In a move aimed at easing the financial reporting burdens of private companies, the Hong Kong Institute of Certified Public Accountants has issued today a simplified standard as a reporting option.
The new standard, known as Hong Kong Financial Reporting Standard for Private Entities, is an option that larger private companies can use instead of the full Hong Kong Financial Reporting Standards. The full HKFRS is considered more relevant for listed companies and could be burdensome for some private companies, while the existing Small and Medium-Sized Entity Financial Reporting Framework and Financial Reporting Standard is best suited for micro private companies.
"The Institute is issuing these standards as a reporting option for private entities to offer relief from the requirement of applying the full Hong Kong financial reporting standards, which can be quite burdensome and produce more information than is necessary in some cases," says Wilson Fung, the Institute's president.
The new standard is closely aligned with the international standards for non-publicly accountable companies issued by the International Accounting Standards Board, based in London, which creates standards for companies worldwide.
The new Hong Kong Financial Reporting Standard for Private Entities is effective today. Eligible entities are permitted to use the standard to prepare their financial statement for prior periods where the relevant financial statements have not been finalized and approved.
For more information, refer to the HKFRS Technical Bulletin: HKFRS for Private Entities Q&A paper here.