2026 Issue 3 Volume 22 DRIVING BUSINESS SUCCESS HKFRS 18 How Hong Kong is preparing for the new standard YOUNG CPAS The growth of the Institute’s young members community SECOND OPINIONS What is the role of accountants in national development agendas? PLUS: Webster Ng, the representative of the Legislative Council’s Accountancy functional constituency, on fixing the profession’s long-standing issues SERVING THE CITY
Case Studies and Success Stories Digital Transformation Hub Training Programme Digital Transformation Roadmap One-stop resource platform Resource Library Discover more! hkicpa.org.hk/digitalhub to equip SMPs and SMEs with cutting-edge tools, knowledge, and inspiration to excel in a digital-first world Strategic framework, organized into 6 key stages: to empower SMPs and SMEs in navigating change with confidence, unlocking unprecedented Efficiency, Innovation, and Growth
PRESIDENT’S MESSAGE APLUS DEAR MEMBERS 2026 Issue 3 1 “ Such strong engagement underscores that the profession remains at the forefront of the strategic shifts shaping Hong Kong’s economic landscape.” The first half of 2026 has brought great energy and a renewed focus to our profession. As the economic and technological landscape shifts, our strategy remains firmly anchored in three pillars: building trust, nurturing talent, and driving development and transformation. A central focus during this period has been strengthening our strategic engagement with the Chinese Mainland. This comes at a pivotal time as the nation launches its 15th FiveYear Plan and Hong Kong prepares its own first Five-Year Plan.The Institute has been gathering members’ feedback to ensure our ongoing professional input remains impactful. In April, I joined a delegation to Chongqing, jointly organized by the Hong Kong Association of Registered Public Interest Entity Auditors Limited and Hong Kong Business Accountants Association. During this visit, I had the opportunity to meet with the Chongqing Party Secretary, Yuan Jiajun. This trip also marked the signing of a Strategic Cooperation Framework Memorandum between the Institute, Chongqing Institute of CPAs, and the two organizers, to further strengthen collaboration and exchange between the accounting profession of Hong Kong and Chongqing. Another key highlight was the delegation to Beijing and Shanghai in June, with the aim of strengthening professional cooperation. Following substantive dialogues with key Mainland government departments, we signed a Memorandum of Understanding with the Shanghai Institute of Certified Public Accountants to establish a joint platform for talent development. To further expand this regional talent pool, earlier in May, we also partnered with Zhongnan University of Economics and Law to accredit undergraduate programmes at their School of Accountancy. This momentum continued with my participation in a delegation to Hangzhou, Suzhou and Shanghai in June, led by Christopher Hui, Secretary for Financial Services and the Treasury, and 20 financial sector leaders. Through this visit, the Institute’s support for the Chinese Mainland enterprises “going global” has unlocked mutually beneficial collaboration opportunities for both sides. Our commitment to global engagement continued into July with a delegation to London. We paid a courtesy call on Dame Susan Langley, Lord Mayor of the City of London, and had in-depth exchanges on international collaboration, talent mobility, United Kingdom-Asia connectivity, and the accounting profession’s contribution to cross-border economic and trade development. We also held a series of meetings with professional bodies, think tanks, business and finance leaders, and academic institutions, including the London Stock Exchange and the Institute of Chartered Accountants in England and Wales. This visit underscores the Institute’s vital role in expanding global opportunities and elevating the stature of Hong Kong’s accounting profession on the world stage. This international standing is also reflected in this recent recognition, as the Institute has been appointed as an official training partner of the International Sustainability Standards Board, which strongly validates our technical capabilities and our commitment to advancing the global environmental, social and governance agenda. Another major highlight of this period was our latest Public Affairs Series, featuring the Honourable Regina Ip. I had the privilege of joining Mrs. Ip on stage, where we co-hosted an engaging discussion with over 300 participants on how emerging technologies, the space economy, and geopolitical tensions are transforming global business. Such strong engagement underscores that the profession remains at the forefront of the strategic shifts shaping Hong Kong’s economic landscape. Beyond professional development, our commitment to the community has entered an inspiring new chapter. I was personally engaged in this heartwarming initiative, as we held the official kick-off ceremony of the HKICPA Volunteer Team in June. The Volunteer Team rallied nearly 1,000 members and their families, reflecting a profession deeply invested in driving positive social impact alongside technical excellence. I invite you to join us for this meaningful cause, as we will continue to grow the team and make a positive impact on the community together. Finally, I hope you will enjoy reading the profile feature in this issue on Webster Ng, our LegCo Councillor (Accountancy). His professional journey and insights offer an inspiring read, and I trust members will find his story both relatable and motivating. As we look toward the second half of the year, I am confident that the momentum we have collectively built will carry us forward into our next chapter of growth. Stephen Law, President
CONTENTS 2026 Issue 3 NEWS 01 President’s message 04 Institute news 07 Business news FEATURES 08 Meeting the moment Webster Ng shares his focus areas as the Accountancy functional constituency’s representative in the Legislative Council 14 HKFRS 18 is coming. Is Hong Kong ready? A close look at how to turn technical understanding of HKFRS 18 into operational readiness 20 Forever young A Plus looks back at the origin and growth of the Institute’s young members community over the past 15 years SHORT PROFILES 30 Q&A with a PAIB Manko Chan, Chief Financial Officer and Company Secretary of Yunfeng Financial Group Limited, and Executive Director and CFO of YF Life Insurance 31 Q&A with a PAIP Louis Lam, Managing Director, Alvarez & Marsal Asia Limited 38 Young member of the month Alex Chu, Director, AI Product Strategy and Adoption at an international bank COLUMNS 27 Thought leadership: Herbert Yung The Director of Sustainability at the Institute on managing AI risks and the role of accountants in AI governance 28 Second opinions What is the role of accountants in national development agendas? 42 Institute insights: As the young members community celebrates its 15th year, A Plus looks at how it has grown from a single proposal into a driving force in the Institute’s engagement with young CPAs 30 Q&A with a PAIB 31 Q&A with a PAIP 20Forever young
What the key new requirements in HKFRS 18, effective for annual periods beginning on or after 1 January 2027, mean for preparers and auditors 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 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 Stephen Law Vice Presidents Jasmine Lee Calvin Tse Chief Executive and Registrar Arthur Lee Director of Corporate Communications Rebecca Tam Publication Manager Kiara Choi 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 Building trust in the new reporting era: Highlights from the Sustainability Forum 2026 Speakers shared practical, practitioner-led insights as Hong Kong strengthens its reporting framework, and develops a mandatory sustainability assurance regime SOURCE 32 From sustainability narrative to financial implications: connected reporting under HKFRS SDS H ow practitioners can assess the financial implications of sustainability-related risks and opportunities under HKFRS Sustainability Disclosure Standards 34 CPD Compliance: Plan ahead, stay ahead M embers who have gone through the CPD compliance audit share lessons learned from the process 38Young 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 2026 Issue 3. The digital version is distributed to over 47,000 members, and around 12,000 students of the Institute and stakeholders every quarterly. 14 HKFRS 18 is coming. Is Hong Kong ready? 35 AI and accounting: Preparing the next generation of professionals How the Institute’s SMP Career Day highlighted that accounting’s AI-empowered future relies on both adaptability and technical skills 36 Technical news
A Hong Kong Institute of CPAs leadership delegation wrapped up a successful three-day official visit to London from 6-8 July. Led by President Stephen Law, Vice-President Jasmine Lee, Chief Executive and Registrar Arthur Lee, and Executive Director Elaine Chung, the delegation engaged with government officials, professional bodies, academic institutions, and business leaders. Their mission focused on deepening the accounting professional and business ties between Hong Kong and the United Kingdom, and promoting Hong Kong as a gateway for Chinese Mainland enterprises going global. During the visit, the delegation paid a courtesy call on Dame Susan Langley, Lord Mayor of the City of London, exchanging views on international collaboration, talent mobility, U.K.- Asia connectivity, and the accounting profession’s contribution to crossborder trade. The Institute delegation also met with the London Stock Exchange to explore strategic pathways for secondary listings and deepen crossborder financial connectivity. On the front of international exchange and talent development, the delegation engaged with leading higher education institutions, including University College London and London Business School, to explore further collaboration opportunities to jointly nurture professional talent. The delegation also met with students interested in pursuing careers in Hong Kong. On 7 July, the delegation co-hosted two themed events with key partners, sharing Hong Kong’s latest developments and regional opportunities with local professionals. The Institute, alongside the Hong Kong Trade Development Council (HKTDC) London Office, InvestHK, the Hong Kong Economic and Trade Office in London, the Hong Kong Business Network (HKBN), and the Institute of Chartered Accountants in England and Wales (ICAEW), organized a morning seminar themed “New U.K. Opportunities from China’s ‘Go Global’ Wave – Where Hong Kong Fits and How U.K. Players Plug In”. On the evening of the same day, the Institute, in collaboration with the ICAEW and HKBN, hosted an exchange event titled “Hong Kong Insights: Asia’s Growth, Global Opportunity and the Role of the Profession”. Building on these discussions, the Institute will follow up to establish regular communication channels and create more opportunities for its members. Read the press release to learn more. Institute leadership concludes visit to Beijing and Shanghai The Institute leadership and Council completed a productive four-day visit to Beijing and Shanghai from 7-10 June. This trip maintained the Institute’s annual Beijing tradition while adding Shanghai to the itinerary for the first time in years. The expansion deepens ties within the Yangtze River Delta region, securing key milestones that benefit members’ long-term professional growth. Additionally, the delegation observed the flag-raising ceremony at Tiananmen Square, marking a moment of appreciation for national history and development. In Beijing, the delegation held intensive meetings with the Ministry NEWS Institute news Business news 4 2026 Issue 3 HKICPA delegation’s London visit strengthens business ties between Hong Kong and U.K. The Institute leadership delegation visited London from 6-8 July to meet with government officials, professional bodies, academic institutions, and business leaders.
APLUS of Finance of the People’s Republic of China, the China Securities Regulatory Commission, the IFRS Foundation Beijing Office, and the Chinese Institute of Certified Public Accountants. Discussions focused on industry development, regulatory policies, talent cultivation, and sustainability, yielding valuable insights and consensus. In Shanghai, the delegation met with the Shanghai United Front Work Department, the Shanghai Stock Exchange, the Shanghai Institute of Certified Public Accountants (SICPA), and the Shanghai National Accounting Institute. Exchanges centred on capital market connectivity between Shanghai and Hong Kong, supporting enterprises in expanding overseas, and nurturing cross-border accounting talent. During the visit, the Institute signed a Memorandum of Understanding (MoU) with the SICPA, covering collaboration in talent exchange, coordinated development, resource sharing, and industry cooperation. This marks another milestone in the Institute’s Mainland cooperation network. Read the press release to learn more. Institute appointed ISSB Training Partner In June, the Institute was among the first organizations in Hong Kong to be appointed an International Sustainability Standards Board (ISSB) Training Partner by the IFRS Foundation. This new global programme recognizes authorized organizations to deliver official training on IFRS Sustainability Disclosure Standards (ISSB Standards) using IFRS Foundationdeveloped content, supporting a consistent, high-quality learning experience. Building on this partnership, the Institute will upgrade its existing Sustainability Reporting Certificate Programme later this year to incorporate IFRS Foundationdeveloped materials, offering enhanced training on the ISSB Standards. Read the press release to learn more. Institute welcomes HKEX’s streamlined board lot framework The Institute welcomes the Hong Kong Exchanges and Clearing Limited’s (HKEX) newly announced enhancements to the board lot framework for the Hong Kong securities market, which should reduce market complexity and improve operational efficiency. The Institute actively contributed to the HKEX consultation process, and key recommendations supported by the Institute – including the reduction of the value floor and the standardization of board lot units – have been adopted in the finalized framework. Stephen Law, Institute President, noted that the streamlined board lot framework will bring clear and tangible benefits to the stock market by lowering entry barriers, reducing trading friction, and enhancing accessibility for a broader base of investors. He added that standardizing and simplifying market arrangements is crucial to maintaining Hong Kong’s competitive edge and strengthening market liquidity. Read the Institute’s submission and press release for more details. Institute joins SFST-led delegation to Hangzhou, Suzhou and Shanghai Institute President Stephen Law participated in a four-day delegation visit to Hangzhou, Suzhou, and Shanghai, led by Christopher Hui, Secretary for Financial Services and the Treasury, from 14-18 June. The delegation brought together over 30 leaders from Hong Kong’s financial sector to strengthen collaboration with Chinese Mainland enterprises, emphasizing shared goals for mutual growth. Institute members and representatives from Go-Global List CPA firms joined the delegation, engaging with over 300 Mainland enterprises at a luncheon to share insights on compliance and cross border development. They also visited Ant Group, Manycore Tech Inc. and the Institute of Global Development at Zhejiang University, gaining a deeper understanding of innovation enterprises and their internationalization needs. The team then held in depth exchanges with 14 leading enterprises on financing, tax planning, and global compliance, while visiting Jiangsu Jinfu Digital Tech Group Co., Ltd., Innovent Biologics Inc, Zhongyifeng Holdings Group Co., Ltd., and meeting with the Jiangsu Branch of the People’s Bank of China. The visit concluded in Shanghai, where the delegation engaged with the Shanghai Pudong Service Center for Overseas Investment, and met with four enterprises seeking international expansion, and attended the 2026 Lujiazui Forum to explore future pathways for Shanghai-Hong Kong financial cooperation. Institute partners with ZUEL The Institute and Zhongnan University of Economics and Law (ZUEL) co-hosted a seminar on high-quality talent development and a certificate presentation ceremony on 13 May. Through this partnership, the Institute has accredited four undergraduate programmes at ZUEL’s School of Accountancy: 2026 Issue 3 5
Accounting, Accounting (CICPA), Financial Management, and Financial Management (CIMA Track). Enrolled students will enjoy exclusive benefits, including Qualification Programme (QP) module exemptions, examination fee discount, and early registration privileges, offering them a streamlined pathway to becoming qualified Hong Kong CPAs. Institute Chief Executive and Registrar Arthur Lee presented the accreditation certificate to ZUEL, marking the official launch of the partnership. “This collaboration provides a strong platform for nurturing globally competitive accounting talent and marks a new chapter in our development in Central China,” Lee said. Launched in 2024, the New Partnership Scheme expands Institute’s network with Mainland universities. Under this initiative, the Institute will conduct QP module exemption assessments for professional courses nominated by universities. Programmes that meet the required number of exempted modules will be recognized as certified programmes. Read the press release to learn more. HKICPA Volunteer Team officially launched The Institute launched the HKICPA Volunteer Team, mobilizing nearly 1,000 members and their families to give back to the community. At the official kick-off ceremony held on 28 June, Dr. Bernard Chan, Under Secretary for Commerce and Economic Development, served as the guest of honour. He joined over 300 Volunteer Team members, along with representatives from the social services, professional services, and business sectors, to celebrate this significant milestone in the Institute’s corporate social responsibility journey. The event included the signing of an MoU with the Agency for Volunteer Service (AVS) to drive cross-sector collaboration. The MoU was formalized by Institute Chief Executive and Registrar Arthur Lee and AVS Chief Executive Officer Carter Ng, with Institute President Stephen Law and AVS Chairman Melissa Pang acting as witnesses. Lee shared the Volunteer Team’s future direction, highlighting the core identity of “CPAs for Good” and its focus on four service areas: community care, social inclusion, green sustainability, and animal welfare. All members are warmly invited to join the HKICPA Volunteer Team. Please read the press release to learn more. CPA Sports Carnival The CPA Sports Carnival 2026, themed “智健未來· 活力 CPA,” was held on 6 June at the Hammer Hill Road Sports Ground in Diamond Hill. Jointly organized by the HKICPA and The Society of Chinese Accountants and Auditors, the event brought together over 1,000 participants from more than 40 accounting organizations. While adverse weather forced the postponement of several competitions this year, the participants’ enthusiasm remained high. Stay tuned for further announcements regarding rescheduled events. Visit the Institute’s website to view the photo highlights and press release. NEWS Institute news The Institute officially launched the HKICPA Volunteer Team at a kick-off ceremony held on 28 June. 6 2026 Issue 3
NEWS Business 20 years The maximum period over which Japanese companies must amortize acquisition goodwill, a rule the Accounting Standards Board of Japan is set to maintain despite pressure to align with International Financial Reporting Standards and Generally Accepted Accounting Principles, which do not require amortization. Nikkei Asia reported that the divergence complicates comparisons between Japanese companies and foreign companies, leaving Japan an outlier among major economies on the issue. World Cup broadcasts injected an extra HK$500 million into Hong Kong’s hospitality sector, despite games being held in the middle of the night due to the time difference, according to Simon Wong, President of the Hong Kong Federation of Restaurants and Related Trades. About 150 restaurants and 10 major malls installed screens to cater to football fans, said Wong on an RTHK radio show. 2026 Issue 3 7 How long a hacker had access to a third-party service management platform that EY in the United States uses to support tax-related work it performs for its clients, between 28 March and 12 April. The breach, disclosed to clients on 13 July, exposed Social Security numbers, credit card details, and tax-filing information. EY says no data has surfaced online and no group has claimed responsibility. The percentage of sustainability assurance engagements globally that were performed by audit firms in 2024, up four percentage points from the year earlier, according to an updated report by IFAC and AICPA & CIMA. The report, The State of Play: Sustainability Disclosure and Assurance (Six-Year Trends and Analysis, 2019-2024), is the sixth annual benchmark of sustainability reporting and assurance practices of companies around the world. It found that a third of companies cite the use or future use of ISSB Standards, compared to 16 percent the year earlier, signaling a shift from fragmented reporting toward standardization. 59% APLUS 16 days 193% 4.5 kg The maximum cargo weight that drones under Lalamove and EY’s strategic partnership can carry. The firm and the Hong Kong delivery company have teamed up to advance innovations in the low-altitude economy and enterprise logistics, with a focus on large companies in Hong Kong and the Greater Bay Area. The collaboration is one of 38 pilot projects approved in the Hong Kong government’s regulatory sandbox project for low-altitude test flights. 73% The percentage of chief financial officers (CFOs) in the United Kingdom who are optimistic that artificial intelligence (AI) will materially boost business performance, up from 59 percent in Q4 2025 and 39 percent in Q3 2024, Deloitte’s Q2 2026 CFO survey finds. Nearly all (93 percent) expect digital investment to rise over the next year. Cost control is cited as the main reason for reduced graduate hiring in the past year, with the use of AI being the second. The surge in net fund inflows into Hong Kong’s asset management industry in 2025, as total assets under management hit a record high, KPMG reports. The firm credits reformed fund tax rules, including a retrospective 0% rate on carried interest, with drawing global managers to the city. Hong Kong also expects roughly HK$350 billion in IPO fundraising this year. 8 The number of standardized board lot unit options Hong Kong Exchanges and Clearing (HKEX) will roll out under its new streamlined framework, alongside a board lot value range of HK$1,000 to HK$50,000. The changes take effect in phases from 2 July, with full compliance tied to the exchange’s Uncertificated Securities Market transition launching 16 November. HKEX says the move will boost trading efficiency and market accessibility.
PROFILE Webster Ng Webster Ng’s first term as the Accountancy functional constituency’s representative in the Legislative Council (LegCo) includes fresh tax bills, Hong Kong’s first five-year plan, and fixing the profession’s oldest fights. He talks to Jemelyn Yadao about how he is handling this A hefty stack of blue booklets – bills drafted by the government, ready to be scrutinized and voted on by lawmakers – is placed neatly on top of Webster Ng’s desk. He skims through them one by one, reading a few of the covers out loud. “Amended common reported standard; automatic exchange of information; dutiable commodities; tax concessions for shipping-related activities and physical commodity trading – these are all tax,” says Ng. “I was told that there will be at least seven bills relating to tax this year, and that’s not including the financial budget. The tax regime will be one of my most important tasks.” Ng, the new representative for the Accountancy functional constituency, takes his seat at a time when the government has tabled numerous bills touching tax, and Hong Kong drafts its first-ever five-year economic and social development plan. Photography by Jocelyn Tam Meeting the moment Interview with Webster Ng: 8 2026 Issue 3
APLUS The small- and medium-sized practitioner turned first-time legislator is navigating the legislative work with the same belief that drives him as a CPA who runs his own firm. “My firm’s slogan is all about getting a win-win situation for both our clients and ourselves. My philosophy is that I want clients to grow and get better, so that we can benefit as well,” says Ng. “Serving as a representative in accountancy, I have to let the other LegCo members know what we are thinking and whether the bills we put on the table for debate are good, but not only good for us. We need a win-win or even a win-win-win situation.” To achieve a win-win situation that meets the needs of Hong Kong accountants, Ng is determined to listen. He says that so far he has been working dynamically to keep up with the concerns and views of the profession. “If many people tell me that something is very important, then I will put it at a high ranking for handling. As the time goes by, the priorities may change,” he says. Two reforms Ng’s current focus as a LegCo member is on two reforms, including limited liability reform for professional firms, a proposal which Ng says stalled around 20 years ago. In Hong Kong, accountants in general partnerships remain jointly and severally liable for the actions of their fellow partners, putting personal assets at risk. Ng is now leaning on LegCo’s research team and a fresh HKICPA task force to rebuild the case from scratch. A lot has changed since the Institute made a submission to the government proposing a reform in professional liability in 2005, he notes. “We need to do research, in particular, to make a comparison between different professions, different jurisdictions, and to see how the bill can be written.” The Institute task force, he adds, has already shared with 2026 Issue 3 9
PROFILE Webster Ng him what has been discussed so far. “I know that it will take a very long time, and a lot of effort to handle this. It is quite challenging.” The corporate rescue bill runs even deeper, with attempts to pass this bill going back around three decades. It carries higher stakes, Ng says, because it affects at least three sectors: Professional, labour force, and commercial. He adds that the bill, which had faced strong opposition from labour groups and the commercial sector, is being modified with the aim of pushing the bill through LegCo in the next one to two years. Signs of movement are showing, as Ng incorporated the bill into a broader nonbiting motion on “Developing a strategic tax regime to consolidate Hong Kong’s status as an international financial centre,” which passed LegCo in May. An element of that motion is to enhance the corporate rescue regime for building a more effective corporate restructuring mechanism. “I embedded the corporate rescue bill into a high-level strategic tax regime, and finally, it has passed. I expect that the government will respond given that its ‘4T’ action plan announced in June (comprising tax revamp, tax agreements, targeted promotion, and talent development) directly ties with my suggestion.” Bringing down the fakes Another long standing issue that Ng is keen to tackle is fake audit reports or unqualified persons providing audit services. A concern is that such auditor’s reports, that fall short of professional standards, can undermine audit quality and reputation of the profession, he notes. “Faux reports are making SMPs (small and medium practices) very nervous,” says Ng. Concerned practitioners have told him about audit reports circulating under fabricated or misused firm names. “In some auditorʼs reports, the auditor name is fake or not registered,” he explains. “In some auditorʼs reports, the CPA firm’s name exists, but the signing partner does not belong to that firm. After I received these complaints, I sent a letter to the Security Bureau, for requesting immediate follow up, as this is a criminal offence.” Ng also set up a quadrilateral meeting in May with the Commercial Crime Bureau, the Financial Services and the Treasury Bureau (FSTB), and the Accounting and Financial Reporting Council (AFRC). As of 31 March 2026, the AFRC received 64 complaints of “bogus CPAs”, which refers to unqualified persons providing audit services. The FSTB and AFRC continue to tackle these malpractices in collaboration with the HKICPA. Beneath the fraud problem, Ng sees a pricing crisis he finds harder to accept. He notes that in some circumstances, those providing audit services when they are not qualified to do so would charge low fees to attract clients, potentially diminishing the quality of financial reporting, and the value of CPAs themselves. “Some members of the profession say this is ‘improper advertising,’” he says. “Of course, with Hong Kong’s reputation as an international financial centre, our profession should not have such low fees. Our audit reports are a safeguard for investors.” Ng says he is in conversation with relevant parties, including the AFRC, about ways of addressing this issue. He has thought about a QR-code traceability system for reports, based on the practice seen in the Chinese Mainland, but acknowledges that some practitioners are wary of excessive data collection and regulatory overreach. “This is a very controversial issue at this moment,” he admits. “But I will try to see if trade-offs can be made, or if there are other workable options for tracing reports to ensure audit quality.” Clever tax, not more tax Ng’s “strategic tax regime” motion is central to how he wants to define his four years in office. He strongly believes in the need to optimize Hong Kong’s tax system. “In my motion, the key wording there is that we are not trying to collect more tax, we want to collect more clever tax,” he says. “Clever tax comes from clever money. We want those high-end enterprises and if a business is not part of this aim, we should strategically put our incentives attracting targeted businesses.” He points to sectors he’d like to see targeted with incentives – aircraft leasing, ship leasing, green shipping fuel, commodity and gold trading – as examples of where “clever” tax design could pull in new business. “As Hong Kong wants to continue being a leading aviation hub, introducing certain tax measures could attract aircraft leasing businesses to come to Hong Kong. We need a strategic tax regime that shows us being very business-friendly.” First-time candidate Webster Ng was elected to represent the Accountancy functional constituency at the December 2025 Legislative Council election. He was previously President of the Taxation Institute of Hong Kong. “ In my motion, the key wording there is that we are not trying to collect more tax, we want to collect more clever tax.” 10 2026 Issue 3
APLUS He is equally enthusiastic about the new tax policy advisory committee unveiled in the 2026-27 budget, framing it against a broader rebalancing of Hong Kong’s economy away from real estate and financial services. The advisory committee, which had its first meeting on 29 June, was established to enhance Hong Kong’s tax competitiveness and investment appeal. “This advisory committee will be very good for getting tax policy reform. We are reformulating our GDP plan so that we are not only highly reliant on real estate and financial services. Instead we want the composition of Hong Kong’s GDP to include different industries,” he says, citing aviation as an example. “The tax regime can be a very important and very strategic one. It is not only about having incentives to get businesses to come. We are asking ourselves, what major GDP components do we want for Hong Kong in the next five or 10 years?” A historic plan Ng is positioning the profession inside a process Hong Kong has never run before: its five-year plan, outlining the city’s development and strategic direction. “In Hong Kong, there’s never, ever been a five-year plan. No one knows how to do it,” says Ng. To explore the profession’s role in this, and gather views to help the government in drafting the plan, Ng hosted an industry consultation meeting for the accounting profession on 8 May. “Eighteen different professional “ The tax regime can be a very important and very strategic one. It is not only about having incentives to get businesses to come.” 2026 Issue 3 11
PROFILE Webster Ng bodies, firms from our accounting sector came to have a conversation, a very comprehensive dialogue to provide their views for the five-year plan,” he says. The consultations pointed him toward the Northern Metropolis as a natural growth area for professional services, with accountants working alongside the entrepreneurs and start-ups the government is trying to attract there. “Professional service could ride on the development of the Northern Metropolis,” he says, noting that LegCo members have visited the area twice to assess its progress. Within that, he sees two clear openings for the sector: helping companies list, and helping them meet Hong Kong’s sustainability reporting standards. Ng and the other LegCo members have since consolidated the views from different sectors and the research conducted into a formal LegCo submission, which has been presented to the government. The formal document of Hong Kong’s Five-Year Plan is expected to be published within the third quarter of the year. The AI question Ng has also been talking to aspiring accountants. He was recently asked by students taking the Qualification Programme whether the profession would disappear in the next five or 10 years because of AI. “I told them that people thought computers would take over our jobs, but instead it enhanced our efficiency. Similarly, the Internet was expected to take over our jobs, but it did not,” says Ng. “With AI, it is not that it will replace you, but the people who know how to use AI can replace the people who don’t.” Indeed, AI has been widely considered a critical survival mechanism for the accounting profession amid a shrinking talent pool. Instead of replacing accountants, AI automates routine work, and elevates professionals into higher-value advisory roles. On the talent shortage issue, Ng says that accountancy’s addition to the government’s Talent List on 1 March 2025 has produced a thin pipeline. A year after the accounting profession had been included in the Talent List, Ng raised a question to the government about the results of the update and its initial effectiveness. “Figures Ng, Founder of Webster Ng & Co., and Managing Director of AC CPA Limited, is a member of the Institute’s Small and Medium Practices Committee, as well as member of its sub-committees 12 2026 Issue 3
APLUS On 8 May, Webster Ng hosted an industry consultation exchange to gather insights for the drafting of Hong Kong’s first five-year plan. The Institute offered policy recommendations on supporting Chinese Mainland enterprises “going global” through enhanced accounting services; expanding opportunities for Hong Kong professionals in the Chinese Mainland; and integrating digital tools, ESG, and AI ethics into accounting education, to ensure the profession’s transformation in the coming five years. tell the story,” he says, adding that as of end-March 2026, 63 people had joined the profession since the inclusion of accountants in the Talent List. “There’s been some improvement in the past two years, particularly with the increase of high-end talent joining the profession. But one thing we need to focus on is the shortage of junior level or semi-senior level staff to handle routine audit work.” He traces part of the problem of low junior talent to public perception. “You’ll see that in most films, they seldom show an accountant. And people still have the perception that being an accountant is very tough. So we need to change that for the teenagers and the fresh grads, and solve the problem at the root cause,” he says. SMPs and the Greater Bay Area SMPs are pressing Ng on proportionality in regulation, which he illustrates with an analogy from one SMP about being handed an airline pre-flight checklist for starting a car. “It’s too safe, too comprehensive, and sometimes not practicable,” he says of blanket compliance rules applied evenly across the Big Four, mid-tier firms and small practices. “The rules should be the same, but SMPs think the level should be on a proportionate basis.” In the Greater Bay Area (GBA), he sees the vast work opportunities there for all accountants, but there are obstacles to overcome. “We’ve been keen on seeing whether we can have an exchange on professional status, allowing Hong Kong accountants to be mutually recognized in the GBA and work there easily,” says Ng. The other issue, he adds, is that Hong Kong CPAs would need to be prepared to open up the Hong Kong market to qualified GBA professionals if a mutual recognition status comes into effect. “Given the size of the GBA, accountants are very concerned about the competition. So there’s two streams.” He points to his own track record securing mutual recognition for chartered tax adviser status during his time as President of the Taxation Institute of Hong Kong. “I see this as more of an opportunity than a challenge because the GBA is a much larger market. If we drive it through a progressive scheme, then some members may see the benefits first.” The busiest year yet Ng was fast asleep when his political career began. It was 6 a.m., and the newly elected LegCo member was slumped in his chair, unaware the result had already gone his way. “I was pushed awake by a colleague sitting behind me. He told me, ‘You won!’” Ng assumed the transition would be manageable, but reality corrected him fast. “At first I thought I could go to my firm in the morning, put down all my stuff for my staff to follow up, and then come back by the end of the day to sign the audit report,” he says. “But after the first day at LegCo, I realized I couldn’t do that.” Ng now mainly manages his firm remotely, carving out “around half a day per week” to return to the office. Since being sworn in on New Year’s Day, his diary has been full. Each bill that reaches his desk, he says, needs independent scrutiny rather than rubber-stamping. “I found that we need to do in-depth statistics and research,” Ng explains. “The bills they put on the table for our assessment, I would say they are mainly focused on the government’s own views. So we need to raise the concerns of the accounting sector, and let them know what the sector is thinking.” Ng has long had a deep interest in supporting the profession. He traces his current role to two decades of being involved in different professional associations, including the HKICPA, ACCA, and the Society of Chinese Accountants and Auditors. Ten years ago, he went beyond accounting, and started serving on government committees, including the Education Bureau and the Social Welfare Department. “They are not solely related to accounting, but I’m using my professional expertise to serve them,” says Ng. Despite having spent considerable time contributing to society, Ng notes that running for LegCo wasn’t originally on his radar. “But that serving spirit has always been there.” “ The Internet was expected to take over our jobs, but it did not. With AI, it is not that it will replace you, but the people who know how to use AI can replace the people who don’t.” 2026 Issue 3 13
FINANCIAL REPORTING HKFRS 18 14 2026 Issue 3
APLUS Illustrations by Olga Aleksandrova HKFRS 18 IS COMING. IS HONG KONG READY? The new accounting standard is set to reshape how companies present financial performance, group information and disclose performance metrics. The challenge now is turning technical understanding into operational readiness. Crystal Chow reports. The biggest change to Hong Kong’s income statement in decades is now less than one year away. Hong Kong Financial Reporting Standard (HKFRS) 18 Presentation and Disclosure in Financial Statements, which is equivalent to International Financial Reporting Standard (IFRS) 18, issued by the Hong Kong Institute of CPAs, replaces the ageing Hong Kong Accounting Standard (HKAS) 1 Presentation of Financial Statements and rewrites how companies present their income statements, promising a sharper, more comparable view of performance for users of financial statements. This evolution represents far more than a routine compliance update. “Overall, HKFRS 18 represents a fundamental shift: not in what companies report, but in how they communicate their financial performance,” explains Katherine Leung, Associate Director of the Standard Setting Department at the Institute and project lead of HKFRS 18 implementation. Its impact will be felt by companies across all industries that prepare financial statements under HKFRS Accounting Standards, making the transition a market-wide issue rather than a sectorspecific concern. While the underlying accounting remains the same, HKFRS 18 will reshape how financial performance is presented, analysed and understood by the market. And the clock is ticking. The standard takes effect for annual reporting periods beginning on or after 1 January 2027, with full retrospective application. That means companies’ first compliant 2027 financial statements must include restated 2026 comparatives. At the heart of HKFRS 18 are three changes aimed at making financial statements more consistent, comparable and clear. Companies will have to classify income and expenses in the income statement as operating, investing, or financing. The standard also introduces two required subtotals: “operating profit or loss” and “profit or loss before financing and income taxes”. HKFRS 18 also provides enhanced guidance on aggregation and disaggregation, requiring companies to group items based on shared characteristics and disaggregate them where necessary to avoid obscuring material information. In addition, alternative performance measures used in public communications must be disclosed in the audited notes as management-defined performance measures (MPMs), bringing them under clearer disclosure requirements and audit scrutiny. 2026 Issue 3 15
FINANCIAL REPORTING HKFRS 18 Assessing Hong Kong’s readiness Hong Kong companies face a blunt question: are they ready? Joe Ng, Chair of the Institute’s Financial Reporting Standards Committee (FRSC), and a Professional Practice Partner at EY, points out that actual execution is lagging behind schedule across many sectors. “For Hong Kong companies in general to reach a stage where they can communicate with investors, there is still quite a distance to go at this point,” Ng says. Companies first need to revisit years of historical data and reclassify transactions under the new framework. Readiness is far from uniform. Executives may understand HKFRS 18 in theory, but many still face a big leap from awareness to system-ready execution. Kenneth Lau, Deputy Chair of FRSC and Partner at Crowe (HK) CPA Limited, observes a clear division in how varying groups of clients are managing the transition. European-owned multinationals are leading the charge, driven by IFRS reporting demands from parent companies, he says. A handful of large Hong Konglisted companies have also started assessing the impact of HKFRS 18 on their financial statements. Many others, however, have yet to get moving. Beyond these early movers, however, many companies are still taking a wait-and-see approach. “Many local clients have yet to start assessing the impact of HKFRS 18. In many cases, they appear to believe that there is still ample time before the effective date,” Lau notes. But delaying the work could create major bottlenecks when companies eventually need to reclassify historical data. Lau also warns against a common misconception. Because HKFRS 18 uses the familiar categories of operating, investing and financing, some preparers assume the classifications follow the same principles as those in HKAS 7 Statement of Cash Flows, Lau says. “As a result, they may believe there is still ample time to address the changes.” That assumption could prove costly, as the categories have different meanings under the two standards. For example, under HKFRS 18, anything that doesn’t fit into investing, financing, income tax or discontinued operations generally lands in the operating category, raising the risk of misclassification for companies that assume the same approach applies. As such, companies that underestimate the changes may find themselves scrambling to rework systems later. Where the real work begins For many companies, the biggest challenge is getting their systems, policies and processes ready. The enhanced guidance on aggregation and disaggregation in HKFRS 18 may require companies to present information at a different level of granularity from current practice, meaning finance teams need to track and capture data that was previously grouped into broader line items. That involves upgrading systems to handle the new requirements, particularly around the presentation of operating expenses. For insurers, these challenges are compounded by the interplay between HKFRS 18 and the existing HKFRS 17 Insurance Contracts. Peter Telders, member of FRSC and Director of Accounting Policy & Finance Controls Governance at AIA Group, explains that under the existing standards, insurers are already required to allocate expenses into specific buckets, such as distinguishing the costs of writing new contracts from servicing existing ones. The new standard’s demand for a granular description of expenses by nature now forces AIA to map these figures into a complex, twodimensional table. “It was clearly an example where there were data gaps, where system changes were required to make sure that going forward we could process that in an automated way,” says Telders. Without those upgrades, companies could be forced to rely on manual spreadsheet work during year-end reporting, an approach that is both time-consuming and prone to errors. The impact of HKFRS 18 also varies by industry. The standard “ It was clearly an example where there were data gaps, where system changes were required to make sure that going forward we could process that in an automated way.” 16 2026 Issue 3
APLUS includes additional classification requirements for companies with specified main business activity (SMBA), specifically companies that provide financing to customers (e.g. banks) or that invest in assets as a main business activity. For insurers, the new requirements on SMBA are widely seen as a better reflection of how the business actually operates. For AIA, that means investment income linked to insurance contracts can sit alongside insurance-related income and expenses in the operating category. “It is very helpful and appropriate that not only income and expense from the insurance contracts, but also income and expense from the investments that are backing those contracts, are both presented in the same operating category,” Telders says. The result is a clearer picture of core business performance. For more complex financial groups, however, the analysis is less straightforward. Determining what qualifies as a company’s SMBA often involves significant judgement and coordination across the organization. Hong Kong Exchanges and Clearing Limited (HKEX), for example, had to carefully assess how the requirements apply to its interconnected trading and clearing operations. “Given HKEX’s integrated business model across trading and clearing activities, including investment of participants’ collateral, this requires careful consideration and alignment across different parts of the organization,” says Kenny Hui, Head of Financial Reporting at HKEX, highlighting the unique complications that arise when conducting such assessments within a complex operational structure. “For example, the Group’s net investment income is derived from the investment of both participants’ collateral and the Group’s own cash. Determining whether such income should be presented within the operating or investing category under HKFRS 18 requires careful judgement, taking into account the nature and specific characteristics of the income.” Hui explains. 2026 Issue 3 17
FINANCIAL REPORTING HKFRS 18 Where cash and investments serve multiple purposes, deciding where income belongs under HKFRS 18 requires close coordination between finance teams, business units and auditors. When performance measures meet scrutiny Restructuring corporate income statements will change how analysts and investors view past financial trends. By introducing standardized subtotals and reducing companyspecific definitions of operating profit, the new requirements could reshape familiar performance metrics. HKEX expects some of these changes in presentation might potentially affect how its financial results are presented and analysed. “This has prompted us to evaluate the use of alternative MPMs to ensure that the results remain relevant and consistent to users of the financial statements,” Hui says. Seen as one of HKFRS 18’s biggest changes, MPMs are subtotals of income and expenses, other than those specified by HKFRS Accounting Standards, that management uses to publicly communicate a company’s financial performance. Companies have long used customized measures such as adjusted operating profit and normalized earnings in investor presentations and earnings releases. Because these measures sat outside audited financial statements, there was often wide variation in how they were calculated. HKFRS 18 changes that. If a performance measure meets the definition of an MPM, companies must now disclose it in a single note in the audited financial statements, including how it is calculated, why it is useful, and how it reconciles to the most directly comparable total or subtotal required by HKFRS Accounting Standards. “These new requirements bring greater transparency and discipline to these widely used measures – retaining their usefulness to investors while ensuring they are clearly explained, comparable and subject to appropriate governance,” Leung of the Institute emphasizes. The changes also raise the stakes for auditors. “In effect, MPMs now form part of the audited financial statements,” Lau says. Auditors must now verify the calculations, test reconciliations and assess whether the measures are being presented fairly and consistently, and companies must watch for performance metrics that may inadvertently fall within the scope of the MPM requirements. A performance metric mentioned in a press release or earnings presentation could meet the definition of an MPM and therefore be subject to the new disclosure 18 2026 Issue 3
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