that makes me a lot more effective as an executive.” 14 2025 Issue 1
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TECHNOLOGY Integrating GenAI James Liu, Finance Director of IKEA at DFI Retail Group and an Institute member. A recent benchmarking study published by PwC, Becoming the Catalyst: How Finance Functions are Driving Shareholder Value, reveals the vast and impactful applications of GenAI in finance. The study highlights key areas where AI can enhance data processing and generate actionable insights. For instance, GenAI allows finance functions to weave disparate data into cohesive narratives. “By integrating data management tools such as enterprise resource planning, robotic process automation, and extract, load, transform, AI can automatically transform and parse data, making it easier to extract insightful information in a timely manner and construct business insights more frequently,” says Wilson Chow, PwC Global TMT Leader and China AI Leader and an Institute member. Moreover, the power of predictive analytics, driven by AI, enables finance teams to leverage complex datasets for more accurate forecasting. This capability not only bolsters revenue generation but also strengthens risk mitigation efforts. Chow notes that by reducing manual processing, professionals can focus on strategic initiatives, and that of the respondents in the PwC study, over 75 percent favoured these applications, showing a strong appetite for AI integration. Golden opportunity for CFOs Lo emphasizes the significance of AI technology for CFOs: “This is a golden time for an effective CFO. If we can help the organization become more productive, then you will be hugely beneficial for everyone.” This transformation means that professionals will have greater opportunities to focus on strategic activities that drive value for their organizations. Chow notes that as companies strive for efficiency and innovation, finance professionals will increasingly serve as advisors, interpreting data and making strategic recommendations. Human accountants will also play a critical role in ensuring the 16 2025 Issue 1
APLUS According to a 2024 survey of CFOs by McKinsey & Company, one in five CFOs report the use of GenAI tools, and of them, nearly half are still in the pilot and experimentation phase. In areas where finance functions have already adopted GenAI, CFOs most often cite improved employee productivity as a benefit (71 percent). 54 percent cite better use of data in business decisions and 48 percent cite insight generation that allows employees to focus on higherorder tasks. ethical use of AI, addressing biases, and maintaining governance over AI-driven processes. “With AI handling routine tasks such as data entry, reconciliation, and basic report generation, accountants and finance professionals will have more time to focus on strategic activities like financial planning, analysis, and projections. This shift will enhance their role as strategic partners in the organization,” Chow says. Navigating risks and challenges Finance leaders must also navigate the risks and challenges associated with AI integration. According to Lo, auditability is a key risk in adopting GenAI for finance and accounting functions. “GenAI is a black box. There’s no audit trail, and no one knows what’s happening within it. And that is completely contradictory to the fundamentals of a good process in the accounting sense,” he explains. GenAI, being a “black box” without transparency into its inner workings, poses a challenge to the need for verifiable records. Because of this, System and Organization Controls (SOC) reporting can be crucial for AI applications to drive trust and transparency. A SOC 2 Type 2 report can reassure external auditors, as it evaluates the operational effectiveness of an AI service provider’s controls related to data security, privacy, and system processing over a specified period. For Liu, the greatest risk lies in accuracy. “There still has to be a certain level of scepticism, which is what finance professionals are trained to do; we don’t take things at face value.” This scepticism can complicate efforts to gain employee buy-in. Chow agrees, noting that transitioning to AI-driven processes requires significant organizational change, and it is up to CFOs to lead these efforts by addressing resistance from staff and fostering a culture that embraces innovation. Cultivating a mindset shift To address this, ultimately there needs to be a mindset shift. According to Lo and Liu, it’s about showcasing the benefits of AI and getting the organization to buy into it. Lo stresses the importance of change management, particularly focusing on the human aspect, while Liu suggests addressing employee concerns about job displacement. “One of the main concerns employees have is that AI will replace their jobs. To address this, we provide that safety cover to our workforce by saying: Look, we are not looking to reduce headcount,” Liu says. Finance leaders must therefore communicate authentically. “You have to make them see what’s in it for them, why they need to do it. Is it going to take away my job, or is it actually helping me to become more effective?” Lo says. “If they don’t have the buy-in, it will be difficult for any digital transformation project.” As such, a clear vision of how AI can empower employees, rather than replace them is also important. Reassuring employees that the goal is to enhance their capabilities and allow them to work more efficiently will be key. Liu shared how IKEA incentivizes innovation by setting annual objectives for team members to automate at least one process using AI. This not only drives adoption but fosters a culture of continuous improvement. “The natural competitiveness of our accountants means that they will come up with something great,” he says. Encouraging openness is equally important, according to Wong. Involving the finance workforce in AI discussions and decisions can help employees view the technology as an asset or partner rather than a threat. “Emphasize AI’s role in enhancing productivity. Showcase how AI frees up time for more meaningful work and promote a continuous improvement and learning environment,” Wong advises. Leaders should also celebrate success stories and empower employees to take ownership of the AI transformation. “Lead by example,” Liu argues. “In terms of training or awareness of what is available, given the speed of AI development, we need to spend time to properly expand it and use it, and think about how to leverage it ourselves.” When leadership demonstrates a commitment to learning and using 2025 Issue 1 17
TECHNOLOGY Integrating GenAI AI, it sends a powerful message throughout the organization. Using quick wins Wong adds that finance leaders should be proactive in identifying specific use cases that align with their organization’s goals and deliver quick wins. “Focus on selective, discrete use cases that have the potential to deliver the most meaningful impact,” he says. “Look for tangible, quick wins that will help build momentum and confidence for the finance function and the rest of the organization to further invest in GenAI.” As an example, Liu shares how IKEA has harnessed AI in its finance function. “We now produce safety videos using AI, with an avatar of our own face as the instructor delivering the training material; this is a huge cost saving.” The company has also automated the scanning and data entry process for vendor invoices. Liu notes, “Now it’s just a matter of putting that chunk of invoices into a scanner and performing checks at an exception basis.” Risk management is key Managing the risks associated with this technology is equally important. “AI systems thrive on high-quality data, so CFOs must implement robust data management practices to ensure accuracy and security,” says Jacqueline Chan, Managing Director and CFO of DBS Bank Hong Kong, and an Institute member. Wong highlights the necessity of collaboration among teams to ensure ethical and secure implementation. “It requires a collaborative approach between finance, IT, legal, and compliance, depending on the industry,” he says. Chan agrees, stating that leaders must recognize the inherent risks associated with AI and establish clear governance frameworks to guide the deployment of these transformative technologies. At DBS, Chan explains the bank’s approach on data management: “We adopt a ‘PURE’ framework to ensure responsible data use. P stands for purposeful, U for unsurprising, meaning that data use should be expected by stakeholders. R is for respectful, meaning data use should consider social norms and ethics, and E is for explainable.” This comprehensive approach to data management lays the foundation for the responsible use of AI, ensuring that the bank’s principles are upheld. For the governance framework, Chan highlights that a crossfunctional task force is formed to identify risks and build guardrails associated with AI adoption. This multi-layered assessment process includes self-assessments by the initiating units and oversight from independent committees to ensure that AI applications meet high standards of safety and reliability. For now, the bank’s GenAI applications are restricted to internal use, prioritizing caution over customer-facing deployment. By systematically assessing risks, Chan explains, “Each AI and GenAI use case can be evaluated to determine if inherent risks can be adequately mitigated and whether any residual risks are at an acceptable level prior to deployment.” Measuring success As finance functions evolve to meet digital age demands, measuring the success of AI initiatives becomes critical. Chan emphasizes the importance of establishing control groups for this purpose. “We establish a control group, and then the outcomes are compared with the experimental group that uses AI. The differences captured can be attributed to AI.” This scientific approach allows organizations to quantify the tangible benefits of AI, such as time savings, improved accuracy, and enhanced decision-making. Chan cautions against focusing solely on cost savings. “Revenue improvement is also a very important incentive for us, because enhanced decision-making will help generate more revenue, improve client engagement, and provide deeper insights into market trends.” Only by taking a holistic view can finance leaders build a compelling case for continued investment in AI technologies. Evolving role of CFOs As the role of the CFO evolves, experts agree that finance leaders must become forward-thinking, data-driven strategic partners who can manage the risks and opportunities presented by AI and GenAI. The path to successful AI adoption requires a delicate balance of vision, governance, and employee engagement. By leveraging these cuttingedge technologies to drive sustainable growth and enhance risk management, Chan believes that the finance function will be “empowered to scale new heights, drive greater value, and foster efficient data intelligence.” PwC’s Chow concurs, adding that “many people express worries that the adoption of AI might eliminate human jobs. In reality, it will lead to an evolving role for accountants and finance experts, allowing them to step up and drive more value within their organizations.” “ Look for tangible, quick wins that will help build momentum and confidence for the finance function and the rest of the organization to further invest in GenAI.” 18 2025 Issue 1
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LOOKING AHEAD 10 focus areas for CPAs in 2025 From cross-border opportunities to major new standards, A Plus explores 10 areas that could potentially shape the work and careers of CPAs this year Key areas accountants should pay attention to in 2025 20 2025 Issue 1
APLUS In 2025, there will likely be continued growth in the utilization of AI in the accounting profession given the value it brings. In particular, Generative AI (GenAI), a type of AI that creates original human-like content, has ushered in a new era of increased productivity and data-driven insight. For accounting firms, GenAI offers the ability to streamline processes, boost efficiency, and derive meaningful insight from data. However, firms are still cautious about adopting GenAI technology into their workflows, according to The 2024 Generative AI in Professional Services report from the Thomson Reuters Institute. Of the survey respondents, 8 percent of tax firms and corporate tax departments identified as using GenAI technology, with 13 percent of these firms planning to use the tech soon. It also found that 30 percent of them are in the consideration phase of whether to use GenAI tools. On the corporate sector side, chief financial officers are gearing up to continue AI strategy plans this year. Research, published in the recent KPMG Global AI in Finance report, shows that the use of AI is rapidly expanding across the world – 71 percent of companies are using AI in finance, and 41 percent of them to a moderate or large degree. GenAI has become a top priority for the future, with 95 percent of organizations that qualify as “leaders”, those more mature in AI usage, and 39 percent of others expecting to selectively or widely adopt it within financial reporting in the next three years, demonstrating the scale of the shifts to come. Artificial intelligence The publication of the first two sustainability disclosure standards – HKFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and HKFRS S2 Climate-related Disclosures (HKFRS Sustainability Disclosure Standards) – on 12 December 2024 is just the beginning of a long journey to building a comprehensive sustainability disclosure ecosystem for Hong Kong, to solidify the city’s status as a leading hub for sustainable finance. In line with the Roadmap on Sustainability Disclosure in Hong Kong published by the government, the Institute will be developing local assurance and ethics standards on a full convergence basis with international standards. It aims to publish the final local standards by the end of this year. The Accounting and Financial Reporting Council will also this year release a proposed local regulatory framework for sustainability assurance for public consultation. With the HKFRS Sustainability Disclosure Standards’ effective date of 1 August 2025, the Institute will be focused on ensuring the successful implementation of the standards, organizing seminars, webinars and other engagement activities to build capacity for the profession and those beyond it. Refer to the Sustainability Information Centre for the latest technical resources and activities. Sustainability disclosure standards 2025 Issue 1 21
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