|Extent of IFRS application
|IFRS Accounting Standards are required for domestic public companies
| Companies whose securities trade in a public market are required to use HKFRS, (which are converged with IFRS Accounting Standards) with the following exceptions:
|IFRS Accounting Standards are permitted but not required for domestic public companies
|IFRS Accounting Standards are required or permitted for listings by foreign companies
|Yes, foreign companies whose securities are publicly traded in Hong Kong are permitted to report under IFRS Accounting Standards.
|The IFRS for SMEs Accounting Standard is required or permitted
|The IFRS for SMEs Accounting Standard is under consideration
Profile last updated: 07 November 2023
As one of two Special Administrative Regions of China (the other being Macao), Hong Kong has its own legal system, including its own legal framework for developing accounting standards.
The HKICPA is the only body authorised by law to promulgate standards relating to financial reporting, auditing, ethics and sustainability disclosures for professional accountants in Hong Kong pursuant to Section 18A of the Professional Accountants Ordinance (Chapter 50).
Companies whose securities trade in a public market are required to use HKFRS (which are converged with IFRS Accounting Standards), with the following exceptions:
certain companies incorporated outside Hong Kong but domiciled in Hong Kong are permitted to use either HKFRS or IFRS Accounting Standards as issued by the IASB.
companies incorporated in the Chinese mainland are permitted to use either HKFRS or China Accounting Standards for Business Enterprises.
Annual accounts of a foreign company that is publicly traded in Hong Kong are required to conform with financial reporting standards acceptable to the Stock Exchange of Hong Kong Limited (Exchange), which are normally:
HKFRS, which are converged with IFRS Accounting Standards; or
IFRS Accounting Standards.
An overseas issuer that has a secondary listing on the Hong Kong Stock Exchange may prepare its accounts in conformity with Generally Accepted Accounting Principles in the United States of America (US GAAP).
Where the Exchange allows annual accounts to be drawn up otherwise than in conformity with HKFRS or IFRS Accounting Standards, the annual accounts will be required to conform with financial reporting standards acceptable to the Exchange. In such cases, the Exchange will normally require the annual accounts to contain a reconciliation statement setting out the financial effect of the material differences (if any) from either HKFRS (which are converged with IFRS Accounting Standards) or IFRS Accounting Standards. The suitability of alternative overseas financial reporting standards depends on whether there is any significant difference between the overseas financial reporting standards and IFRS Accounting Standards, and whether there is any concrete proposal to converge or substantially converge the overseas financial reporting standards with IFRS Accounting Standards. A list of alternative overseas financial reporting standards that are considered comparable to HKFRS (which are converged with IFRS Accounting Standards) or IFRS Accounting Standards is published on the Exchange’s website. This list is amended from time to time.
No. Financial reporting standards issued by the HKICPA are recognised as authoritative under Hong Kong law.
The HKICPA’s due process procedures are as follows:
HKFRS are developed through a due process that involves members and assurance practitioners of the HKICPA, listed companies in Hong Kong, the Exchange, regulatory and legal authorities, academics and other interested individuals and organisations.
The HKICPA Financial Reporting Standards Committee (FRSC) decides on major projects and work priorities. The FRSC identifies potential agenda items for which timely guidance can be provided. Due process for projects may involve any or all of the following steps, which are conducted by the FRSC except for those that note otherwise:
On occasion, the FRSC may consult and raise issues specific to Hong Kong proactively with the IASB.