|Extent of IFRS application||Status||Additional Information|
|IFRS Standards are required for domestic public companies||Domestic companies whose securities trade in a public market are required to use Hong Kong Financial Reporting Standards (HKFRS), which are virtually identical to IFRS Standards, with the following exception: A company that is domiciled in Hong Kong but that is incorporated outside of Hong Kong is permitted to use either HKFRS or IFRS Standards as issued by the Board.|
|IFRS Standards are permitted but not required for domestic public companies|
|IFRS Standards are required or permitted for listings by foreign companies||Permitted. For example, more than 250 mainland Chinese companies listed on the Stock Exchange of Hong Kong use either IFRS Standards or HKFRS.|
|The IFRS for SMEs Standard is required or permitted||Permitted.|
|The IFRS for SMEs Standard is under consideration|
Profile last updated: 16 November 2018
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 financial reporting, auditing and ethical standards for professional accountants in Hong Kong pursuant to Section 18A of the Professional Accountants Ordinance (Chapter 50).
Annual accounts of foreign company that is publicly traded in Hong Kong are required to conform to:
HKFRS, which are virtually identical to IFRS Standards; or
China Accounting Standards for Business Enterprises (ASBE) in the case of an issuer from the People’s Republic of China that has adopted ASBE for the preparation of its annual financial statements; or
an overseas issuer that has a secondary listing on the Hong Kong Exchange may prepare its accounts in conformity with Generally Accepted Accounting Principles in the United States of America (US GAAP).
At 30 October 2018, a total of 391 Chinese companies trade in Hong Kong (on the ‘Red Chip’ and ‘H-Share’ main boards). The financial reporting frameworks used by those companies in Hong Kong are as follows:
|Which standards?||Number of companies||Per cent of companies|| |
|Per cent of market capitalisation|
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 member practices of the HKICPA, listed companies in Hong Kong, the stock exchange, regulatory and legal authorities, academics and other interested individuals and organisations.
The HKICPA Financial Reporting Standards Committee (FRSC) consults the HKICPA Standards and Quality Accountability Board (SQAB) on major projects, agenda decisions, 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 noted otherwise:
On occasion, the FRSC may consult and raise issues specific to Hong Kong proactively with the IASB Board.