Audit Procedures - FCPA PDF

HKICPA AUDIT MANUAL
Tailoring Checklist
1. Complete the following data concerning the client. This will then appear on every sheet.
Client name Aero North
Year-end
File number
2. Complete the following tailoring questions to select the programmes required. Select 'yes' to indicate
that a programme is required or 'no' if it is not. In most cases the default is set to 'yes' so if a programme
is not required you should click the box and select 'no'. For programmes that are not expected to be used
that frequently the default is set to 'no'.
3. This page can be printed as a record of the tailoring for this client.
Answer
Q Ref Sch Ref Question Notes
CURRENT FILE
Do you want:
A001 Ai Section A index Yes
A002 Ap Section A partner completion Yes
A003 Aop1 Will the accounts require calling over? No
A004 SME_FRS Do you want an SME FRS checklist? No
A005 Chklst Do you want the main disclosure checklist? Yes
A006 Do you want any additional checklists: No
A007 App 1 Share based payment No
A008 App 2 Investment properties Yes
A009 App 3 Financial instruments No
A010 App 4 Group companies, associates & joint ventures Yes
A011 App 5 Business combinations & goodwill Yes
A012 App 6 Non-current assets, discontinued operations
and disposal groups No
A013 App 7 Defined benefit costs No
A014 App 8 Pension plan accounts No
A015 App 9 Hyperinflationary economies No
A016 App 10 Agriculture No
A017 App 11 Exploration for mineral resources No
A018 App 12 First time adoption of HKFRS No
Do you want:
B001 Bi Section B index Yes
B002 Bp Section B partner completion Yes
B003 B2 Audit standards review questionnaire Yes
B004 B3.1/2 File completion questionnaires Yes
B005 B4 Critical review of accounts questionnaire Yes
B006 B6 Justification of audit report Yes
Falcon CPAs - May 2010 HKICPA Jun 07 Supp 00

B007 B7 Summary of unadjusted errors Yes
B008 B9 Final analytical review Yes
Where a decision is made not to use one of the standard forms B2 to B9 it is
essential that the issues considered on the form(s) are addressed in the audit
highlights report.
Do you want:
C001 Ci Section C index Yes
C002 C1 Audit planning summary Yes
C003 C1.1 Acceptance procedures Yes
C004 C2 Planning checklist Yes
C005 C3 Planning memorandum Yes
C006 C4 Record of planning meeting Yes
C007 C5 Systems & internal controls summary Yes
C008 C5.1 Review of design & implementation of internal
controls Yes
C009 C5.1op Continuation sheet for review of design &
implementation of internal controls Yes
C010 C6 Audit risk summary Yes
C011 C6.1 Audit risk checklist Yes
C012 C6.2 Risk response summary Yes
C013 C6.3 Specific risk action plan Yes
C014 C6.4 C6.4 Detailed risk assessment Yes
C015 C7 C7 Preliminary analytical review Yes
C016 C8 C8 Materiality summary Yes
Other planning schedules
C017 C9.1 Accountancy work planning No
C018 C9.2 Sample size planning No
C019 C9.3 Assignment planning - timetable No
C020 C9.4 Budget and performance summary No
C021 C9.5 Job progress report No
C022 Cop01 Were the comparative figures unaudited or
audited by another firm? No
C023 Cop02HK Small company status - Hong Kong company Yes
C024 Cop02OS Small company status - other entity No
C025 Cop03 Will the accounts be published in an electronic
form? No
C027 Cop04 Is the use of service organisations material to the
company's activities? No
C028 Cop05 Will the firm be using the work of another auditor? No
C029 Cop06 Will the firm be using the work of an expert? No
C030 Cop07/08 Are there aspects of the clients operations that
require additional bespoke audit tests? No
Where a decision is made not to use one of the standard forms C1 to C8 it is
essential that the issues considered on the form(s) are addressed in the planning
memorandum.
D001 Will analytical procedures be applied to reduce

the level of substantive testing? Yes
Do you want:

D002 Di Section D index Yes
D003 Ds Extensive analytical review - audit objectives Yes
D004 D2 Extensive analytical review - audit programme Yes
E001 Does the entity have any goodwill or other

intangible assets? Yes
Do you want:
E002 Ei Section E index Yes
E003 EAs Intangible assets - audit objectives Yes
E004 EA2 Intangible assets - audit programme Yes
E005 EBs Business combinations - audit objectives No
E006 EB2 Business combinations - audit programme No
F001 Does the entity have any property, plant,

equipment or investment properties? Yes
Do you want:
F002 Fi Section F index Yes
F003 FAs PPE - audit objectives Yes
F004 FA2 PPE - audit programme
Yes
F005 FA2 Were there material additions to or disposals
from PPE during the year? Yes
F006 FA2 Is depreciation material? Yes
F007 FAssb Sample calculation form for PPE? Yes
F008 FBs Investment properties - audit objectives Yes
F009 FB2 Investment properties - audit programme Yes
F010 FBssb Sample calculation form for investment properties? Yes
G001 Does the entity have any investments in group or

associated undertakings? Yes
Do you want:
G002 Gi Section G index Yes
G003 Gs Investments in group & associated undertakings -
audit objectives Yes
G004 G2 Investments in group & associated undertakings -
audit programme Yes
H001 Does the entity have any other investments,

derivatives or other financial instruments? Yes
Do you want:
H002 Hi Section H index Yes
H003 HAs Other investments - audit objectives Yes
H004 HA2 Other investments - audit programme Yes
H005 HA2 Were there material additions to or disposals
from other investments during the year? Yes
H006 HBs Other financial instruments & derivatives - audit
objectives No
H007 HB2 Other financial instruments & derivatives - audit
programme No

I001 Does the entity have any inventories or
construction contracts? Yes
Do you want:
I002 Ii Section I index Yes
I003 IAs Inventories - audit objectives Yes
I004 IA2 Inventories - audit programme Yes
I005 IA2 Is any stock held by 3rd parties? Yes
I006 IA2 Did we attend the client's stock take? Yes
I007 IAssb Sample selection form for inventories? Yes
I008 I4 Stock take attendance programme Yes
I009 IBs Construction contracts - audit objectives No
I010 IB2 Construction contracts - audit programme No
J001 Does the entity have any trade or other

receivables? Yes
Do you want:
J002 Ji Section J index Yes
J003 Js Trade and other receivables - audit objectives Yes
J004 J2 Trade and other receivables - audit programme Yes
J005 J2 Does the company have any trade receivables?
Yes
J006 J2 Will a trade receivables circularisation be
performed? Yes
J007 Jop01 Trade receivables circularisation summary Yes
J008 Jop02 Trade receivables circularisation sheet Yes
J009 J2 Does the company have any long-term debtors? Yes
J010 Jssb A sample selection planning form for this section Yes
K001 Does the entity have any bank or cash balances?

Yes
Do you want:
K002 Ki Section K index Yes
K003 Ks Bank & cash - audit objectives Yes
K004 K2 Bank & cash - audit programme Yes
K005 K2 Does the company receive cash or hold material
cash balances? Yes
L001 Does the entity have any trade or other payables?

Yes
Do you want:
L002 Li Section L index Yes
L003 Ls Trade & other payables - audit objectives Yes
L004 L2 Trade & other payables - audit programme
Yes
L005 L2 Does the company have any trade creditors?
Yes
L006 L2 Will a trade payables circularisation be
performed? Yes
L007 Lop01 Trade payables circularisation summary Yes
L008 Lop02 Trade payables circularisation sheet Yes

L009 L2 Does the company have any operating or
finance lease creditors? Yes
L010 Lssb A sample selection planning form for this section Yes
M001 Does the entity have any long term loans or

deferred income? Yes
Do you want:
M002 Mi Section M index Yes
M003 Ms Long term loans or deferred income - audit Yes
M004 M2 objectives
Long term loans or deferred income - audit Yes
programme
N001 Does the entity have any provisions for liabilities
and charges, contingent liabilities or financial
commitments?
Yes
Do you want:
N002 Ni Section N index Yes
N003 Ns Provisions, contingencies and commitments -
audit objectives Yes
N004 N2 Provisions, contingencies and commitments -
audit programme Yes
The purpose of the programme in this section (N2) is to ensure that all provisions,
contingencies and commitments are identified. It is therefore good practice to
complete the tests in this programme even if you believe they are not applicable. If
you decide not to use the programme you must consider carefully how the
completeness of provisions, contingencies and commitments will be addressed.
O001 Does the entity have capital, reserves or statutory

records? Yes
Do you want:
O002 Oi Section O index Yes
O003 Os Capital, reserves and statutory records - audit
objectives Yes
O004 O2 Capital, reserves and statutory records - audit
programme Yes
O005 O2 Is the entity required to maintain statutory
records? Yes
O006 O2 Does the entity have a share capital or other
form of membership? Yes
P001 Is the entity liable to Corporation tax?

Yes
Do you want:
P002 Pi Section P index Yes
P003 Ps Taxation - audit objectives Yes
P004 P2 Taxation - audit programme Yes
Q001 Qi Do you want the Q section index Yes
R001 Does the entity prepare an income statement?

Yes

Do you want:
R002 Ri Section R index Yes
R003 Rs Income statement - audit objectives Yes
R004 R2 Income statement - audit programme
Yes
R005 R2 Does the entity despatch goods? Yes
R006 R2 Does the entity make cash sales? Yes
R007 R2 Does the entity have material salaries or wages
other than directors remuneration? Yes
R008 Rop01 A sample selection planning form for this section
Yes
R009 Rop02 Is there a risk that material related party
transactions may not be identified? Yes
S001 Will reliance be placed on the operational

effectiveness of any internal controls? Yes
Do you want:
S002 Si Section S index Yes
S003 Ss Tests of control - audit objectives Yes
S004 S2 Tests of control - audit programme Yes
S005 S3 Internal control evaluation Yes
S006 S4 Internal control questionnaire Yes
T001 Will a formal subsequent events review be

undertaken? Yes
Do you want:
T002 Ti Section T index Yes
T003 Ts Subsequent events - audit objectives Yes
T004 T2 Subsequent events - audit programme Yes
T005 T3 Going concern - checklist Yes
T006 T3.1 Going concern - conclusion Yes
T007 T4 Final programme - subsequent events Yes
Subsequent events review is a requirement of auditing standards. Are you sure that
this area will be properly addressed and documented without completion of at least
the audit objectives on Ts?
U001 Section not used

Yes
V001 Is the entity required to prepare consolidated

accounts? No
W001 WXi Do you want an index sheet for Section W -

Accounting working papers and Section X - Other
primary financial statements?
No
Y001 YZi Do you want an index sheet for Section Y -

Computer reports and records received and Z -
Obsolete working papers?
No

PERMANENT FILE
The following forms for the permanent audit file are available. Please
select those required.
PAF001 PAF01 Permanent audit file index No
PAF002 PAF02 Background information No
PAF003 PAF03 Details of professional advisors No
PAF004 PAF04 Know your client checklist No
PAF005 PAF05 Register of laws and regulations No
PAF006 PAF06 Details of related parties
No
PAF007 PAF07 Significant accounting policies No
PAF008 PAF08 New client checklist No
PAF009 PAF09 Systems overview No
Now click on 'Refresh Programmes' to update your programme selection.

MUST always stay at the front in the working paper file
Client: Aero North Ref:
Year end: INDEX

File no:
AUDIT FILE INDEX

1 Final accounts - signed copy
2 Points for Audit Director's/Partner's Attention
3 Review Notes / Queries
4 Post Audit Adjustments
5 Draft accounts, typing instructions
6 Letter of representation / Letter of Shareholder Support / S141 Agreement
7 Letter to management
8 Management accounts/last year‟s accounts
9
AUDIT PLANNING & COMPLETION
10 Audit Planning P
11 Audit Completion
12 Compliance
13 Company accounts disclosure checklists
14 Audit points for next year audit
15 Correspondence with client - Letters & Emails
16 Letter of engagement / Professional Clearance letter
OTHER AUDIT ISSUES
A PROPERTY, PLANT, EQUIPMENT & INVESTMENT PROPERTIES
B BANK & CASH BALANCES
C TRADE PAYABLES & OTHER PAYABLES
D TRADE RECEIVABLES & OTHER RECEIVABLES
E INTANGIBLE ASSETS & BUSINESS COMBINATIONS
F
G INVESTMENTS IN GROUP COMPANIES & ASSOCIATED UNDERTAKINGS
H OTHER INVESTMENTS AND DERIVATIVES
I INVENTORIES & CONSTRUCTION CONTRACTS
J JOINT VENTURES
K INTER-COMPANY ACCOUNT BALANCES
L LEASING, FINANCIAL COMMITMENTS & CONTIGENT LIABILITIES
M MANAGEMENT - DIRECTORS CURRENT ACCOUNTS
N
O OPERATIONAL EFFECTIVENESS OF CONTROLS
P POST BALANCE SHEET EVENTS / SUBSEQUENT EVENTS
Q
R CONSOLIDATION
S SHARE CAPITAL, RESERVES AND STATUTORY RECORDS
T TAXATION & TAX COMPUTATION
U INCOME STATEMENT - RECEIPTS ITEMS
V INCOME STATEMENT - EXPENDITURE ITEMS
W ACCOUNTS WORKING PAPERS
X OTHER PRIMARY FINANCIAL STATEMENTS
Y COMPUTER REPORTS AND RECORDS RECEIVED
Z OBSOLETE WORKING PAPERS
FCPA Jan2011 Ai Audit File Index HKICPA Jun 07 Supp 00

Year end: A
File no:
PARTNER COMPLETION
Final Initials
1 Have all outstanding items on the initial partner completion been adequately
dealt with?
Yes/N/A*
2 Has a signed letter of representation been received from management that
addresses at least the specific issues required by the HKSAs (see B3.1)?
Yes
3 Where fraud has been identified or information found that fraud may exist, has
this been communicated to the appropriate level of management or those
charged with governance?
Yes/N/A*
4 Where the letter of representation is signed by one director on behalf of the
Board, have we seen minutes of a meeting agreeing its contents?
Yes/N/A*
5 Are we satisfied that the directors' representations can be relied upon? Yes
6 Does the file contain adequate justification of the audit report? Yes
7 Have we informed those charged with governance of any unadjusted
misstatements, any material weaknesses in the accounting and internal control
systems, or any other relevant matters relating to the audit as required by HKSA
260.11? Yes/N/A*
8 Has the final subsequent events programme on T4 been completed? (Date
latest subsequent events review completed ______________________)
Yes/NCNU*
9 Does the balance sheet state the name of the director who approves the
accounts on behalf of the Board, together with the date of approval?
Yes
10 Where applicable does the audit file contain sufficient evidence to support
reporting under the SME-FRS?
Yes/N/A*
11 Do the working papers and the tax computation reflect final adjustments? Yes
12 Have all final journals been recorded and processed to produce a closing trial
balance agreeing with the accounts?
Yes
13 Has the final copy of the accounts been referenced to the file to ensure all lead
and Q schedules reflect final adjustments?
Yes
14 Will the final file be assembled within 60 days of the date of approval of the audit
report?
Yes
15 On consideration of the file and in particular questions 1 and 2 on B3.2 are we
satisfied that it is appropriate for us to seek re-appointment as auditors?
Yes
I am satisfied that sufficient appropriate audit evidence has been obtained to support the conclusions reached and for
the auditor‟s report to be issued.
Signed Partner Date
Second Partner (if applicable)
Signed Partner Date

* Delete as appropriate
U NCN = Not considered necessary
These questions should be signed by the partner, all other questions may be signed by the manager or senior and reviewed by the partner.
FCPA Jan2011 HKICPA Jun 07 Supp 00

Client: Aero North Prepared by: Date: Ref:
Year end: Reviewed by: Date:
File no:
CALLING OVER SHEET AND TYPING INSTRUCTIONS

Calling over
(Insert initials & date)
Draft accounts – prior to client approval
Called by: Cast by:
Read by: Referenced to file by:
Note totals agreed to P/L or B/S by: Checklist completed by:
Final accounts for signature
Called by: Cast by:
Read by: Referenced to file by:
Note totals agreed to P/L or B/S by: Checklist revised by:
Typing/printing instructions
Copies required Number of copies Notes

Full s141D
accounts accounts
Client
Inland Revenue Department
Bank
Audit File
Other
HKICPA Jun 07 Supp 00

SME FRS
HKICPA AUDIT MANUAL

SME-FRS Disclosure Checklist
Client Name: Aero North

Year End:
File No.:
This checklist applies for accounting periods commencing on or after 1 January 2005. All disclosures
shown apply from that date except where otherwise indicated.
The checklist addresses the disclosure requirements of the SME-FRS and provisions of the Companies
Ordinance that are applicable to such companies.
Overseas companies are also eligible to apply the SME-FRS. Such companies should ignore any
references to the Companies Ordinance.
All questions should be answered 'Y' for yes, 'N' for No or 'N/A' for not applicable.
Completion
I am satisfied that the answers given to the questions in this checklist are correct and that all significant
matters have been adequately documented in supporting working papers.
I confirm that any new disclosure requirements arising since the used version of this checklist was
produced have been reviewed and taken into account. Any relevant matters have been explained on B5
or B8.
Prepared by: Date:
Review
I have reviewed the completion of the checklist and am satisfied that this has been properly undertaken.
Reviewed by: Date:
Comments
Page 11 of 356 HKICPA Jun 07 Supp 00

SME FRS
Reference Yes No
N/A
1.0 General
1.01 Does the company satisfy the criteria set out in section 141D of SME-FRF 16
the Companies Ordinance?
1.02 Does the entity satisfy the following conditions: SME-FRF 17
a) It does not have public accountability.
b) All of its owners agree to prepare the financial statements in
accordance with the SME-FRS; and
c) The entity is considered to be an SME in terms of its size
under paragraph 24 of the SME Financial Reporting
Framework.
1.03 Every balance sheet of a company shall be approved by the s129B(1)
board of directors of the company and signed on behalf of the
board:
(a) by 2 of the directors; or
(b) in the case of a private company having only one director, by
the sole director.
1.04 A complete set of separate financial statements for an entity SME-FRS 1.1
includes the following components: s122(1-2)
a) a balance sheet;
b) an income statement; and
c) accounting policies and explanatory notes.
1.05 Where departure from a requirement is necessary in order to SME-FRS 1.5
achieve a proper presentation, in accordance with the SME-FRS, s123(1)
an entity should disclose:
a) that management has concluded that the financial
statements properly present the entity‟s financial position and
financial performance;
b) that it has complied in all material respects with applicable
sections of the SME-FRS, except for departing from them in
order to achieve a proper presentation; and
c) in respect of the departure:
i) the nature;
ii) the financial effect (when quantifiable);
iii) the treatment that the SME-FRS would require;
iv) the reason why that treatment would be misleading in
the circumstances; and
v) the treatment adopted.
1.06 For matters not addressed in the SME-FRS: has an accounting SME-FRS 1.2
policy, consistent with the historical cost convention, for that
particular event or transaction been applied?
1.07 Where management is aware, in making its assessment, of SME-FRS 1.6
material uncertainties related to events or conditions that may
cast significant doubt on the entity‟s ability to continue as a going
concern, those uncertainties should be disclosed.
1.08 When the financial statements are not prepared on a going SME-FRS 1.6
concern basis, that fact should be disclosed, together with the
basis on which the financial statements are prepared and the
reason why the entity is not considered to be a going concern.

SME FRS
Reference Yes No
N/A
1.09 Has comparative information with respect to the previous period SME-FRS 1.11
been disclosed for all numerical information in the financial
statements?
1.10 Does the comparative information include narrative and SME-FRS 1.11
descriptive information when it is relevant to an understanding of
the current period‟s financial statements?
Structure & content
1.11 The following information should be prominently displayed, and SME-FRS 1.12
repeated when it is necessary for a proper understanding of the
information presented:
a) the name of the reporting entity or other means of
identification;
b) the balance sheet date or the period covered by the financial
statements, whichever is appropriate to the related
component of the financial statements; and
c) the reporting currency.
1.12 Where annual financial statements are presented for a period SME-FRS 1.13
longer or shorter than one year, an entity should disclose, in
addition to the period covered by the financial statements:
a) the reason why a period other than one year is being used;
b) andfact that comparative amounts for the income statement
the
and related notes are not comparable.
1.13 Where a company enters into any contract, other than a contract s162A(1)(a)
of service with any director or any person engaged in the full-time
employment of the company, whereby any individual, firm or body
corporate undertakes the management and administration of the
whole or any substantial part of any business of the company
disclose for any year in which the contract is in force :
a) a statement of the existence of the contract; and

b) the duration of the contract and
c) the name of any director interested therein.
1.14 If the auditors fail to obtain all the information and explanations s141(6)
which, to the best of their knowledge and belief, are necessary for
the purposes of their audit, they shall state that fact in their report.
1.15 If in the case of any accounts the requirements for the disclosure s161(8)
of directors emoluments are not complied with, it shall be the duty
of the auditors to include in their, so far as they are reasonably
able to do so, a statement giving the required particulars.
2.0 Income statement

2.01 The face of the income statement should include, where SME-FRS 1.22
applicable, line items that present the following amounts:
a) revenue;
b) finance costs;
c) tax expense; and
d) profit or loss for the period.

SME FRS
Reference Yes No
N/A
2.02 Have additional line items, headings and subtotals been SME-FRS 1.22
presented on the face of the income statement when such
presentation is necessary to present properly the entity‟s financial
performance?
2.03 An entity should present, either on the face of the income SME-FRS 1.26
statement or in the notes, an analysis of expenses using a
classification based on either the nature of expenses or their
function within the entity.
2.04 Entities classifying expenses by function should disclose SME-FRS 1.27
additional information on the nature of expenses including:
a) depreciation and amortisation expense; and
b) staff costs.
2.05 An entity should disclose, either on the face of the income SME-FRS 1.28
statement or in the notes, the amount of dividends per share,
declared or proposed, for the period covered by the financial
statements.
Revenue
2.06 An entity should disclose: SME-FRS 11.11
a) the accounting policies adopted for the recognition of
revenue, including the methods adopted to determine the
stage of completion of transactions involving the rendering of
services;
b) the amount of each significant category of revenue
recognised during the period, including revenue arising from:
i) the sale of goods;

ii) the rendering of services;
iii) interest;
iv) royalties; and
v) dividends; and
c) the amount of revenue arising from exchanges of goods or
services included in each significant category of revenue.
Government grants
a) the accounting policy adopted for government grants,
including the methods of presentation adopted in the
financial statements;
b) the nature and extent of government grants recognised in the
financial statements and an indication of other forms of
government assistance from which the entity has directly
benefited; and
c) unfulfilled conditions and other contingencies attaching to
government assistance that has been recognised.
Borrowing costs
a) the accounting policy adopted for borrowing costs;
b) the total borrowing costs incurred during the period;
c) the amount of borrowing costs capitalised during the period;
and

SME FRS
Reference Yes No
N/A
d) the capitalisation rate used to determine the amount of

borrowing costs eligible for capitalisation.
Directors' emoluments
2.09 So far as the information is contained in the company's books s161(1)
and papers or the company has the right to obtain it from the
persons concerned, disclose:
a) the aggregate amount of the directors' emoluments; s161(1)a
b) the aggregate amount of directors' or past directors' s161(1)b
pensions; and
c) the aggregate amount of any compensation to directors or s161(1)c
past directors in respect of loss of office.
2.10 The amount to be shown above: s161(2)
a) shall include any emoluments paid to or receivable by any s161(2)a
person in respect of his services:
(i) as director of the company; or
(ii) in respect of his services, while director of the company,
as director of any subsidiary thereof or otherwise in
connexion with the management of the affairs of the
company or any subsidiary thereof; and
b) shall distinguish between: s161(2)b
(i) emoluments in respect of services as director, whether
of the company or its subsidiary; and
(ii) other emoluments;
2.11 The amount to be shown above: s161(3)a
a) shall not include any pension paid or receivable under a
pension scheme if the scheme is such that the contributions
thereunder are substantially adequate for the maintenance of
the scheme;
b) but shall include any pension paid or receivable in respect of
any such services of a director or past director of the
company, whether to or by him or, on his nomination or by
virtue of dependence on or other connexion with him, to or by
any other person; and
c) shall distinguish between s161(3)b
(i) pensions in respect of services as director, whether of
the company or its subsidiary; and
(ii) and other pensions;
a) shall include any sums paid to or receivable by a director or s161(4)a
past director by way of compensation for the loss of any
office as director or otherwise in connexion with the
management of the affairs of the company or any subsidiary
thereof; and
b) shall distinguish between compensation in respect of the s161(4)b
office of director, whether of the company or its subsidiary,
and compensation in respect of other offices; and

SME FRS
Reference Yes No
N/A
Note. For the purposes of this section references to

compensation for loss of office shall include sums paid as
consideration for or in connexion with a person's retirement from
office. (s161(4)b)
2.13 The amounts to be shown for aggregate emoluments, pensions s161(5)
and compensation for loss of office:
(a) shall include all relevant sums (except those to be accounted s161(5)a
for to the company or any of its subsidiaries) paid by or
receivable from:
(i) the company; and
(ii) the company's subsidiaries; and
(iii) any other person.
(b) shall distinguish, in the case of the compensation for loss of s161(5)b
office, between the sums paid by or receivable from:
(i) the company; and
(ii) the company's subsidiaries; and
(iii) persons other than the company and its subsidiaries.
2.14 Corresponding amounts for the immediately preceding financial s161A(1)
year are required for all the s161 disclosures concerning
directors' remuneration.
Foreign Exchange Rates
a) the accounting policy adopted for foreign currency
transactions, including the basis used in the translation of the
foreign currency transactions, balances denominated in
foreign currencies at the balance sheet date and the basis
used in the translation of financial statements of foreign
branches and the treatment accorded to exchange
differences;
b) the amount of exchange differences included in the profit or
loss for the period; and
c) net exchange differences recognised as a separate
component of equity, and a reconciliation of the amount of
such exchange differences at the beginning and end of the
period.
Exceptional items
2.16 When items of income and expense within profit or loss are of SME-FRS 1.24
such size, nature or incidence that their disclosure is relevant to
explain the performance of the entity for the period, the nature
and amount of such items should be disclosed separately.
2.17 Circumstances that may give rise to the separate disclosure of SME-FRS 1.25
items of income and expense in accordance with the above
include the following:
a) the write-down of inventories to net realisable value or
property, plant and equipment to recoverable amount, as well
as the reversal of such write-downs;
b) the write-down of intangible assets to recoverable amount,
as well as the reversal of such write-downs;

SME FRS
Reference Yes No
N/A
c) a restructuring of the activities of an entity and the reversal of

any provisions for the costs of restructuring;
d) disposals of items of property, plant and equipment;
e) disposals of intangible assets;
f) disposals of long-term investments;
g) litigation settlements; and
h) other reversals of provisions.
Income taxes
2.18 Current tax assets and current tax liabilities should be presented SME-FRS 14.7
separately from other assets and liabilities in the balance sheet.
2.19 An entity should offset current tax assets and current tax liabilities SME-FRS 14.8
if, and only if, the entity:
a) has a legally enforceable right to set off the recognised
amounts; and
b) intends either to settle on a net basis or to realise the asset
and settle the liability simultaneously.
a) the accounting policy adopted for income taxes; and
b) major components of tax expense (income).
2.21 Components of tax expense (income) may include: SME-FRS 14.10
a) current tax expense (income);
b) any adjustments recognised in the period for current tax of
prior periods; and
c) the amount of benefit arising from a previously unrecognised
tax loss or tax credit of a prior period that is used to reduce
current tax expense.
Other expenses
2.22 In respect of any interest paid on share capital in the year Sch 11.2b
disclose:
a) the amount of any interest paid;
b) that rate at which it has been paid.
2.23 Disclose the amount of dividends that were proposed or declared SME-FRS 1.21
after the balance sheet date but before the financial statements
were authorised for issue.
2.24 Disclose the amount of any cumulative preference dividends not SME-FRS 1.21
recognised.
3.0 Statement of Changes in Equity
3.01 An entity should present changes in equity either in the notes to SME-FRS 1.29
the financial statements or as a separate component of the
financial statements.
3.02 Changes in equity should include the following: SME-FRS 1.29
a) the profit or loss for the period;
b) each item of income and expense, gain or loss that, as
required by the SME-FRS, is recognised directly in equity,
and the total of these items;
c) the cumulative effect of changes in accounting policy and the
correction of prior period errors;
d) capital transactions with owners and distributions to owners;

SME FRS
Reference Yes No
N/A
e) the balance of accumulated reserves at the beginning of the

period and at the balance sheet date, and the movements for
the period; and
f) a reconciliation between the carrying amount of each class of
equity capital, share premium and each reserve at the
beginning and end of the period, separately disclosing each
movement.
Note. Comparative information is not required for this

reconciliation .
4.0 Balance Sheet
General
4.01 There shall be shown under a separate heading the aggregate Sch 11.5
amount of any outstanding loans made in respect of financial
assistance.
4.02 Has the entity presented current and non-current assets and SME-FRS 1.14
current and non-current liabilities as separate classifications on Sch 11.4(1)
the face of the balance sheet?
4.03 Where the entity has not presented current and non-current SME-FRS 1.15
assets and current and non-current liabilities as separate
classifications on the face of the balance sheet:
a) have they been presented broadly in order of liquidity; and
b) for each asset and liability item that combines amounts
expected to be recovered or settled both before and after 12
months from the balance sheet date, has the amount
expected to be recovered or settled after more than 12
months been separately disclosed?
4.04 Does the face of the balance sheet should include, where SME-FRS 1.19
applicable, line items presenting the following amounts?
a) property, plant and equipment;
b) intangible assets;
c) financial assets (including investments but excluding
amounts shown under (e) and (g));
d) inventories;
e) trade and other receivables;
f) tax assets;
g) cash and cash equivalents;
h) trade and other payables;
i) tax liabilities;
j) provisions;
k) non-current liabilities;
l) issued capital; and
m) reserves.
4.05 Have additional line items, headings and subtotals been SME-FRS 1.20
presented on the face of the balance sheet when such
presentation is necessary to present properly the entity‟s financial
position?
4.06 The method or methods used to arrive at the amount of the fixed Sch 11.4(2)
assets shall be stated.

SME FRS
Reference Yes No
N/A
Intangible Assets
4.07 An entity should disclose the following for each class of intangible SME-FRS 4.22
assets, distinguishing between internally generated intangible
assets and other intangible assets:
a) the useful lives or the amortisation rates used;
b) the amortisation methods used;
c) the gross carrying amount and the accumulated amortisation
(aggregated with accumulated impairment losses) at the
beginning and end of the period;
d) the line item(s) of the income statement in which the
amortisation of intangible assets is included; and
e) a reconciliation of the carrying amount at the beginning and
end of the period showing the following (comparative
information is not required).
i) additions;
ii) retirements and disposals;
iii) impairment losses recognised in the income statement
during the period (if any);
iv) impairment losses reversed in the income statement
v) amortisation recognised during the period; and
vi) other changes in the carrying amount during the period.
4.08 An entity should also disclose: SME-FRS 4.23

a) if an intangible asset is amortised over more than 20 years,
the reasons why the presumption that the useful life of an
intangible asset will not exceed 20 years from the date when
the asset is available for use is rebutted;
b) a description, the carrying amount and remaining
amortisation period of any individual intangible asset that is
material to the financial statements of the entity as a whole;
and
c) the existence and carrying amounts of intangible assets
whose title is restricted and the carrying amounts of
intangible assets pledged as security separately for:
i) the entity‟s liabilities; and
ii) another entity‟s liabilities.
Property plant and equipment
4.09 An entity should disclose, for each class of property, plant and SME-FRS 3.20
equipment:
a) the measurement bases used for determining the gross
carrying amount;
b) the depreciation methods used;
c) the useful lives or the depreciation rates used;
d) the gross carrying amount and the accumulated depreciation
beginning and end of the period; and

SME FRS
Reference Yes No
N/A
e) a reconciliation of the carrying amount at the beginning and

end of the period showing the following (comparative
information is not required).
i) additions;
ii) disposals;
iii) impairment losses recognised in the income statement
iv) impairment losses reversed in the income statement
v) depreciation; and
vi) other movements.
4.10 An entity should also disclose the existence and amounts of SME-FRS 3.21
restrictions on title, as well as property, plant and equipment
pledged as security separately for:
a) the entity‟s liabilities; and
b) another entity‟s liabilities.
Investments
a) the measurement bases used for determining the carrying
amount of investments;
b) the significant amounts included in income for:
i) interest and dividends;
ii) profits and losses on disposal of investments;
iii) impairment losses; and
iv) reversals of impairment losses;
c) the market value of listed investments if they are not carried
at market value;
d) significant restrictions and other terms affecting the
realisability of investments or the remittance of income and
proceeds of disposal;
e) in respect of investments in subsidiaries, associates and joint
ventures:
i) the name of the investee;
ii) the proportion of ownership interest in the investee;
iii) the principal place of operation and place of
incorporation of the investee; and
iv) an indication of the nature of business of the investee;
f) and
the accumulated write-down to net carrying amount (if any).
4.12 Investments in securities should be distinguished and analysed SME-FRS 6.12

between:
a) equities and debt securities;
b) those that are listed and those that are unlisted;
c) current investments and long-term investments.
4.13 An entity should disclose the existence and amounts of SME-FRS 6.13
restrictions on title, as well as investments pledged as security
separately for:
a) the entity‟s liabilities; and
b) another entity‟s liabilities.

SME FRS
Reference Yes No
N/A
Inventories
4.14 In respect of inventories an entity should disclose: SME-FRS 7.6
a) the accounting policies adopted in measuring inventories,
including the cost formula used;
b) the total carrying amount of inventories analysed in
classifications appropriate to the entity;
c) the carrying amount of inventories pledged as security for the
entity‟s liabilities; and
d) the carrying amount of inventories pledged as security for
another entity‟s liabilities.
Construction contracts
4.15 In respect of construction contracts an entity should disclose: SME-FRS 8.12
a) the amount of contract revenue recognised as revenue in the
period;
b) the methods used to determine the contract revenue
recognised in the period; and
c) the methods used to determine the stage of completion of
contracts in progress.
4.16 An entity should disclose each of the following for contracts in SME-FRS 8.13
progress at the balance sheet date:
a) the aggregate amount of costs incurred and recognised
profits (less recognised losses) to date;
b) the amount of advances received; and
c) the amount of retentions.
Note. Retentions are amounts of progress billings that are not
paid until the satisfaction of conditions specified in the contract
for the payment of such amounts or until defects have been
rectified. Progress billings are amounts billed for work performed
on a contract whether or not they have been paid by the
customer. Advances are amounts received by the contractor
before the related work is performed. (SME-FRS 8.14)
4.17 An entity should present: SME-FRS 8.15

a) the gross amount due from customers for contract work as
an asset; and
b) the gross amount due to customers for contract work as a
liability.
4.18 The gross amount due from customers for contract work is the SME-FRS 8.16
net amount of:
a) costs incurred plus recognised profits; less
b) the sum of recognised losses and progress billings;
4.19 for all contracts in progress for which costs incurred plus SME-FRS 8.16
recognised profits (less recognised losses) exceed progress
billings.
4.20 The gross amount due to customers for contract work is the net SME-FRS 8.17
amount of:
a) costs incurred plus recognised profits; less
b) the sum of recognised losses and progress billings;

SME FRS
Reference Yes No
N/A
for all contracts in progress for which progress billings exceed

costs incurred plus recognised profits (less recognised losses).
Finance leases
4.21 Disclose for finance leases at the balance sheet date: SME-FRS 5.8
a) the carrying amount of the asset, and
b) the outstanding liability falling due in each of the following
periods:
i) not later than one year; and
ii) later than one year.
Operating leases
4.22 Disclose the total of future minimum lease payments under non- SME-FRS 5.11
cancellable operating leases for each of the following periods:
a) not later than one year; and
b) later than one year.
Provisions, Contingent Liabilities and Contingent Assets
4.23 For each class of provision, an entity should disclose: SME-FRS 10.18
a) the carrying amount at the beginning of the period;
b) the carrying amount at the end of the period;
c) a brief description of the nature of the obligation;
d) the expected timing of any resulting outflows of economic
benefits; and
e) Whether discounting is used to arrive at the best estimate of
the provision.
4.24 Unless the possibility of any outflow in settlement is remote, an SME-FRS 10.19
entity should disclose for each class of contingent liability at the
balance sheet date:
a) a brief description of the nature of the contingent liability: and
b) where practicable, an estimate of its financial effect.
4.25 Where an inflow of economic benefits is probable, an entity SME-FRS 10.20
should disclose:
a) a brief description of the nature of the contingent assets at
the balance sheet date; and
b) where practicable, an estimate of their financial effect.
4.26 Where any of the information required by paragraphs 10.19 and SME-FRS 10.21
10.20 of the SME-FRS is not disclosed because it is not
practicable to do so, that fact should be stated.
4.27 In extremely rare cases, disclosure of some or all of the SME-FRS 10.22
information required by the SME-FRS can be expected to
prejudice seriously the position of the entity in a dispute with other
parties on the subject matter of the provision, contingent liability
or contingent asset. In such cases, an entity need not disclose the
information but should disclose:
a) the general nature of the dispute;
b) the fact that the information has not been disclosed; and
c) the reason why.
Share capital
4.28 Where any part of the issued capital consists of redeemable Sch 11.2a
shares disclose:

SME FRS
Reference Yes No
N/A
a) the earliest date on which the company has the power to

redeem those shares;
b) the latest date on which the company has the power to
redeem those shares;
c) whether the shares must be redeemed in any event;
d) whether the shares are liable to be redeemed at the option of
the company;
e) whether any (and, if so, what) premium is payable on
redemption.
4.29 Disclose the amount of the share premium account. Sch 11.2c
4.30 There shall be stated under separate headings, so far as they are Sch 11.3
not written off:
a) the preliminary expenses; Sch 11.3a
b) any expenses incurred in connexion with any issue of share Sch 11.3b
capital or debentures;
c) any sums paid by way of commission in respect of any Sch 11.3c
shares or debentures;
d) any sums allowed by way of discount in respect of any Sch 11.3d
debentures; and
e) the amount of the discount allowed on any issue of shares at Sch 11.3e
a discount.
4.31 An entity should disclose the following, either on the face of the SME-FRS 1.21
balance sheet or in the notes: Sch 11.2
a) for each class of share capital:

i) the number of shares authorised;
ii) the number of shares issued and fully paid, and issued
but not fully paid;
iii) par value per share, or that the shares have no par
iv) value;
a reconciliation of the number of shares outstanding at
the beginning and at the end of the period;
v) the rights, preferences and restrictions attaching to that
class, including restrictions on the distribution of
dividends and the repayment of capital;
vi) shares in the entity held by the entity itself; and
vii) shares reserved for issuance under options and sales
contracts, including the terms and amounts;
b) where it is not otherwise self-evident, a description of the
nature and purpose of each component within equity;
4.32 An entity without share capital, such as a partnership, should SME-FRS 1.21
disclose information equivalent to that required for a company
with shares, showing:
a) movements during the period in each category of equity
interest; and
b) the rights, preferences and restrictions attaching to each
category of equity interest.
4.33 Give particulars of any redeemed debentures which the company Sch 11.2d
has power to reissue.
5.0 Related Party Disclosures

SME FRS
Reference Yes No
N/A
5.01 In respect of loans to officers etc. the following particulars of s161B(1)

every relevant transaction entered into by the company after 13
February 2004 should be disclosed:
(a) the name of the borrower; s161B(1)a
(b) if this subsection applies to a relevant transaction: s161B(1)b
(i) by reason of the fact that the borrower is connected with
a director of the company or of its holding company; or
(ii) where the borrower is a body corporate, by reason of the

fact that a director of the company or a person
connected with him has held (jointly or severally or
directly or indirectly) a controlling interest therein,
the name of that director;
(c) the terms of the relevant transaction including: s161B(1)c
(i) the amounts payable thereunder (whether in a lump sum
or instalments or by way of periodical payments or
otherwise);
(ii) the rate of interest; and
(iii) the security.
(d) the amount outstanding on the relevant transaction, in s161B(1)d
respect of principal and interest or otherwise:
(i) at the beginning of the year;
(ii) at the end of the year; and
(iii) the maximum amount outstanding during the year.
(e) In respect of any failure or anticipated failure by the borrower s161B(1)e
to pay the whole or any part of the principal amount of the
relevant transaction or any other amount owing under that
transaction disclose:
(i) the amount, if any, that, having fallen due, has not been
paid; and
(ii) the amount of any provision made.
5.02 In the case of relevant transactions that consist of quasi-loans or s161B(2)
credit transactions, there may be included in the accounts of the
company, in lieu of the particulars required above a statement
showing, with respect to each borrower in relation to whom
particulars are required to be given under that subsection:
(a) the name of that person; s161B(2)a

(b) where the borrower is connected with a director of the s161B(2)b
company or of its holding company disclose the name of the
relevant director;
(c) the aggregate of the amounts outstanding on all such s161B(2)c
relevant transactions of which that person is the borrower, in
respect of principal and interest or otherwise:
(i) at the beginning of the year; and
(ii) at the end of the company's financial year; and
(d) the aggregate of the amounts, if any: s161B(2)d
(i) that, having fallen due, have not been paid; and

SME FRS
Reference Yes No
N/A
(ii) the aggregate of the amounts of any provision made in

respect of any failure or anticipated failure by that
person to pay the whole or any part of the principal
amount of any such relevant transaction or any other
amount owing under it.
5.03 Disclose the following particulars in respect of a guarantee s161B(3)
entered into, or security provided, by the company in connection
with a relevant transaction where the liability of the company in
respect of the guarantee or security has not been discharged
before the beginning of the financial year.
(a) in respect of the relevant transaction in connection with s161B(4)a
which the guarantee is entered into or the security provided
disclose:
(i) the name of the borrower; and
(ii) where the borrower is connected with a director of the
company or of its holding company give the name of the
relevant director;
(b) the maximum liability of the company under the guarantee or s161B(4)b
in respect of the security both
(i) at the beginning of the year; and
(ii) at the end of the financial year; and
(c) any amount paid and any liability incurred by the company for s161B(4)c
the purpose of fulfilling the guarantee or discharging the
security (including any loss incurred by the company by
reason of the enforcement of the guarantee or security).
5.04 In the case of guarantees entered into or security provided in s161B(5)

connection with relevant transactions that consist of quasi-loans
or credit transactions, there may be included in the accounts of
the company, in lieu of the particulars specified above, a
statement showing, with respect to each borrower in relation to
whom particulars are required to be given under those
subsections:
a) the name of that person; s161B(5)a
b) where the borrower is connected with a director of the s161B(5)b
company or of its holding company, the name of the relevant
director;
c) in respect of all guarantees entered into security and s161B(5)c
provided by the company in connection with all such relevant
transactions of which that person is the borrower disclose the
maximum liability of the company:
i) at the beginning; and
ii) at the end of the financial year
d) the aggregate of the amounts paid and of all liabilities s161B(5)d
incurred by the company for the purpose of fulfilling the
guarantees or discharging the security (including the
aggregate of all losses incurred by the company by reason of
the enforcement of such guarantees or security).

SME FRS
Reference Yes No
N/A
5.05 An entity should disclose the name of the entity‟s parent and, if SME-FRS 16.3
different, the ultimate controlling company irrespective of whether
there have been transactions between those related parties.
5.06 An entity should disclose the total remuneration of key SME-FRS 16.4
management personnel.
5.07 If there have been transactions between related parties, an entity SME-FRS 16.5
should disclose the nature of the related party relationships as
well as information about the transactions and outstanding
balances necessary for an understanding of the potential effect of
the relationship on the financial statements. These disclosure
requirements are in addition to the requirements to disclose key
management personnel compensation. At a minimum,
disclosures should include:
a) the amount of the transactions;
b) the amount of outstanding balances and:
i) their terms and conditions, including whether they are
secured, and the nature of the consideration to be
provided in settlement; and
ii) details of any guarantees given or received;
c) provisions for doubtful debts related to the amount of
outstanding balances; and
d) the expense recognised during the period in respect of bad
or doubtful debts due from related parties.
5.08 The above disclosures should be made separately for each of the SME-FRS 16.6
following categories:
a) the parent;
b) entities with joint control or significant influence over the
entity;
c) associates;
d) joint ventures in which the entity is a venturer;
e) key management personnel of the entity or its parent; and
f) other related parties.
5.09 The following are examples of situations where related party SME-FRS 16.7
transactions may lead to disclosures by an entity in the period
they affect. Has disclosure been made concerning:
a) purchases or sales of goods (finished or unfinished);
b) purchases or sales of property and other assets;
c) rendering or receiving of services;
d) leases;
e) transfers of research and development;
f) transfers under licence agreements;
g) transfers under finance arrangements (including loans and
equity contributions in cash or in kind);
h) provision of guarantees or collateral; and
i) settlement of liabilities on behalf of the entity or by the entity
on behalf of another party.

SME FRS
Reference Yes No
N/A
5.10 Items of a similar nature may be disclosed in aggregate except SME-FRS 16.8
when separate disclosure is necessary for an understanding of
the effects of related party transactions on the financial
statements.
6.0 Accounting policies and explanatory notes
6.01 The notes to the financial statements should: SME-FRS 1.30
a) present information about the basis of preparation of the
financial statements and the specific accounting policies
selected and applied for significant transactions and events;
b) disclose the information required by the SME-FRS that is not

presented elsewhere in the financial statements; and
c) provide additional information that is necessary for a proper
presentation.
6.02 Notes to the financial statements should be presented in a SME-FRS 1.31
systematic manner. Each item on the face of the balance sheet
and the income statement should be cross-referenced to any
related information in the notes.
6.03 The accounting policies section of the notes to the financial SME-FRS 1.32
statements should describe:
a) whether the financial statements have been prepared in
accordance with the SME-FRS and the criteria on which the
entity qualifies to apply the SME-FRS;
b) the measurement basis (or bases) used in preparing the
financial statements; and
c) each specific accounting policy that is necessary for a proper
understanding of the financial statements.
6.04 An entity should disclose the following, if the information is not SME-FRS 1.33
disclosed elsewhere in information published with the financial
statements:
a) the domicile of the entity;
b) the legal form of the entity;
c) its place of incorporation;
d) the address of the registered office (or principal place of
business, if different from the registered office);
e) a description of the nature of the entity‟s operations; and
f) its principal activities.
Changes in accounting policies
6.05 Where application of a change in the SME-FRS has a material SME-FRS 2.6
effect on the current period or any prior period presented, an
entity should disclose the following:
a) the fact that the change in accounting policy is made in
accordance with the change in the SME-FRS, with a
description of those provisions;
b) the amount of the adjustment for the current period and for
each prior period presented;
c) the amount of the adjustment relating to periods prior to
those included in the comparative information; and

SME FRS
Reference Yes No
N/A
d) the fact that comparative information has been restated, or

that restatement for a particular prior period has not been
made because it would require undue cost or effort or
because this is in accordance with the transitional provisions
issued with the amendment to the SME-FRS.
6.06 A change in an accounting policy other than one due to a change SME-FRS 2.7
in the SME-FRS should be applied as follows:
a) it should be applied retrospectively;
b) the opening balance of reserves for the earliest prior period
presented should be adjusted; and
c) the other comparative amounts disclosed for each prior
period presented should also be adjusted, where applicable,
as if the new accounting policy had always been in use.
6.07 When a change in an accounting policy has an effect on the SME-FRS 2.9
current period or any prior period presented, or may have an
affect in subsequent periods, an entity should disclose the
following:
a) the reasons for the change;
b) the amount of the adjustment for the current period and for
each prior period presented;
c) the amount of the adjustment relating to periods prior to
those presented; and
d) that comparative information has been restated, or that
restatement for a particular prior period has not been made
because it would require undue cost or effort.
Changes in accounting estimates
6.08 The nature and amount of a change in an accounting estimate SME-FRS 2.11
should be disclosed where:
a) this has an effect on the current period; or
b) it is expected to have an effect in subsequent periods; or
c) that fact that it would require undue cost or effort to quantify
that amount.
Errors
6.09 The amount of the correction of a material prior period error SME-FRS 2.12
should be accounted for retrospectively. A prior period error
should be corrected by:
a) either restating the comparative amounts for the prior periods
in which the error occurred; or
b) when the error occurred before the earliest prior period
presented, restating the opening balance of reserves for that
period, so that the financial statements are presented as if
the error had never occurred.
An entity should disclose: SME-FRS 2.14
a) the nature of the prior period error; and
b) the amount of the correction for each prior period presented.
7.0 Events After the Balance Sheet Date

SME FRS
Reference Yes No
N/A
7.01 If an entity receives information after the balance sheet date SME-FRS 17.7
about conditions that existed at the balance sheet date, the entity
should, in the light of the new information, update disclosures that
relate to these conditions.
7.02 Where non-adjusting events after the balance sheet date are of SME-FRS 17.8
such importance that non-disclosure would affect the ability of the
users of the financial statements to make proper evaluations and
decisions, an entity should disclose the following information for
each significant category of non-adjusting event after the balance
sheet date:
a) the nature of the event; and
b) an estimate of its financial effect; or
c) a statement that such an estimate cannot be made.
a) the date when the financial statements were authorised for
issue; and
b) who gave that authorisation.
7.04 If the entity‟s owners or others have the power to amend the SME-FRS 17.10
financial statements after issuance, the entity should disclose that
fact.
8 Other disclosures
8.01 Where any liability of the company is secured otherwise than by Sch 11.6
operation of law on any assets of the company, the fact that that
liability is so secured shall be stated, but it shall not be necessary
to specify the assets on which the liability is secured.
8.02 Where all the shareholders of a private company agree in writing s141D(1)
that the provisions of s141D shall be applied with respect to a
financial year of that company:
(a) there shall be attached to the balance sheet a report by the s141D(1)c
directors with respect to:
(i) the state of the company's affairs;
(ii) the amount (if any) which they recommend should be
paid by way of dividend;
(iii) the amount of (if any) which they propose to carry to the
reserve fund, general reserve or reserve account shown
specifically on the balance sheet or to a reserve fund,
general reserve or reserve account to be shown
specifically on a subsequent balance sheet;
(b) the directors' report so attached shall be approved by the s141D(1)d
board of directors and signed on behalf of the board either by
the chairman of the meeting at which it was approved or by
the secretary of the company;
(c) the auditors' report shall state: s141D(1)e
(i) whether or not the auditors have obtained all the
information and explanations which they have required;
and

SME FRS
Reference Yes No
N/A
(ii) whether, in their opinion, the balance sheet referred to in

the report is properly drawn up so as to exhibit a true
and correct view of the state of the company's affairs
according to the best of their information and the
explanations given to them, and as shown by the books
of the company.

Falcon Certified Public Accountants' Audit Manual
Full Disclosure Checklist
Client Name: Aero North

Year End:
File No.:
This checklist applies for accounting periods commencing on or after 1 January 2005. All disclosures shown
apply from that date except where otherwise indicated.
The checklist does not address the disclosure requirements for the following:
- banks, insurance companies and similar financial institutions;
- interim financial reports;
- additional requirements for listed companies including segment information and earnings per share;
All questions should be answered 'Y' for yes, 'N' for No or 'N/A' for not applicable.
Completion
I am satisfied that the answers given to the questions in this checklist are correct and that all significant
matters have been adequately documented in supporting working papers.
I confirm that any new disclosure requirements arising since the used version of this checklist was produced
have been reviewed and taken into account. Any relevant matters have been explained on B5 or B8.
Prepared by: Date:
Review
I have reviewed the tailoring assumptions used in preparing this checklist and confirm that they are
appropriate. I am satisfied that any questions that have been excluded from the checklist on the basis of these
tailoring assumptions are irrelevant to this assignment.
I have reviewed the completion of the checklist and am satisfied that this has been properly undertaken.
Reviewed by: Date:
Comments
Falcon CPAs - May 2010 Page 31 of 356 HKICPA Jun 07 Supp 00

Contents
1.0 General
2.0 Directors' report
3.0 Auditors
4.0 Income statement
5.0 Revenue
6.0 Government grants
7.0 Pension costs and other employee benefits
8.0 Directors & employees remuneration
9.0 Foreign currencies
10.0 Exceptional & extraordinary items
11.0 Income taxes
12.0 Other expenses
13.0 Dividends
14.0 Statement of changes in equity
15.0 Balance sheet
16.0 Intangible assets
17.0 Property, plant & equipment
18.0 Investments
19.0 Current assets - general
20.0 Inventories
21.0 Construction contracts
22.0 Impairment of assets
23.0 Related party transactions
24.0 Leases
25.0 Loans & other liabilities
26.0 Provisions & contingencies
27.0 Deferred tax
28.0 Share capital and reserves
29.0 Accounting policies
30.0 Accounting estimates & errors
31.0 Events after the balance sheet date
32.0 Cash flow statements
33.0 Other disclosures
Appendices
App 1 Share based payment
App 2 Investment properties
App 3 Financial instruments
App 4 Group companies, associates & joint ventures
App 5 Business combinations & goodwill
App 6 Non-current assets, discontinued operations and disposal groups
App 7 Defined benefit costs
App 8 Pension plan accounts
App 9 Hyperinflationary economies
App 10 Agriculture
App 11 Exploration for mineral resources
App 12 First time adoption of HKFRS

Reference Yes No
N/A
1.0 General
1.01 Entities with not-for-profit activities in the private sector, public sector HKAS 1.5
or government seeking to apply HKAS 1 may need to amend the
descriptions used for particular line items in the financial statements
and for the financial statements themselves.
1.02 Similarly, entities that do not have equity as defined in HKAS 32 HKAS 1.6
Financial Instruments: Disclosure and Presentation (eg some mutual
funds) and entities whose share capital is not equity (eg some co-
operative entities) may need to adapt the presentation in the financial
statements of members' or unit holders' interests.
1.03 Except where permitted, does the name of the company include s21(1)
'Limited' or the equivalent Chinese characters?
1.04 Every balance sheet of a company shall be approved by the board of s129B(1)
directors of the company and signed on behalf of the board:
(a) by 2 of the directors; or s129B(1)

(b) in the case of a private company having only one director, by the s129B(1)
sole director.
True & fair view
1.05 Financial statements shall give a true and fair view of the financial HKAS 1.13
position, financial performance and cash flows of an entity.
Note. True and fair view requires the faithful representation of the
effects of transactions, other events and conditions in accordance
with the definitions and recognition criteria for assets, liabilities,
income and expenses set out in the Framework. The application of
HKFRSs, with additional disclosure when necessary, is presumed to
result in financial statements that give a true and fair view. (HKAS
1.13)
1.06 Do the financial statements include an explicit and unreserved HKAS 1.14
statement of compliance with HKFRS in the notes?
Note. Financial statements shall not be described as complying with
HKFRSs unless they comply with all the requirements of HKFRSs.
(HKAS 1.14)
1.07 In virtually all circumstances, a true and fair view is achieved by HKAS 1.15
compliance with applicable HKFRSs. A true and fair view also
requires an entity:
a) to select and apply accounting policies in accordance with HKAS HKAS 1.15a
8 Accounting Policies, Changes in Accounting Estimates and
Errors.
b) to present information, including accounting policies, in a manner HKAS 1.15b
that provides relevant, reliable, comparable and understandable
information.
c) to provide additional disclosures when compliance with the HKAS 1.15c
specific requirements in HKFRSs is insufficient to enable users
to understand the impact of particular transactions, other events
and conditions on the entity's financial position and financial
performance.
1.08 When, in extremely rare circumstances, an entity departs from a HKAS 1.18
requirement of a Standard or an Interpretation in order to give a true
and fair view it shall disclose:

Reference Yes No
N/A
a) that management has concluded that the financial statements HKAS 1.18a
give a true & fair view of the entity's financial position, financial
performance and cash flows;
b) that it has complied with applicable Standards and HKAS 1.18b
Interpretations, except that it has departed from a particular
requirement to give a true and fair view;
c) in respect of each standard concerned: HKAS 1.18c
(i) the title of the Standard or Interpretation from which the HKAS 1.18c
entity has departed;
(ii) the nature of the departure; HKAS 1.18c
(iii) the treatment that the Standard or Interpretation would HKAS 1.18c
require;
(iv) the reason why that treatment would be so misleading in the HKAS 1.18c
circumstances that it would conflict with the objective of
financial statements set out in the Framework; and
(v) the treatment adopted; and HKAS 1.18c

d) for each period presented, the financial impact of the departure HKAS 1.18d
on each item in the financial statements that would have been
reported in complying with the requirement.
e) When an entity has departed from a requirement of a Standard HKAS 1.19

or an Interpretation in a prior period, and that departure affects
the amounts recognised in the financial statements for the
current period, it shall make the disclosures set out in paragraph
HKAS 1.18(c) and (d) above.
1.09 In the extremely rare circumstances in which management concludes HKAS 1.21
that compliance with a requirement in a Standard or an Interpretation
would be so misleading that it would conflict with the objective of
financial statements set out in the Framework, but the relevant
regulatory framework prohibits departure from the requirement, the
entity shall, to the maximum extent possible, reduce the perceived
misleading aspects of compliance by disclosing:
a) the title of the Standard or Interpretation in question; HKAS 1.21a

b) the nature of the requirement; HKAS 1.21a
c) the reason why management has concluded that complying with HKAS 1.21a
that requirement is so misleading in the circumstances that it
conflicts with the objective of financial statements set out in the
Framework; and
d) for each period presented, the adjustments to each item in the HKAS 1.21b
financial statements that management has concluded would be
necessary to give a true and fair view.
1.10 Every balance sheet of a company shall give a true and fair view of s123(1)
the state of affairs of the company as at the end of its financial year,
and every profit and loss account of a company shall give a true and
fair view of the profit or loss of the company for the financial year.
Note. This does not apply to a company's own profit and loss account
if a consolidated profit and loss account is presented. (s123(5))

Reference Yes No
N/A
1.11 Where compliance with the requirements of the Companies s123(4)(a, c)

Ordinance as to the matters to be included in a company's balance
sheet and profit and loss account or in a statement annexed to those
accounts would not be sufficient to give a true and fair view of the
state of affairs or the profit or loss of the company disclose any
additional information that is necessary to give a true and fair view in
the accounts or statement, as the case may require.
1.12 Where compliance with the requirements of the Companies s123(4)(b, d)

Ordinance as to the matters to be included in a company's balance
sheet and profit and loss account or in a statement annexed to those
accounts would be inconsistent with the requirement to give a true
and fair view of the state of affairs or the profit or loss of the company,
then:
(a) the directors of the company shall depart from those s123(4)(b, d)
requirements to the extent that is necessary to give a true and
fair view; and
(b) the reasons for and particulars and effects of such departure s123(4)(b, d)
should be disclosed in the accounts or in a statement annexed to
those accounts.
Basis of preparation
1.13 When management is aware, in making its assessment, of material HKAS 1.23
uncertainties related to events or conditions that may cast significant
doubt upon the entity's ability to continue as a going concern, those
uncertainties shall be disclosed.
1.14 When financial statements are not prepared on a going concern basis HKAS 1.23
disclose:
a) that fact; HKAS 1.23
b) the basis on which the financial statements are prepared; and HKAS 1.23
c) the reason why the entity is not regarded as a going concern. HKAS 1.23
1.15 Each material class of similar items shall be presented separately in HKAS 1.29
the financial statements.
1.16 Items of a dissimilar nature or function shall be presented separately HKAS 1.29
unless they are immaterial.
1.17 Assets and liabilities, and income and expenses, shall not be offset HKAS 1.32
unless required or permitted by a Standard or an Interpretation.
Comparatives
1.18 Except when a Standard or an Interpretation permits or requires HKAS 1.36
otherwise, comparative information shall be disclosed in respect of
the previous period for all amounts reported in the financial
statements.
1.19 Comparative information shall be included for narrative and HKAS 1.36
descriptive information when it is relevant to an understanding of the
current period's financial statements.
1.20 When the presentation or classification of items in the financial HKAS 1.38
statements is amended, comparative amounts shall be reclassified
unless the reclassification is impracticable. When comparative
amounts are reclassified, an entity shall disclose:
a) the nature of the reclassification; HKAS 1.38a

Reference Yes No
N/A
b) the amount of each item or class of items that is reclassified; and HKAS 1.38b
c) the reason for the reclassification. HKAS 1.38c

1.21 When it is impracticable to reclassify comparative amounts, an entity HKAS 1.39
shall disclose:
a) the reason for not reclassifying the amounts; and HKAS 1.39a
b) the nature of the adjustments that would have been made if the HKAS 1.39b
amounts had been reclassified.
Structure & content
1.22 A complete set of financial statements comprises: HKAS 1.8
a) a balance sheet; HKAS 1.8a
b) an income statement; HKAS 1.8b
c) a statement of changes in equity showing either: HKAS 1.8c
(i) all changes in equity, or HKAS 1.8ci
(ii) changes in equity other than those arising from transactions HKAS 1.8cii
with equity holders acting in their capacity as equity holders;
d) a cash flow statement; and HKAS 1.8d

e) notes, comprising a summary of significant accounting policies HKAS 1.8e
and other explanatory notes.
1.23 The financial statements shall be identified clearly and distinguished HKAS 1.44
from other information in the same published document.
1.24 Each component of the financial statements shall be identified clearly. HKAS 1.46
1.25 The following information shall be displayed prominently, and HKAS 1.46
repeated when it is necessary for a proper understanding of the
information presented:
a) the name of the reporting entity or other means of identification, HKAS 1.46a
and any change in that information from the preceding balance
sheet date;
b) whether the financial statements cover the individual entity or a HKAS 1.46b
group of entities;
c) the balance sheet date or the period covered by the financial HKAS 1.46c
statements, whichever is appropriate to that component of the
d) the presentation currency, as defined in HKAS 21 The Effects of HKAS 1.46d
Changes in Foreign Exchange Rates; and
e) the level of rounding used in presenting amounts in the financial HKAS 1.46e
statements.
1.26 When an entity's balance sheet date changes and the annual HKAS 1.49
financial statements are presented for a period longer or shorter than
one year, an entity shall disclose, in addition to:
a) the period covered by the financial statements; HKAS 1.49
b) the reason for using a longer or shorter period; and HKAS 1.49a
c) the fact that comparative amounts for the income statement, HKAS 1.49b
statement of changes in equity, cash flow statement and related
notes are not entirely comparable.
1.27 The notes shall: HKAS 1.103

Reference Yes No
N/A
a) present information about the basis of preparation of the financial HKAS 1.103a
statements and the specific accounting policies used;
b) disclose the information required by HKFRSs that is not HKAS 1.103b

presented on the face of the balance sheet, income statement,
statement of changes in equity or cash flow statement; and
c) provide additional information that is not presented on the face of HKAS 1.103c
the balance sheet, income statement, statement of changes in
equity or cash flow statement, but is relevant to an understanding
of any of them.
1.28 Notes shall, as far as practicable, be presented in a systematic HKAS 1.104
manner.
1.29 Each item on the face of the balance sheet, income statement, HKAS 1.104
statement of changes in equity and cash flow statement shall be
cross-referenced to any related information in the notes.
1.30 Notes are normally presented in the following order, which assists HKAS 1.105
users in understanding the financial statements and comparing them
with financial statements of other entities:
a) a statement of compliance with HKFRSs; HKAS 1.105a
b) a summary of significant accounting policies applied; HKAS 1.105b
c) supporting information for items presented on the face of the HKAS 1.105c
balance sheet, income statement, statement of changes in equity
and cash flow statement, in the order in which each statement
and each line item is presented; and
d) other disclosures, including: HKAS 1.105d
(i) contingent liabilities and unrecognised contractual HKAS 1.105di
commitments; and
(ii) non-financial disclosures. HKAS 1.105dii
1.31 The accounts laid before the members in general meeting should s122(1)
comprise:
(a) a profit and loss account or, in the case of a company not trading s122(1)
for profit, an income and expenditure account for the period;
(b) a balance sheet as at the date to which the profit and loss s122(2)
account, or the income and expenditure account, as the case
may be, is made up.
1.32 The presentation and classification of items in the financial HKAS 1.27
statements shall be retained from one period to the next unless:
(a) it is apparent, following a significant change in the nature of the HKAS 1.27a
entity‟s operations or a review of its financial statements, that
another presentation or classification would be more appropriate
having regard to the criteria for the selection and application of
accounting policies in HKAS 8; or
(b) a Standard or an Interpretation requires a change in presentation. HKAS 1.27b
2.0 Directors' Report

2.01 If the entity presents a financial review by management that describes HKAS 1.9
and explains the main features of the entity's financial performance
and financial position and the principal uncertainties it faces the report
might include a review of:

Reference Yes No
N/A
a) the main factors and influences determining financial HKAS 1.9a

performance, including changes in the environment in which the
entity operates;
b) the entity's response to those changes and their effect; HKAS 1.9a
c) the entity's policy for investment to maintain and enhance HKAS 1.9a
financial performance, including its dividend policy;
d) the entity's sources of funding and its targeted ratio of liabilities to HKAS 1.9b
equity; and
e) the entity's resources not recognised in the balance sheet in HKAS 1.9c
accordance with HKFRSs.
2.02 There shall be attached to every balance sheet laid before a company s129D(1)
in general meeting a report by the directors with respect to the profit
or loss of the company for the financial year and the state of the
company's affairs as at the end thereof.
2.03 Every directors' report shall be approved by the board of directors and s129D(2)
signed on behalf of the board either by the chairman of the meeting at
which it was approved or by the secretary of the company.
2.04 The report shall: s129D(3)

a) state the principal activities of the company and of its s129D(3)a
subsidiaries in the course of the financial year;
b) state any significant change in those activities in that year; s129D(3)a
c) state the amount, if any, which the directors recommend should s129D(3)b
be paid by way of dividend;
d) state the amount, if any, which the directors propose to carry to s129D(3)c
reserves within the meaning of the Tenth Schedule;
e) if the company (not being the wholly owned subsidiary of a s129D(3)d
company incorporated in Hong Kong) has no subsidiaries and
has in the financial year made donations for charitable or other
purposes to a total amount of not less than HK$10,000, state the
total amount of such donations;
f) if the company (not being the wholly owned subsidiary of a s129D(3)d
company incorporated in Hong Kong) has subsidiaries and the
company and its subsidiaries have between them made
donations for charitable or other purposes to a total amount of
not less than HK$1,000, state the total amount of such donations;
g) if significant changes in the fixed assets of the company or of any s129D(3)f

of its subsidiaries have occurred in the financial year, give
particulars of the changes;
h) if, in the financial year, the company has issued any shares, state: s129D(3)g
(i) the reason for making the issue; s129D(3)g

(ii) the classes of shares issued; s129D(3)g
(iii) for each class of shares, the number issued; and s129D(3)g
(iv) the consideration received by the company for the issue. s129D(3)g
i) if, in the financial year, the company has issued any debentures, s129D(3)h
state:
(i) the reason for making the issue; s129D(3)h
(ii) the classes of debentures issued; s129D(3)h

Reference Yes No
N/A
(iii) as respects each class of debentures, the amount issued; s129D(3)h

and
(iv) the consideration received by the company for the issue. s129D(3)h
j) state the names of the persons who, at any time during the s129D(3)i
financial year, were directors of the company;
k) Where a company enters into any contract, other than a contract s129D(3)ia
of service with any director or any person engaged in the full-time s162A(1)(a)
employment of the company, whereby any individual, firm or
body corporate undertakes the management and administration
of the whole or any substantial part of any business of the
company disclose for any year in which the contract is in force :
(i) a statement of the existence of the contract; and s129D(3)ia

s162A(1)(a)
(ii) the duration of the contract and s129D(3)ia

s162A(1)(a)
(iii) the name of any director interested therein. s129D(3)ia

s162A(1)(a)
l) If, at the end of the financial year, or at any time in that year, s129D(3)j
there subsisted a contract with the company or a group company
in which a director of the company has, or had, in any way,
whether directly or indirectly, an interest disclose:
(i) a statement of the fact of the contract's subsisting or, as the s129D(3)j
case may be, having subsisted;
(ii) the names of the parties to the contract (other than the s129D(3)j
company);
(iii) the name of the director (if not a party to the contract); s129D(3)j
(iv) an indication of the nature of the contract; and s129D(3)j

(v) an indication of the nature of the director's interest in the s129D(3)j
contract
Note. This is only applicable if the contract is significant to the
company's business and the director's interest is material.
(s162(1,4)) It does not include directors' service contracts or
where a directors is interested only by virtue of being a director
of the other company. (s129D(6))
m) In respect of arrangements that existed at the year end or at any s129D(3)k
time during the year for directors of the company to acquire
shares or debentures in the company or any group company
include a statement:
(i) explaining the effect of the arrangements; and s129D(3)k
(ii) giving the names of the persons who at any time in that year s129D(3)k
were directors of the company and held, or whose nominees
held, shares or debentures acquired in pursuance of the
arrangements.
n) contain particulars of any other matters so far as they are s129D(3)l
material for the appreciation of the state of the company's affairs
by its members, being matters the disclosure of which will not, in
the opinion of the directors, be harmful to the business of the
company or of any of its subsidiaries.

Reference Yes No
N/A
2.05 Where advantage is taken of the proviso to show an item in the s129E
directors' report instead of in the accounts, the report shall also show
the corresponding amount of that item for the immediately preceding
financial year, except where that amount would not have had to be
shown had the item been shown in the accounts.
3.0 Auditors
3.01 The auditor's report shall state whether: s141(3)
(a) in the auditors' opinion, the company's balance sheet and profit s141(3)
and loss account and (if it is a holding company submitting group
accounts) the group accounts have been properly prepared in
accordance with the provisions of The Companies Ordinance
applicable to the company; and
(b) in their opinion, on the basis aforesaid, a true and fair view is s141(3)
given:
(i) in the case of the balance sheet, of the state of the s141(3)
company's affairs as at the end of its financial year;
(ii) in the case of the profit and loss account (if it is not framed s141(3)
as a consolidated profit and loss account), of the company's
profit or loss for its financial year;
(iii) in the case of group accounts submitted by a holding s141(3)
company, of the state of affairs and profit or loss of the
company and its subsidiaries dealt with thereby, so far as
concerns members of the company.
3.02 The auditor‟s report should contain a clear expression of the auditor‟s HKSA 700.4
opinion on the financial statements.
3.03 The auditor‟s report should have a title that clearly indicates that it is HKSA 700.18
the report of an independent auditor.
3.04 The auditor‟s report should be addressed as required by the HKSA 700.20
circumstances of the engagement.
3.05 The introductory paragraph in the auditor‟s report should identify the HKSA 700.22
entity whose financial statements have been audited and should state
that the financial statements have been audited.
3.06 The introductory paragraph should also: HKSA 700.22
a) Identify the title of each of the financial statements that comprise HKSA 700.22a
the complete set of financial statements;
b) Refer to the summary of significant accounting policies and other HKSA 700.22b
explanatory notes; and
c) Specify the date and period covered by the financial statements. HKSA 700.22c
3.07 The auditor‟s report should state that management is responsible for HKSA 700.28
the preparation and the fair presentation of the financial statements in
accordance with the applicable financial reporting framework and that
this responsibility includes:
a) Designing, implementing and maintaining internal control HKSA 700.28a
relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether
due to fraud or error;
b) Selecting and applying appropriate accounting policies; and HKSA 700.28b
c) Making accounting estimates that are reasonable in the HKSA 700.28c
circumstances.

Reference Yes No
N/A
3.08 The auditor‟s report should state that the responsibility of the auditor HKSA 700.32
is to express an opinion on the financial statements based on the
audit.
3.09 The auditor‟s report should state that the audit was conducted in HKSA 700.34
accordance with Hong Kong Standards on Auditing. The auditor‟s
report should also explain that those standards require that the
auditor comply with ethical requirements and that the auditor plan and
perform the audit to obtain reasonable assurance whether the
financial statements are free from material misstatement.
3.10 The auditor‟s report should describe an audit by stating that: HKSA 700.37
a) An audit involves performing procedures to obtain audit evidence HKSA 700.37a
about the amounts and disclosures in the financial statements;
b) The procedures selected depend on the auditor‟s judgment, HKSA 700.37b

including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control
relevant to the entity‟s preparation and fair presentation of the
financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity‟s internal
control. In circumstances when the auditor also has a
responsibility to express an opinion on the effectiveness of
internal control in conjunction with the audit of the financial
statements, the auditor should omit the phrase that the auditor‟s
consideration of internal control is not for the purpose of
expressing an opinion on the effectiveness of internal control; and
c) An audit also includes evaluating the appropriateness of the HKSA 700.37c

accounting policies used, the reasonableness of accounting
estimates made by management, as well as the overall
presentation of the financial statements.
3.11 The auditor‟s report should state that the auditor believes that the HKSA 700.38
audit evidence the auditor has obtained is sufficient and appropriate
to provide a basis for the auditor‟s
opinion.
3.12 When expressing an unqualified opinion, the opinion paragraph of the HKSA 700.40
auditor‟s report should state the auditor‟s opinion that the financial
statements give a true and fair view or present fairly, in all material
respects, in accordance with the applicable financial reporting
framework (unless the auditor is required by law or regulation to use
different wording for the opinion, in which case the prescribed
wording should be used).
3.13 When Hong Kong Financial Reporting Standards are not used as the HKSA 700.41
financial reporting framework, the reference to the financial reporting
framework in the wording of the opinion should identify the jurisdiction
or country of origin of the financial reporting framework.

Reference Yes No
N/A
3.14 When the auditor addresses other reporting responsibilities within the HKSA 700.48
auditor‟s report on the financial statements, these other reporting
responsibilities should be addressed in a separate section in the
auditor‟s report that follows the opinion paragraph.
3.15 The auditor‟s report should be signed. HKSA 700.50

3.16 The auditor should date the report on the financial statements no HKSA 700.52
earlier than the date on which the auditor has obtained sufficient
appropriate audit evidence on which to base the opinion on the
3.17 The report should name the location in the country or jurisdiction HKSA 700.57
where the auditor practices.
3.18 Where the auditor forms a negative opinion in respect of any of the
following matters that fact should be stated:
a) whether proper books of account have been kept; s141(4)a
b) whether proper returns adequate for the audit have been s141(4)a
received from branches not visited;
c) whether the company's balance sheet and profit and loss s141(4)b
account (unless consolidated) are in agreement with the books of
account and returns;
d) whether they have received all the information and explanations s141(6)
necessary for the purposes of the audit.
e) whether the information given in the directors' report and other HKSA 720.18-1
information accompanying the financial statements is consistent
with those financial statements.
f) whether the disclosure requirements in respect of loan to officers s161(8)
and directors' remuneration are not complied with. Where this is
the case the required particulars should be disclosed.
4.0 Income Statement

4.01 As a minimum, the face of the income statement should include the HKAS 1.81
following headings:
a) revenue; HKAS 1.81a
b) finance costs; HKAS 1.81b
c) share of the profit or loss of associates and joint ventures HKAS 1.81c
accounted for using the equity method;
d) pre-tax gain or loss recognised on the disposal of assets or HKAS 1.81d
settlement of liabilities attributable to discontinuing operations;
and
e) tax expense; HKAS 1.81e
f) profit or loss. HKAS 1.81f
4.02 The following items shall be disclosed on the face of the income HKAS 1.82
statement as allocations of profit or loss for the period:
a) profit or loss attributable to minority interest; and
b) profit or loss attributable to equity holders of the parent.
4.03 Additional line items, headings and subtotals shall be presented on HKAS 1.83
the face of the income statement when such presentation is relevant
to an understanding of the entity's financial performance.
4.04 An entity shall present an analysis of expenses using whichever HKAS 1.88
classification provides information that is reliable and more relevant to
the entity.

Reference Yes No
N/A
a) By nature of expenditure. HKAS 1.88

b) By function of expenditure. HKAS 1.88
4.05 Entities are encouraged to present the analysis of expenditure on the HKAS 1.89
face of the income statement.
4.06 Where expenses are analysed by the nature of the expense consider HKAS 1.91
use of the following headings:
a) Revenue; HKAS 1.91
b) Other income; HKAS 1.91
c) Changes in inventories of finished goods and work in progress; HKAS 1.91
d) Raw materials and consumables used; HKAS 1.91

e) Employee benefits costs; HKAS 1.91
f) Depreciation and amortisation expense; HKAS 1.91
g) Other expenses; HKAS 1.91
h) Total expenses; HKAS 1.91
i) Profit. HKAS 1.91
4.07 Where expenses are analysed by the nature of the expense consider HKAS 1.92
use of the following headings:
a) Revenue; HKAS 1.92
b) Cost of sales; HKAS 1.92
c) Gross profit; HKAS 1.92
d) Other income; HKAS 1.92
e) Distribution costs; HKAS 1.92
f) Administrative expenses; HKAS 1.92
g) Other expenses; HKAS 1.92
h) Profit. HKAS 1.92
Note. As a minimum an entity discloses its cost of sales under this HKAS 1.92
method separately from other expenses.
4.08 Entities classifying expenses by function shall disclose additional HKAS 1.93
information on the nature of expenses, including:
a) depreciation and amortisation expense; and HKAS 1.93
b) employee benefits expense. HKAS 1.93
4.09 Disclose separately the income received from: Sch 10.13(1)g
a) listed investments; and Sch 10.13(1)g
b) unlisted investments. Sch 10.13(1)g
4.10 If a substantial part of the company's revenue for the financial year Sch 10.13(1)h
consists in rents from land and buildings, disclose the amount thereof
(after deduction of ground-rents, rates and other out-goings).
4.11 Disclose the corresponding amounts for the immediately preceding Sch 10.17(5)
financial year for all items shown in the profit and loss account.
4.12 Disclose where, in any material respects, any items shown in the Sch 10.17(6)
profit and loss account are affected:
a) by transactions of a sort not usually undertaken by the company Sch 10.17(6)a
or otherwise by circumstances of an exceptional or non-recurrent
nature; or
b) by any change in the basis of accounting. Sch 10.17(6)b
5.0 Revenue

Reference Yes No
N/A
5.01 The disclosures in this section apply to revenue arising from the HKAS 18.1
following transactions and events:
a) the sale of goods, including those produced by the entity and HKAS 18.1a
those purchased for resale;
b) the rendering of services; and HKAS 18.1b
c) the use by others of entity assets yielding interest, royalties and HKAS 18.1c
dividends.
5.02 Accordingly, these disclosures do not apply to revenue arising from: HKAS 18.6
a) lease agreements; HKAS 18.6a

b) dividends arising from investments which are accounted for HKAS 18.6b
under the equity method;
c) insurance contracts within the scope of HKFRS 4 Insurance HKAS 18.6c
Contracts;
d) changes in the fair value of financial assets and financial HKAS 18.6d
liabilities or their disposal;
e) changes in the value of other current assets; HKAS 18.6e
f) initial recognition and from changes in the fair value of biological HKAS 18.6f
assets related to agricultural activity;
g) initial recognition of agricultural produce; HKAS 18.6g
h) the extraction of mineral ores; and HKAS 18.6h
i) construction contracts; HKAS 18.4
5.03 An enterprise should disclose: HKAS 18.35
a) the accounting policies adopted for the recognition of revenue HKAS 18.35a
including the methods adopted to determine the stage of
completion of transactions involving the rendering of services;
b) the amount of each significant category of revenue recognised HKAS 18.35b

during the period including revenue arising from:
i) the sale of goods; HKAS 18.35b

ii) the rendering of services; HKAS 18.35b
iii) interest; HKAS 18.35b
iv) royalties; HKAS 18.35b
v) dividends; and HKAS 18.35b
c) the amount of revenue arising from exchanges of goods or HKAS 18.35c
services included in each significant category of revenue.
5.04 Contingent liabilities and contingent assets may arise from items such HKAS 18.36
as warranty costs, claims, penalties or possible losses. Any such
contingent liabilities or contingent assets are disclosed in accordance
with HKAS 37.
5.05 Disclose the turnover for the financial year. Sch 10.16(2)
5.06 Disclose the method by which turnover stated is arrived at. Sch 10.16(4)
6.0 Government grants
6.01 Government grants shall be recognised as income over the periods HKAS 20.12
necessary to match them with the related costs which they are
intended to compensate, on a systematic basis. They shall not be
credited directly to shareholders' interests.

Reference Yes No
N/A
a) In some circumstances, a government grant may be awarded for HKAS 20.21

the purpose of giving immediate financial support to an entity
rather than as an incentive to undertake specific expenditures.
These circumstances may warrant recognising a grant as income
in the period in which the entity qualifies to receive it, with
disclosure to ensure that its effect is clearly understood.
b) A government grant may become receivable by an entity as HKAS 20.22

compensation for expenses or losses incurred in a previous
period. Such a grant is recognised as income of the period in
which it becomes receivable, with disclosure to ensure that its
effect is clearly understood.
6.02 Grants related to assets may be presented as either: HKAS 20.24
a) deferred income; or HKAS 20.24
b) a deduction in arriving at the carrying amount of the asset. HKAS 20.24
6.03 The purchase of assets and the receipt of related grants are often HKAS 20.28
disclosed as separate items in the cash flow statement, regardless of
whether or not the grant is deducted from the related asset for the
purpose of balance sheet presentation.
6.04 Grants related to income may be presented as either: HKAS 20.29,
HKAS 20.31
a) a credit in the income statement, either separately or under a HKAS 20.29
general heading such as "Other income"; or
b) a deduction in reporting the related expense. HKAS 20.29
6.05 Disclosure of the grant may be necessary for a proper understanding HKAS 20.31
of the financial statements.
6.06 Disclosure of the effect of the grants on any item of income or HKAS 20.31
expense which is required to be separately disclosed, is usually
appropriate.
6.07 Certain forms of government assistance cannot reasonably have a HKAS 20.34,
value placed upon them, and certain transactions with government HKAS 20.34,
cannot be distinguished from the normal trading transactions of the HKAS 20.36
enterprise. The significance of the benefit may be such that
disclosure of the nature, extent and duration of the assistance is
necessary in order that the financial statements may not be
misleading.
6.08 Disclose: HKAS 20.39
a) the accounting policy adopted for government grants, including HKAS 20.39a
the methods of presentation adopted in the financial statements;
b) the nature and extent of government grants recognised in the HKAS 20.39b
financial statements and an indication of other forms of
government assistance from which the entity has directly
benefited; and
c) unfulfilled conditions and other contingencies attaching to HKAS 20.39c
government assistance that has been recognised.
7.0 Pension costs & other employee benefits
7.01 The disclosures in this section apply to all employee benefits, except HKAS 19.1
those to which HKFRS 2 applies.
7.02 The employee benefits to which this Standard applies include those HKAS 19.3
provided:

Reference Yes No
N/A
a) under formal plans or other formal agreements between an entity HKAS 19.3a
and individual employees, groups of employees or their
representatives;
b) under legislative requirements, or through industry HKAS 19.3b
arrangements, whereby entities are required to contribute to
national, state, industry or other multi-employer plans; or
c) by those informal practices that give rise to a constructive HKAS 19.3c
obligation. Informal practices give rise to a constructive obligation
where the entity has no realistic alternative but to pay employee
benefits.
7.03 An entity shall classify a multi-employer plan as a defined contribution HKAS 19.29
plan or a defined benefit plan under the terms of the plan (including
any constructive obligation that goes beyond the formal terms).
Where a multi-employer plan is a defined benefit plan, an entity shall:
a) account for its proportionate share of the defined benefit HKAS 19.29a
obligation, plan assets and cost associated with the plan in the
same way as for any other defined benefit plan; and
b) disclose the information required by HKAS 19.120. HKAS 19.29b
7.04 When sufficient information is not available to use defined benefit HKAS 19.30
accounting for a multi-employer plan that is a defined benefit plan, an
entity shall:
a) account for the plan under HKAS 44 - 46 as if it were a defined HKAS 19.30a
contribution plan;
b) disclose: HKAS 19.30b
i) the fact that the plan is a defined benefit plan; and HKAS 19.30b
ii) the reason why sufficient information is not available to HKAS 19.30b
enable the entity to account for the plan as a defined benefit
plan; and
c) to the extent that a surplus or deficit in the plan may affect the HKAS 19.30c
amount of future contributions, disclose in addition:
i) any available information about that surplus or deficit; HKAS 19.30c
ii) the basis used to determine that surplus or deficit; and HKAS 19.30c
iii) the implications, if any, for the entity. HKAS 19.30c

7.05 HKAS 37 requires an entity to recognise, or disclose information HKAS 19.35
about, certain contingent liabilities. In the context of a multi-employer
plan, a contingent liability may arise from, for example:
a) actuarial losses relating to other participating entities because HKAS 19.35a
each entity that participates in a multi-employer plan shares in
the actuarial risks of every other participating entity; or
b) any responsibility under the terms of a plan to finance any HKAS 19.35b
shortfall in the plan if other entities cease to participate.
Defined contribution plans
7.06 In respect of defined contribution plans, disclose: HKAS 19.46
a) the amount recognised as an expense; and HKAS 19.46
b) information about contributions for key management personnel HKAS 19.47
where required by HKAS 24.
7.07 An entity shall offset an asset relating to one plan against a liability HKAS 19.116
relating to another plan when, and only when, the entity:

Reference Yes No
N/A
a) has a legally enforceable right to use a surplus in one plan to HKAS 19.116a
settle obligations under the other plan; and
b) intends either to settle the obligations on a net basis, or to realise HKAS 19.116b
the surplus in one plan and settle its obligation under the other
plan simultaneously.
7.08 Defined benefit plans that share risks between various entities under HKAS 19.34
common control, for example, a parent and its subsidiaries, are not HKAS 19.34B
multi-employer plans. Participation in such a plan is a related party
transaction for each individual group entity. An entity shall therefore,
in its separate or individual financial statements, make the following
disclosures:
a) the contractual agreement or stated policy for charging the net
defined benefit cost or the fact that there is no such policy.
b) the policy for determining the contribution to be paid by the entity.
c) if the entity accounts for an allocation of the net defined benefit

cost in accordance with HKAS 19.34A, all the information about
the plan as a whole in accordance with HKAS 19.120-121.
d) if the entity accounts for the contribution payable for the period in
accordance with paragraph 34A, the information about the plan
as a whole required in accordance with HKAS 19.120A(b)-(e), (j),
(n), (o), (q) and 121. The other disclosures required by HKAS
19.120A do not apply.
7.09 If the entity has a defined benefit pension plan complete the checklist
in Appendix 7
7.10 In respect of termination benefits:
a) Where there is uncertainty about the number of employees who HKAS 19.141
will accept an offer of termination benefits, disclose information
about the contingent liability unless the possibility of an outflow in
settlement is remote.
b) If terminations benefits are material, disclose the nature and HKAS 19.142
amount of the expense.
c) Where required by HKAS 24, disclose information about HKAS 19.143
termination benefits for key management personnel.
8.0 Directors' remuneration
8.01 So far as the information is contained in the company's books and s161(1)
papers or the company has the right to obtain it from the persons
concerned, disclose:
(a) the aggregate amount of the directors' emoluments; s161(1)a
(b) the aggregate amount of directors' or past directors' pensions; s161(1)b
and
(c) the aggregate amount of any compensation to directors or past s161(1)c
directors in respect of loss of office.
(a) shall include any emoluments paid to or receivable by any s161(2)a
person in respect of his services:
(i) as director of the company; or s161(2)a

Reference Yes No
N/A
(ii) in respect of his services, while director of the company, as s161(2)a

director of any subsidiary thereof or otherwise in connexion
with the management of the affairs of the company or any
subsidiary thereof; and
(b) shall distinguish between: s161(2)b
(i) emoluments in respect of services as director, whether of s161(2)b
the company or its subsidiary; and
(ii) other emoluments; s161(2)b
8.03 The amount to be shown above: s161(3)a
(a) shall not include any pension paid or receivable under a pension s161(3)a
scheme if the scheme is such that the contributions thereunder
are substantially adequate for the maintenance of the scheme;
(b) but shall include any pension paid or receivable in respect of any s161(3)a
such services of a director or past director of the company,
whether to or by him or, on his nomination or by virtue of
dependence on or other connexion with him, to or by any other
person; and
c) shall distinguish between s161(3)b
(i) pensions in respect of services as director, whether of the s161(3)b
company or its subsidiary; and
(ii) and other pensions; s161(3)b
(a) shall include any sums paid to or receivable by a director or past s161(4)a
director by way of compensation for the loss of any office as
director or otherwise in connexion with the management of the
affairs of the company or any subsidiary thereof; and
(b) shall distinguish between compensation in respect of the office of s161(4)b

director, whether of the company or its subsidiary, and
compensation in respect of other offices; and
Note. For the purposes of this section references to compensation for

loss of office shall include sums paid as consideration for or in
connexion with a person's retirement from office. (s161(4)b)
8.05 The amounts to be shown for aggregate emoluments, pensions and s161(5)
compensation for loss of office:
(a) shall include all relevant sums (except those to be accounted for s161(5)a
to the company or any of its subsidiaries) paid by or receivable
from:
(i) the company; and s161(5)a
(ii) the company's subsidiaries; and s161(5)a
(iii) any other person. s161(5)a
(b) shall distinguish, in the case of the compensation for loss of s161(5)b
office, between the sums paid by or receivable from:
(i) the company; and s161(5)b
(ii) the company's subsidiaries; and s161(5)b
(iii) persons other than the company and its subsidiaries. s161(5)b
8.06 Corresponding amounts for the immediately preceding financial year s161A(1)
are required for all the s161 disclosures concerning directors'
remuneration.

Reference Yes No
N/A
9.0 Foreign currencies

9.01 When a gain or loss on a non-monetary item is recognised directly in HKAS 21.30
equity, any exchange component of that gain or loss shall be
recognised directly in equity.
9.02 Conversely, when a gain or loss on a non-monetary item is HKAS 21.30
recognised in profit or loss, any exchange component of that gain or
loss shall be recognised in profit or loss.
9.03 An entity shall disclose: HKAS 21.52
a) the amount of exchange differences recognised in profit or loss HKAS 21.52a
except for those arising on financial instruments measured at fair
value through profit or loss in accordance with HKAS 39; and
b) net exchange differences classified in a separate component of HKAS 21.52b

equity, and a reconciliation of the amount of such exchange
differences at the beginning and end of the period.
9.04 When the presentation currency is different from the functional HKAS 21.53
currency, that fact shall be stated, together with disclosure of the
functional currency and the reason for using a different presentation
currency.
Note. The functional currency in the case of a group is the functional
currency of the parent. (HKAS 21.51)
9.05 When there is a change in the functional currency of either the HKAS 21.54
reporting entity or a significant foreign operation, that fact and the
reason for the change in functional currency shall be disclosed.
9.06 When an entity presents its financial statements in a currency that is HKAS 21.55
different from its functional currency, it shall describe the financial
statements as complying with International Financial Reporting
Standards only if they comply with all the requirements of each
applicable Standard and each applicable Interpretation of those
Standards including the translation method set out in HKAS 21.39
and 42.
9.07 When an entity displays its financial statements or other financial HKAS 21.57
information in a currency that is different from either its functional
currency or its presentation currency and the requirements of HKAS
21.55 are not met, it shall:
a) clearly identify the information as supplementary information to HKAS 21.57a
distinguish it from the information that complies with International
Financial Reporting Standards;
b) disclose the currency in which the supplementary information is HKAS 21.57b
displayed; and
c) disclose the entity's functional currency and the method of HKAS 21.57c
translation used to determine the supplementary information.
9.08 Disclose the basis on which other currencies have been converted Sch 10.12(14)
into the currency in which the balance sheet is expressed.
10.0 Exceptional & extraordinary items

10.01 An entity shall not present any items of income and expense as HKAS 1.85
extraordinary items, either on the face of the income statement or in
the notes.
10.02 When items of income and expense are material, their nature and HKAS 1.86
amount shall be disclosed separately.

Reference Yes No
N/A
10.03 Circumstances that would give rise to the separate disclosure of HKAS 1.87
items of income and expense include:
a) write-downs of inventories to net realisable value or of property, HKAS 1.87a
plant and equipment to recoverable amount, as well as reversals
of such write-downs;
b) restructurings of the activities of an entity and reversals of any HKAS 1.87b
provisions for the costs of restructuring;
c) disposals of items of property, plant and equipment; HKAS 1.87c
d) disposals of investments; HKAS 1.87d
e) discontinued operations; HKAS 1.87e
f) litigation settlements; and HKAS 1.87f
g) other reversals of provisions. HKAS 1.87g
11.0 Income taxes
11.01 The tax expense or income related to profit or loss from ordinary HKAS 12.77
activities should be presented on the face of the income statement.
11.02 HKAS 21 requires certain exchange differences to be recognised as HKAS 12.78

income or expense but does not specify where such differences
should be presented in the income statement. Accordingly, where
exchange differences on deferred foreign tax liabilities or assets are
recognised in the income statement, such differences may be
classified as deferred tax expense or income if that presentation is
considered to be the most useful to financial statement users.
11.03 The major components of tax expense or income should be disclosed HKAS 12.79,
separately. Components of tax expense or income may include: HKAS 12.80
a) current tax expense or income; HKAS 12.80a

b) any adjustments recognised in the period for current tax of prior HKAS 12.80b
periods;
c) the amount of deferred tax expense or income relating to the HKAS 12.80c
origination and reversal of temporary differences;
d) the amount of deferred tax expense or income relating to HKAS 12.80d
changes in tax rates or the imposition of new taxes;
e) the amount of the benefit arising from a previously unrecognised HKAS 12.80e
tax loss, tax credit or temporary difference of a prior period that is
used to reduce current tax expense;
f) the amount of the benefit from a previously unrecognised tax HKAS 12.80f
loss, tax credit or temporary difference of a prior period that is
used to reduce deferred tax expense;
g) deferred tax expense arising from the write-down, or reversal of a HKAS 12.80g
previous write-down, of a deferred tax asset; and
h) the amount of tax expense or income relating to those changes HKAS 12.80h
in accounting policies and errors that are included in profit or loss
in accordance with HKAS 8, because they cannot be accounted
for retrospectively.
11.04 Also disclose separately in relation to tax: HKAS 12.81
a) the aggregate current and deferred tax relating to items that are HKAS 12.81a
charged or credited to equity;

Reference Yes No
N/A
b) an explanation of the relationship between tax expense or HKAS 12.81c

income and accounting profit in either or both of the following
forms:
i) a numerical reconciliation between tax expense or income HKAS 12.81c
and the product of accounting profit multiplied by the
applicable tax rate(s);
ii) a numerical reconciliation between the average effective tax HKAS 12.81c
rate (i.e. tax expense or income divided by the accounting
profit) and the applicable tax rate;
iii) in both cases disclose the bases on which the applicable tax HKAS 12.81c
rate(s) is (are) computed.
iv) For entities operating in multiple jurisdictions it may be more HKAS 12.85
meaningful to aggregate separate reconciliations prepared
using the domestic tax rate in each individual jurisdiction,
rather than giving a single reconciliation using a composite
rate.
v) The reconciliation may include such headings as: HKAS 12.84
- revenue that is exempt from taxation; HKAS 12.84
- expenses that are not deductible in determining taxable HKAS 12.84
profit or loss;
- the effect of tax losses; and HKAS 12.84
- the effect of foreign tax rates. HKAS 12.84
c) an explanation of changes in the applicable tax rate(s) compared HKAS 12.81d
to the previous accounting period;
d) the amount (and expiry date, if any) of deductible temporary HKAS 12.81e
differences, unused tax losses, and unused tax credits for which
no deferred tax asset is recognised in the balance sheet;
e) the aggregate amount of temporary differences associated with HKAS 12.81f

investments in subsidiaries, branches and associates and
interests in joint ventures, for which deferred tax liabilities have
not been recognised;
Note. Disclosure is not required of unrecognised deferred tax
liabilities themselves, although disclosure is encouraged where it
is practicable to do so. (HKAS 12.87)
f) in respect of each type of temporary difference, and in respect of HKAS 12.81g
each type of unused tax losses and unused tax credits:
i) the amount of the deferred tax assets and liabilities HKAS 12.81g
recognised in the balance sheet for each period presented;
ii) the amount of the deferred tax income or expense HKAS 12.81g
recognised in the income statement, if this is not apparent
from the changes in the amounts recognised in the balance
sheet;
g) in respect of discontinued operations, the tax expense relating to: HKAS 12.81h
i) the gain or loss on discontinuance; and HKAS 12.81h

ii) the profit or loss from the ordinary activities of the HKAS 12.81h
discontinued operation for the period, together with the
corresponding amounts for each prior period presented; and

Reference Yes No
N/A
h) the amount of income tax consequences of dividends to HKAS 12.81i

shareholders of the entity that were proposed or declared
before the financial statements were authorised for issue,
but are not recognised as a liability in the financial
statements.
11.05 Disclose the basis on which the amount, if any, set aside for Hong Sch 10.12(15)
Kong profits tax is computed.
11.06 In respect of taxation disclose: Sch 10.13(1)c
a) the amount of the charge to revenue for taxes imposed by the Sch 10.13(1)c
Inland Revenue Ordinance; and
b) if that amount would have been greater but for relief from double Sch 10.13(1)c
taxation, the amount which it would have been but for such relief;
and
c) the amount of the charge for taxation imposed outside Hong Sch 10.13(1)c
Kong of profits, income and (so far as charged to revenue)
capital gains.
11.07 Disclose the basis on which the charge for Hong Kong profits tax is Sch 10.17(3)
computed.
11.08 Give details of any special circumstances which affect liability in Sch 10.17(4)
respect of taxation of profits, income or capital gains for the financial
year or liability in respect of taxation of profits, income or capital gains
for succeeding financial years.
12.0 Other expenses

12.01 Where the entity adopts a format for the profit or loss account that HKAS 2.39
results in amounts being disclosed other than the cost of inventories
recognised as an expense during the period, an analysis of expenses
should be given using a classification based on the nature of those
expenses, including:
a) the costs recognised as an expense for raw materials and HKAS 2.39
consumables;
b) labour costs; HKAS 2.39
c) other costs; and HKAS 2.39
d) the amount of the net change in inventories for the period. HKAS 2.39
12.02 Disclose the amount charged to revenue by way of provision for Sch 10.13(1)a
depreciation, renewals or diminution in value of fixed assets (except
investments in subsidiary companies).
12.03 Where an amount is charged by way of provision for renewal in Sch 10.13(3)
addition to any charge for depreciation this amount should be shown
separately.
12.04 If the amount charged by way of provision for depreciation or Sch 10.13(4)
diminution in value of any fixed assets (other than investments) has
been determined otherwise than by reference to the amount of those
assets that fact shall be stated.
12.05 If depreciation or replacement of fixed assets (excluding investments Sch 10.17(2)

in subsidiary companies) is provided for by some method other than a
depreciation charge or provision for renewals, or is not provided for,
disclose:
a) the method by which it is provided for or Sch 10.17(2)
b) the fact that it is not provided for, as the case may be. Sch 10.17(2)

Reference Yes No
N/A
12.06 Disclose the amounts charged in respect of hire of plant and Sch 10.13(1)i
machinery.
12.07 Disclose separately the amount of any charge or credit arising in Sch 10.14
consequence of the occurrence of an event in a preceding financial
year if not included elsewhere.
12.08 Disclose the remuneration of the auditors under a separate heading. Sch 10.15
Note. For the purposes of this note, any sums paid by the company in
respect of the auditors' expenses shall be deemed to be included in
the expression "remuneration". (Sch 10.15)
Borrowing costs
12.09 Borrowing costs shall be recognised as an expense in the period in HKAS 23.10,
which they are incurred, except where they are directly attributable to HKAS 23. 11
the acquisition, construction or production of a qualifying asset and
capitalised as part of the cost of that asset.
12.10 Where borrowing costs have been capitalised under the allowed, HKAS 23.29
alternative treatment in HKAS 23, also disclose:
a) the amount of borrowing costs capitalised during the period; and HKAS 23.29b
b) the capitalisation rate used to determine the amount of borrowing HKAS 23.29c
costs eligible for capitalisation.
12.11 Disclose the amount of the interest on loans of the following kinds Sch 10.13(1)b
made to the company (whether on the security of debentures or not),
namely, bank loans, overdrafts and loans which, not being bank loans
or overdrafts:
a) that are repayable otherwise than by instalments and fall due for Sch 10.13(1)b
repayment before the expiration of the period of 5 years
beginning with the day next following the expiration of the
financial year; or
b) that are repayable by instalments the last of which falls due for Sch 10.13(1)b
payment before the expiration of that period; and the amount of
the interest on loans of other kinds so made (whether on the
security of debentures or not).
13.0 Dividends
13.01 An entity shall disclose, either on the face of the income statement or HKAS 1.95
the statement of changes in equity, or in the notes:
a) the amount of dividends recognised as distributions to equity HKAS 1.95
holders during the period; and
b) the related amount per share. HKAS 1.95
13.02 An entity shall disclose in the notes: HKAS 1.125
a) the amount of dividends proposed or declared before the HKAS 1.125a
financial statements were authorised for issue but not recognised
as a distribution to equity holders during the period;
b) the related amount per share; and HKAS 1.125a

c) the amount of any cumulative preference dividends not HKAS 1.125b
13.03 recognised.
Disclose the aggregate amount which is recommended for distribution Sch 10.9(1)e
by way of dividend.
13.04 In respect of dividends payable: Sch 10.12(3)

Reference Yes No
N/A
a) the amount of any arrears of fixed cumulative dividends on the Sch 10.12(3)
company's shares; and
b) the period for which the dividends are in arrears; or Sch 10.12(3)
c) if there is more than one class, each class of them are in arrear. Sch 10.12(3)
13.05 Disclose the aggregate amount of the dividends paid and proposed. Sch 10.13(1)j
13.06 Disclose any amounts set aside or proposed to be set aside to, or Sch 10.13(1)e
withdrawn from, reserves.
14.0 Statement of changes in equity
14.01 An entity shall present a statement of changes in equity showing on HKAS 1.96
the face of the statement:
a) profit or loss for the period; HKAS 1.96a
b) each item of income and expense for the period that, as required HKAS 1.96b
by other Standards or by Interpretations, is recognised directly in
equity, and the total of these items;
c) total income and expense for the period (calculated as the sum HKAS 1.96c
of (a) and (b)), showing separately the total amounts attributable
to:
i) equity holders of the parent; HKAS 1.96c
ii) to minority interest; and HKAS 1.96c
d) for each component of equity, the effects of changes in HKAS 1.96d
accounting policies and corrections of errors recognised in
accordance with HKAS 8.
14.02 An entity shall also present, either on the face of the statement of HKAS 1.97
changes in equity or in the notes:
a) the amounts of transactions with equity holders acting in their HKAS 1.97a
capacity as equity holders, showing separately distributions to
equity holders;
b) the balance of retained earnings (ie accumulated profit or loss): HKAS 1.97b
i) at the beginning of the period and HKAS 1.97b

ii) at the balance sheet date, and HKAS 1.97b
iii) the changes during the period; and HKAS 1.97b
c) a reconciliation between the carrying amount of each class of HKAS 1.97c
contributed equity and each reserve at the beginning and the end
of the period, separately disclosing each change.
14.03 If an asset is measured using the revaluation model, HKAS 1 requires HKFRS-Int 1.6d
disclosure on the face of the statement of changes in equity of each
item of income or expense that is recognised directly in equity. In
complying with this requirement, the change in the revaluation surplus
arising from a change in the liability shall be separately identified and
disclosed as such.
15.0 Balance Sheet
15.01 The authorized share capital, issued share capital, liabilities and Sch 10.2
assets shall be summarized, with such particulars as are necessary
to disclose the general nature of the assets and liabilities.

Reference Yes No
N/A
15.02 The reserves, provisions, liabilities and assets shall be classified Sch 10.4(1)
under headings appropriate to the company's business. Provided that:
a) where the amount of any class is not material, it may be included Sch 10.4(1)a
under the same heading as some other class; and
b) where any assets of one class are not separable from assets of Sch 10.4(1)b
another class, those assets may be included under the same
heading.
15.03 Fixed assets, current assets and assets that are neither fixed nor Sch 10.4(2)
current shall be separately identified.
15.04 The method or methods used to arrive at the amount of the fixed Sch 10.4(3)
assets under each heading shall be stated.
15.05 The method of arriving at the amount of any fixed asset (except Sch 10.5(1)
investments in subsidiary companies) shall be to take the difference
between:
a) its cost or, if it stands in the company's books at a valuation, the Sch 10.5(1)a
amount of the valuation; and
b) the aggregate amount provided or written off since the date of Sch 10.5(1)b
acquisition or valuation, as the case may be, for depreciation or
diminution in value;
15.06 Note that these requirements do not apply: Sch 10.5(2)
a) to assets for which the figures relating to the period beginning Sch 10.5(2)a
with 1st October 1975 cannot be obtained without unreasonable
expense or delay; or
b) to assets the replacement of which is provided for wholly or partly: Sch 10.5(2)b
i) by making provision for renewals and charging the cost of

replacement against the provision so made; or
ii) by charging the cost of replacement direct to revenue; or
c) to any listed investments or to any unlisted investments of which Sch 10.5(2)c

the value as estimated by the directors is shown either as the
amount of the investments or by way of note; or
d) to goodwill, patents or trade marks. Sch 10.5(2)d

15.07 For the assets under each heading treated in accordance with Sch Sch 10.5(3)
10.5(1) there shall be shown:
a) the aggregate cost or valuation; and Sch 10.5(3)a
b) the aggregate depreciation or other diminution in value. Sch 10.5(3)b
15.08 For the assets under each heading treated in accordance with Sch Sch 10.5(4)
10.5(2) there shall be shown:
a) the means by which their replacement is provided for; and Sch 10.5(4)a
b) the aggregate amount of the provision (if any) made for renewals Sch 10.5(4)b
and not used.
15.09 Disclose the corresponding amounts at the end of the immediately Sch 10.12(16)
preceding financial year for all items shown in the balance sheet other
than:
a) additions and disposals of fixed assets; and Sch 10.12(16)a
b) movements in provisions and reserves. Sch 10.12(16)b

Reference Yes No
N/A
15.10 An entity shall either: HKAS 1.51

a) present current and non-current assets, and current and non- HKAS 1.51
current liabilities, as separate classifications on the face of its
balance sheet; or
b) where a presentation based on liquidity provides information that HKAS 1.51
is reliable and is more relevant: all assets and liabilities shall be
presented broadly in order of liquidity.
15.11 Whichever method of presentation is adopted, for each asset and HKAS 1.52
liability line item that combines amounts expected to be recovered or
settled (a) no more than twelve months after the balance sheet date
and (b) more than twelve months after the balance sheet date, an
entity shall disclose the amount expected to be recovered or settled
after more than twelve months.
15.12 An entity is permitted to present some of its assets and liabilities HKAS 1.55
using a current/non-current classification and others in order of
liquidity where this provides information that is reliable and is more
relevant.
15.13 As a minimum, the face of the balance sheet should include the HKAS 1.68
following to the extent that they are not classified as held for re-sale:
a) property, plant and equipment; HKAS 1.68a

b) investment property; HKAS 1.68b
c) intangible assets; HKAS 1.68c
d) financial assets (excluding amounts shown under (e), (h) and (i)); HKAS 1.68d
e) investments accounted for using the equity method; HKAS 1.68e

f) biological assets; HKAS 1.68f
g) inventories; HKAS 1.68g
h) trade and other receivables; HKAS 1.68h
i) cash and cash equivalents; HKAS 1.68i
j) trade and other payables; HKAS 1.68j
k) provisions; HKAS 1.68k
l) financial liabilities (excluding amounts shown under (j) and (k)); HKAS 1.68l
m) liabilities and assets for current tax; HKAS 1.68m

n) deferred tax liabilities and deferred tax assets; HKAS 1.68n
o) minority interest, presented within equity; and HKAS 1.68o
p) issued capital and reserves attributable to equity holders of the HKAS 1.68p
parent.
15.14 The face of the balance sheet shall also include line items that HKAS 1.68A
present the following amounts:
a) the total of assets classified as held for sale and assets included HKAS 1.68Aa
in disposal groups classified as held for sale in accordance with
HKFRS 5 Non-current Assets Held for Sale and Discontinued
Operations; and
b) liabilities included in disposal groups classified as held for sale in HKAS 1.68Ab
accordance with HKFRS 5.
15.15 Additional headings and subtotals should be presented on the face of HKAS 1.69
the balance sheet when such presentation is relevant to an
understanding of the entity's financial position.

Reference Yes No
N/A
15.16 Where an entity presents current and non-current assets, and current HKAS 1.70
and non-current liabilities, as separate classifications on the face of
its balance sheet, it should not classify deferred tax assets (liabilities)
as current assets (liabilities).
15.17 There is not a prescribed order or format in which items are to be HKAS 1.71
presented. However:
a) line items are included when the size, nature or function of an HKAS 1.71a
item or aggregation of similar items is such that separate
presentation is relevant to an understanding of the entity's
financial position; and
b) the descriptions used and the ordering of items or aggregation of HKAS 1.71b
similar items may be amended according to the nature of the
entity and its transactions, to provide information that is relevant
to an understanding of the entity's financial position.
15.18 An entity shall disclose, either on the face of the balance sheet or in HKAS 1.74
the notes, further sub classifications of the line items presented,
classified in a manner appropriate to the entity's operations.
16.0 Intangible assets

16.01 Disclose the following for each class of intangible assets, HKAS 38.118
distinguishing between internally generated intangible assets and
other intangible assets:
a) whether the useful lives are indefinite or finite; and HKAS 38.118a
b) if finite, the useful lives or the amortisation rates used; HKAS 38.118a
c) the amortisation methods used for intangible assets with finite HKAS 38.118b
useful lives;
d) the gross carrying amount and any accumulated amortisation HKAS 38.118c
e) the line item(s) of the income statement in which any HKAS 38.118d
amortisation of intangible assets is included; and
f) a reconciliation of the carrying amount at the beginning and end HKAS 38.118e
of the period, showing:
i) additions, indicating separately those from internal HKAS 38.118e
development, those acquired separately, and those acquired
through business combinations;
ii) assets classified as held for sale or included in a disposal HKAS 38.118e
group classified as held for sale in accordance with HKFRS
5 and other disposals;
iii) increases or decreases during the period resulting from HKAS 38.118e
revaluations (per HKAS 38.75, 85 and 86) and from
impairment losses recognised or reversed directly in equity
in accordance with HKAS 36;
iv) impairment losses recognised in profit or loss during the HKAS 38.118e
period in accordance with HKAS 36;
v) impairment losses reversed in profit or loss during the period HKAS 38.118e
vi) any amortisation recognised during the period; HKAS 38.118e

Reference Yes No
N/A
vii) net exchange differences arising on the translation of the HKAS 38.118e
financial statements into the presentation currency, and on
the translation of a foreign operation into the presentation
currency of the entity; and
viii) other changes in the carrying amount during the period. HKAS 38.118e
16.02 For the purposes of HKAS 38.118, a class of intangible assets is a HKAS 38.119
grouping of assets of a similar nature and use in the entity's
operations, examples of which are:
a) brand names; HKAS 38.119a
b) mastheads and publishing titles; HKAS 38.119b
c) computer software; HKAS 38.119c
d) licences and franchises; HKAS 38.119d
e) copyrights, patents and other industrial property rights, service HKAS 38.119e
and operating rights;
f) recipes, formulae, models, designs and prototypes; and HKAS 38.119f
g) intangible assets under development. HKAS 38.119g
Note. These classes may be either disaggregated into smaller
classes or aggregated into larger classes if this results in more
relevant information for the users of the financial statements. HKAS
38.119
16.03 HKAS 8 requires disclosure of the nature and amount of a change in HKAS 38.121
an accounting estimate that has a material effect in the current period
or is expected to have a material effect in subsequent periods. With
regard to intangible assets, this includes:
a) the assessment of an intangible asset's useful life; HKAS 38.121a

b) the amortisation method; or HKAS 38.121b
c) residual values. HKAS 38.121c
16.04 Also disclose in respect of intangible assets: HKAS 38.122
a) for those assessed as having an indefinite useful life, the HKAS 38.122a
carrying amount of that asset and the reasons supporting the
assessment of an indefinite useful life;
b) in giving these reasons, describe the factor(s) that played a HKAS 38.122a
significant role in determining that the asset has an indefinite
useful life;
c) a description, the carrying amount and remaining amortisation HKAS 38.122b
period of any individual intangible asset that is material to the
d) for intangible assets acquired by way of a government grant and HKAS 38.122c
initially recognised at fair value:
i) the fair value initially recognised for these assets; HKAS 38.122c
ii) their carrying amount; and HKAS 38.122c
iii) whether they are measured after recognition under the cost HKAS 38.122c
model or the revaluation model;
e) the existence and carrying amounts of intangible assets whose HKAS 38.122d
title is restricted and the carrying amounts of intangible assets
pledged as security for liabilities; and
f) the amount of contractual commitments for the acquisition of HKAS 38.122e
intangible assets.

Reference Yes No
N/A
16.05 Where intangible assets are accounted for at revalued amounts, HKAS 38.124
disclose:
a) by class of intangible assets: HKAS 38.124a
i) the effective date of the revaluation; HKAS 38.124a
ii) the carrying amount of revalued intangible assets; and HKAS 38.124a
iii) the carrying amount that would have been recognised had HKAS 38.124a
the revalued class of intangible assets been measured after
recognition using the cost model;
b) the amount of the revaluation surplus that relates to intangible HKAS 38.124b
assets at the beginning and end of the period, indicating the
changes during the period and any restrictions on the distribution
of the balance to shareholders; and
c) the methods and significant assumptions applied in estimating HKAS 38.124c

the assets' fair values.
16.06 Classes of revalued assets may be aggregated into larger classes for HKAS 38.125
disclosure purposes, but this is not permitted where the combination
of classes would includes amounts measured under both the cost and
revaluation models.
16.07 Disclose the aggregate amount of research and development HKAS 38.126
expenditure recognised as an expense during the period.
16.08 Disclosure is encouraged, but not required, of: HKAS 38.128
a) a description of any fully amortised intangible asset that is still in HKAS 38.128a
use; and
b) a brief description of significant intangible assets not recognised HKAS 38.128b
in the financial statements because either:
i) they did not meet the recognition criteria; or HKAS 38.128b
ii) they were acquired or generated before the version of SSAP HKAS 38.128b
29 issued in 2001 was effective.
16.09 Where they are shown as a separate item or are otherwise Sch 10.9(1)b
ascertainable from the books and records of the company disclose:
a) goodwill; Sch 10.9(1)b

b) patents; Sch 10.9(1)b
c) trademarks. Sch 10.9(1)b
17.0 Property, plant & equipment
17.01 The following disclosures shall be applied in accounting for property, HKAS 16.2
plant and equipment except when another Standard requires or
permits a different accounting treatment. Accordingly, these
disclosures does not apply to:
a) property, plant and equipment classified as held for sale; HKAS 16.3a
b) biological assets related to agricultural activity; HKAS 16.3b
c) the recognition and measurement of exploration and evaluation HKAS 16.3c
assets; or
d) mineral rights and mineral reserves such as oil, natural gas and HKAS 16.3d
similar non-regenerative resources.
17.02 However, these disclosures do apply to property, plant and equipment HKAS 16.3
used to develop or maintain the assets described in b) and d) above.

Reference Yes No
N/A
17.03 Where the cost model is applied are property, plant and equipment HKAS 16.30
carried at cost less any accumulated depreciation and any
accumulated impairment losses?
17.04 Where the valuation model is applied are property, plant and HKAS 16.31
equipment (whose fair value can be measured reliably) carried at a
revalued amount, being fair value at the date of the revaluation less
any subsequent accumulated depreciation and subsequent
accumulated impairment losses?.
17.05 Are revaluations made with sufficient regularity to ensure that the HKAS 16.31
carrying amount does not differ materially from that which would be
determined using fair value at the balance sheet date?
17.06 When an item of property, plant and equipment was revalued, was HKAS 16.35
any accumulated depreciation at the date of the revaluation treated in
one of the following ways:
a) restated proportionately with the change in the gross carrying HKAS 16.35a
amount of the asset so that the carrying amount of the asset after
revaluation equals its revalued amount.
b) eliminated against the gross carrying amount of the asset and HKAS 16.35b
the net amount restated to the revalued amount of the asset.
17.07 Where an item of property, plant and equipment was revalued, was HKAS 16.36
the entire class of property, plant and equipment to which that asset
belongs shall be revalued?
17.08 Where an asset‟s carrying amount increased as a result of a HKAS 16.39
revaluation, was the increase credited directly to equity under the
heading of revaluation surplus except that the increase should be
recognised in profit or loss to the extent that it reverses a revaluation
decrease of the same asset previously recognised in profit or loss?
17.09 Where an asset‟s carrying amount decreased as a result of a HKAS 16.40

revaluation, was the decrease recognised in profit or loss except that
the decrease should be debited directly to equity under the heading of
revaluation surplus to the extent of any credit balance exists in the
revaluation surplus in respect of that asset?
17.1 Has each part of an item of property, plant and equipment with a cost HKAS 16.43
that is significant in relation to the total cost of the item been
depreciated separately?
17.11 Has compensation from third parties for items of property, plant and HKAS 16.65
equipment that were impaired, lost or given up been included in profit
or loss when the compensation became receivable?
17.12 In respect of each class of property, plant and equipment, disclose: HKAS 16.73
a) the measurement bases used for determining the gross carrying HKAS 16.73a
amount;
b) the depreciation methods used; HKAS 16.73b
c) the useful lives or the depreciation rates used; HKAS 16.73c
d) the gross carrying amount and the accumulated depreciation HKAS 16.73d
beginning and end of the period; and
e) a reconciliation of the carrying amount at the beginning and end HKAS 16.73e
of the period, showing:
i) additions; HKAS 16.73e

Reference Yes No
N/A
ii) assets classified as held for sale or included in a disposal HKAS 16.73e
group classified as held for sale in accordance with HKFRS
5 and other disposals;
iii) acquisitions through business combinations; HKAS 16.73e
iv) increases or decreases resulting from revaluations, and HKAS 16.73e
from impairment losses recognised or reversed directly in
equity in accordance with HKAS 36;
v) impairment losses recognised in profit or loss in accordance HKAS 16.73e
with HKAS 36;
vi) impairment losses reversed in profit or loss in accordance HKAS 16.73e
with HKAS 36;
vii) depreciation; HKAS 16.73e
viii) the net exchange differences arising on the translation of the HKAS 16.73e
financial statements from the functional currency into a
different presentation currency, including the translation of a
foreign operation into the presentation currency of the
reporting entity; and
ix) any other changes. HKAS 16.73e
17.13 Also disclose: HKAS 16.74
a) the existence and amounts of restrictions on title, and property, HKAS 16.74a
plant and equipment pledged as security for liabilities;
b) the amount of expenditures recognised in the carrying amount of HKAS 16.74b

an item of property, plant and equipment in the course of its
construction;
c) the amount of contractual commitments for the acquisition of HKAS 16.74c
property, plant and equipment; and
d) if it is not disclosed separately on the face of the income HKAS 16.74d
statement, the amount of compensation from third parties for
items of property, plant and equipment that were impaired, lost or
given up that is included in profit or loss.
a) depreciation, whether recognised in profit or loss or as a part of HKAS 16.75a
the cost of other assets, during a period; and
b) accumulated depreciation at the end of the period. HKAS 16.75b
17.15 In accordance with HKAS 8 an entity discloses the nature and effect HKAS 16.76
of a change in an accounting estimate that has an effect in the current
period or is expected to have an effect in subsequent periods. For
property, plant and equipment, such disclosure may arise from
changes in estimates with respect to:
a) residual values; HKAS 16.76a
b) the estimated costs of dismantling, removing or restoring items of HKAS 16.76b
property, plant and equipment;
c) useful lives; and HKAS 16.76c
d) depreciation methods. HKAS 16.76d
17.16 If items of property, plant and equipment are stated at revalued HKAS 16.77
amounts, the following shall be disclosed:
a) the effective date of the revaluation; HKAS 16.77a
b) whether an independent valuer was involved; HKAS 16.77b
c) the methods and significant assumptions applied in estimating HKAS 16.77c
the items' fair values;

Reference Yes No
N/A
d) the extent to which the items' fair values were determined directly HKAS 16.77d
by reference to observable prices in an active market or recent
market transactions on arm's length terms or were estimated
using other valuation techniques;
e) for each revalued class of property, plant and equipment, the HKAS 16.77e
carrying amount that would have been recognised had the assets
been carried under the cost model; and
f) the revaluation surplus, indicating the change for the period and HKAS 16.77f
any restrictions on the distribution of the balance to shareholders.
17.17 In order to assist users of financial statements, disclosure of the HKAS 16.79
following is also encouraged:
a) the carrying amount of temporarily idle property, plant and HKAS 16.79a
equipment;
b) the gross carrying amount of any fully depreciated property, plant HKAS 16.79b
and equipment that is still in use;
c) the carrying amount of property, plant and equipment retired from HKAS 16.79c
active use and not classified as held for sale in accordance with
HKFRS 5;
d) when the cost model is used, the fair value of property, plant and HKAS 16.79d
equipment when this is materially different from the carrying
amount.
17.18 If an entity applies HKAS 16 for a period beginning before 1 January HKAS 16.81
2005, it shall disclose that fact.
17.19 In the case of fixed assets under any heading (other than unlisted Sch 10.12(7)
investments) carried at a valuation disclose:
a) the years (so far as they are known to the directors) in which the Sch 10.12(7)
assets were severally valued; and
b) the several values; and Sch 10.12(7)
c) in the case of assets that have been valued during the financial Sch 10.12(7)
year:
i) the names of the persons who valued them or particulars of Sch 10.12(7)a
their qualifications for doing so, and
ii) the bases of valuation used by such persons. Sch 10.12(7)b
17.20 Disclose for fixed assets under any heading (other than investments) : Sch 10.12(8)
a) the aggregate amount of the assets acquired; and Sch 10.12(8)

b) the aggregate amount of assets that have been disposed of or Sch 10.12(8)
destroyed.
17.21 In respect of fixed assets consisting of land, disclose how much is Sch 10.12(9)
ascribable to:
a) land in Hong Kong in each of the following categories: Sch 10.12(9)a
i) land held on long lease;
ii) land held on medium-term lease;
iii) land held on short lease;
b) land outside Hong Kong in each of the following categories: Sch 10.12(9)b
i) land held freehold;
ii) land held on long lease;
iii) land held on medium-term lease;
iv) land held on short lease.

Reference Yes No
N/A
18.0 Investments
18.01 Where, at the end of its financial year, a company holds equity shares 129(1)
of any class of another body corporate (not being its subsidiary)
exceeding one fifth of the nominal value of the issued shares of that
class, disclose the following:
(a) the name of that other body corporate; 129(1)a
(b) the country in which it is incorporated; 129(1)b
(c) the identity of the class and 129(1)c
(d) the proportion of the nominal value of the issued shares of that 129(1)c
class represented by the shares held; and
e) if the company also holds shares in that other body corporate of 129(1)d
another class or classes (whether or not comprised in its equity
share capital) the like particulars as respects that other class or
classes.
18.02 Where, at the end of its financial year, a company holds equity shares s129(2)
of any class of another body corporate (not being its subsidiary)
exceeding one tenth of the nominal value of the issued shares of that
class, disclose the following:
(a) the name of that other body corporate; s129(2)a
(b) the country in which it is incorporated; s129(2)b
(c) in relation to shares in that other body corporate of each class s129(2)c
held:
(i) the identity of the class; and s129(2)c
(ii) the proportion of the nominal value of the issued shares of s129(2)c
that class represented by the shares held.
18.03 Disclosure by a company of information concerning 10% or 20% s129(3)
interests in another body corporate where that other body is
incorporated outside Hong Kong or, being incorporated in Hong
Kong, carries on business outside Hong Kong is not required if:
(a) the disclosure would, in the opinion of the directors of the s129(3)
company, be harmful to the business of the company or of that
other body; and
(b) the Financial Secretary agrees that the information need not be s129(3)
disclosed.
18.04 Where the number of companies is such that compliance with the s129(4)
disclosures concerning 10% and 20% interests would result in
particulars of excessive length being given, then disclosure is only
required of those which principally affected the amount of the profit or
loss of the company or the amount of its assets.
18.05 Where a company that is not a private company having a share s129(5)
capital takes advantage of the exemption concerning disclosure of all
10% and 20% interests:
(a) Disclose the fact that the information given relates only to the s129(5)a
principal companies concerned.
(b) Send a statement to the Registrar at the same time as the s129(5)b
company's annual return first made after the AGM setting out the
information for the excluded companies.
18.06 Where a private company having a share capital takes advantage of s129(5)A
the exemption concerning disclosure of all 10% and 20% interests:
(a) Disclose the fact that the information given relates only to the s129(5)Aa
principal companies concerned.

Reference Yes No
N/A
(b) Send a statement to the Registrar within 42 days of the AGM s129(5)Ab
setting out the information for the excluded companies.
18.07 Show under separate headings the aggregate amounts respectively Sch 10.9(1)a
of the company's:
a) listed investments and Sch 10.9(1)a
b) unlisted investments. Sch 10.9(1)a
18.08 The heading showing the amount of listed investments shall be Sch 10.9(3)
subdivided, where necessary, to distinguish:
a) those that are listed on a recognised stock market; and Sch 10.9(3)
b) those that are not so listed. Sch 10.9(3)
18.09 Where the aggregate market value of the company's listed Sch 10.12(11)
investments differs from the amount at which they are stated disclose:
a) the aggregate market value; and Sch 10.12(11)

b) the stock exchange value of any investments of which the market Sch 10.12(11)
value is shown (whether separately or not) and is taken as being
higher than their stock exchange value.
19.0 Current assets - general
19.01 If in the opinion of the directors any of the current assets have a value Sch 10.12(10)
on realization, in the ordinary course of the company's business, that
is less than the amount at which they are stated this fact should be
disclosed.
19.02 Disclose how the amount carried forward for stock in trade or work in Sch 10.12(13)
progress has been computed.
19.03 Disclose the aggregate amount of any outstanding loans to trustees Sch 10.9(1)c
or employees (but not directors) for financial assistance to purchase
the company's own shares made under the authority of section
47C(4)(b) and (c);
20.0 Inventories
20.01 The disclosures in this section apply to all inventories except: HKAS 2.2
a) work in progress arising under construction contracts, including HKAS 2.2a
directly related service contracts;
b) financial instruments; and HKAS 2.2b
c) biological assets related to agricultural activity and agricultural HKAS 2.2c
produce at the point of harvest.
20.02 Disclose in respect of inventories: HKAS 2.36
a) the accounting policies adopted in measuring inventories, HKAS 2.36a
including the cost formula used;
b) the total carrying amount of inventories and the carrying amount HKAS 2.36b
in classifications appropriate to the entity.
c) the carrying amount of inventories carried at fair value less costs HKAS 2.36c
to sell;
d) the amount of inventories recognised as an expense during the HKAS 2.36d
period;
e) the amount of any write-down of inventories recognised as an HKAS 2.36e
expense in the period
f) the amount of any reversal of any write-down that is recognised HKAS 2.36f
as a reduction in the amount of inventories recognised as
expense in the period

Reference Yes No
N/A
g) the circumstances or events that led to the reversal of a write- HKAS 2.36g
down of inventories; and
h) the carrying amount of inventories pledged as security for HKAS 2.36h
liabilities.
20.03 In order to assist users of financial statements, disclosure is HKAS 2.37
encouraged of the carrying amounts held in different classifications of
inventories and the extent of the changes in these assets. Common
classifications of inventories are:
a) merchandise; HKAS 2.37
b) production supplies; HKAS 2.37
c) materials; HKAS 2.37
d) work in progress; and HKAS 2.37
e) finished goods. HKAS 2.37
20.04 The inventories of a service provider may be described as work in HKAS 2.37
progress.
20.05 The amount of inventories recognised as an expense during the HKAS 2.38
period, which is often referred to as cost of sales, comprise:
a) those costs previously included in the measurement of inventory HKAS 2.38
that has now been sold;
b) unallocated production overheads; HKAS 2.38
c) abnormal amounts of production costs of inventories; and HKAS 2.38
d) under certain circumstances of the entity, also warrant the HKAS 2.38
inclusion of other amounts, such as distribution costs.
21.0 Construction contracts
21.01 The disclosures in this section only apply to construction contracts in HKAS 11.1
the financial statements of contractors.
21.02 In respect of construction contracts disclose: HKAS 11.39
a) the amount of contract revenue recognised as revenue in the HKAS 11.39a
period;
b) the methods used to determine the contract revenue recognised HKAS 11.39b
in the period; and
c) the methods used to determine the stage of completion of HKAS 11.39c
contracts in progress.
21.03 For contracts in progress at the balance sheet date, disclose: HKAS 11.40
a) the aggregate amount of costs incurred and recognised profits HKAS 11.40a
(less recognised losses) to date;
b) the amount of advances received (amounts received by the HKAS 11.40b,
contractor before the related work is performed); and HKAS 11.41
c) the amount of retentions (amounts of progress billings which are HKAS 11.40c,
not paid until the satisfaction of conditions specified in the HKAS 11.41
contract for the payment of such amounts or until defects have
been rectified).
d) the gross amount due from customers for contract work as an HKAS 11.42a
asset; and
e) the gross amount due to customers for contract work as a liability. HKAS 11.42b
22.0 Impairment of assets

Reference Yes No
N/A
22.01 Disclose the following for each class of assets (a class of assets is a HKAS 36.126,
grouping of assets of similar nature and use in the entity's operations): HKAS 36.127
a) the amount of impairment losses recognised in profit or loss HKAS 36.126a

during the period and the line item(s) of the income statement in
which those impairment losses are included;
b) the amount of reversals of impairment losses recognised in profit HKAS 36.126b
or loss during the period and the line item(s) of the income
statement in which those impairment losses are reversed;
c) the amount of impairment losses on revalued assets recognised HKAS 36.126c

directly in equity during the period; and
d) the amount of reversals of impairment losses on revalued assets HKAS 36.126d
recognised directly in equity during the period.
Note. The above disclosures may be presented with other
information disclosed for the relevant class of assets. (HKAS 36.128)
22.02 For entities that report segment information in accordance with HKAS HKAS 36.129
14, disclose the following for each reportable segment based on the
entity's primary reporting format:
a) the amount of impairment losses recognised in profit or loss and HKAS 36.129a
directly in equity during the period; and
b) the amount of reversals of impairment losses recognised in profit HKAS 36.129b
or loss and directly in equity during the period.
22.03 Disclose the following for each material impairment loss recognised HKAS 36.130
or reversed during the period for an individual asset, including
goodwill, or a cash-generating unit:
a) the events and circumstances that led to the recognition or HKAS 36.130a
reversal of the impairment loss;
b) the amount of the impairment loss recognised or reversed; HKAS 36.130b
c) for an individual asset: HKAS 36.130c
i) the nature of the asset; and HKAS 36.130c
ii) if the entity reports segment information in accordance with HKAS 36.130c
HKAS 14, the reportable segment to which the asset
belongs, based on the entity's primary reporting format;
d) for a cash-generating unit: HKAS 36.130d

i) a description of the cash-generating unit (e.g. product line, HKAS 36.130d
plant, business operation, geographical area, or reportable
segment);
ii) the amount of the impairment loss recognised or reversed HKAS 36.130d
by class of assets and, if the entity reports segment
information in accordance with HKAS 14, by reportable
segment based on the entity's primary reporting format; and
iii) if the aggregation of assets for identifying the cash- HKAS 36.130d
generating unit has changed since the previous estimate of
the cash-generating unit's recoverable amount (if any), a
description of the current and former way of aggregating
assets and the reasons for changing the way the cash-
generating unit is identified;

Reference Yes No
N/A
e) whether the recoverable amount of the asset or cash-generating HKAS 36.130e

unit is its fair value less costs to sell or its value in use; and either
i) where recoverable amount is fair value less costs to sell, the HKAS 36.130f
basis used to determine fair value less costs to sell (such as
whether fair value was determined by reference to an active
market); or
ii) where recoverable amount is value in use, the discount HKAS 36.130g
rate(s) used in the current estimate and previous estimate (if
any) of value in use.
22.04 Disclose the following information for the aggregate impairment HKAS 36.131
losses and the aggregate reversals of impairment losses recognised
during the period for which no information is disclosed in accordance
with HKAS 36.130:
a) the main classes of assets affected by impairment losses and the HKAS 36.131a
main classes of assets affected by reversals of impairment
losses; and
b) the main events and circumstances that led to the recognition of HKAS 36.131b
these impairment losses and reversals of impairment losses.
22.05 Disclosure is encouraged of the assumptions used to determine the HKAS 36.132
recoverable amount of assets and cash-generating units during the
period.
22.06 If (per HKAS 36.84) any portion of the goodwill acquired in a business HKAS 36.133
combination during the period has not been allocated to a cash-
generating unit or group of units at the reporting date, disclose:
a) the amount of the unallocated goodwill; and HKAS 36.133

b) the reasons why that amount remains unallocated. HKAS 36.133
22.07 For each cash-generating unit (or group of units) for which the HKAS 36.134
carrying amount of goodwill or intangible assets with indefinite useful
lives allocated to that unit (or group of units) is significant in
comparison with the entity's total carrying amount of goodwill or
intangible assets with indefinite useful lives, disclose:
a) the carrying amount of goodwill allocated to the unit (or group of HKAS 36.134a
units);
b) the carrying amount of intangible assets with indefinite useful HKAS 36.134b
lives allocated to the unit (or group of units);
c) the basis on which the unit's (or group of units') recoverable HKAS 36.134c
amount has been determined (i.e. value in use or fair value less
costs to sell);
d) where recoverable amount is based on value in use: HKAS 36.134d
i) a description of each key assumption on which management HKAS 36.134d
has based its cash flow projections for the period covered by
the most recent budgets/forecasts, where key assumptions
are those to which recoverable amount is most sensitive;

Reference Yes No
N/A
ii) a description of management's approach to determining the HKAS 36.134d

value(s) assigned to each key assumption, whether those
value(s) reflect past experience or, if appropriate, are
consistent with external sources of information, and, if not,
how and why they differ from past experience or external
sources of information;
iii) the period over which management has projected cash flows HKAS 36.134d
based on approved financial budgets/forecasts and, when a
period greater than five years is used for a cash-generating
unit (or group of units), an explanation of why that longer
period is justified;
iv) the growth rate used to extrapolate cash flow projections HKAS 36.134d
beyond the period covered by the most recent
budgets/forecasts, and the justification for using any growth
rate that exceeds the long-term average growth rate for the
products, industries, or country or countries in which the
entity operates, or for the market to which the unit (or group
of units) is dedicated; and
v) the discount rate(s) applied to the cash flow projections; HKAS 36.134d
e) where recoverable amount is based on fair value less costs to HKAS 36.134e
sell, the methodology used to determine fair value less costs to
sell. If fair value less costs to sell is not determined using an
observable market price for the unit (or group of units), also
disclose:
i) a description of each key assumption on which management HKAS 36.134e
has based its determination of fair value less costs to sell,
where key assumptions are those to which the recoverable
amount is most sensitive;
ii) a description of management's approach to determining the HKAS 36.134e
value(s) assigned to each key assumption;
iii) whether those value(s) reflect past experience or, if HKAS 36.134e
appropriate, are consistent with external sources of
information; and
iv) if not, how and why they differ from past experience or HKAS 36.134e
external sources of information; and
f) if a reasonably possible change in a key assumption on which HKAS 36.134f
management has based its determination of recoverable amount
would cause the carrying amount of the unit (or group of units) to
exceed recoverable amount, also disclose:
i) the amount by which recoverable amount exceeds the HKAS 36.134fi

carrying amount of the unit (or group of units);
ii) the value assigned to the key assumption; and HKAS 36.134fii
iii) the amount by which the value assigned to the key HKAS 36.134fiii
assumption must change, after incorporating any
consequential effects of that change on the other variables
used to measure recoverable amount, in order for the
recoverable amount to be equal to the carrying amount of
the unit (or group of units).

Reference Yes No
N/A
22.08 Where some or all of the carrying amount of goodwill or intangible HKAS 36.135
assets with indefinite useful lives is allocated across multiple cash-
generating units (or groups of units), and the amount so allocated is
not significant in comparison with the entity's total carrying amount of
goodwill or intangible assets with indefinite useful lives, disclose:

b) the aggregate carrying amount of goodwill or intangible assets HKAS 36.135
with indefinite useful lives allocated to those units (groups of
units).
22.09 In addition, where the recoverable amounts of any of those units (or HKAS 36.135
groups of units) are based on the same key assumption(s), and the
aggregate carrying amount of goodwill or intangible assets with
indefinite useful lives allocated to them is significant in comparison
with the entity's total carrying amount of goodwill or intangible assets
with indefinite useful lives, disclose:
b) the aggregate carrying amount of goodwill allocated to those HKAS 36.135a
units (or groups of units);
c) the aggregate carrying amount of intangible assets with indefinite HKAS 36.135b
useful lives allocated to those units (or groups of units);
d) a description of the key assumption(s); HKAS 36.135c

e) a description of management's approach to determining the HKAS 36.135d
value(s) assigned to the key assumption(s), whether those
value(s) reflect past experience or, if appropriate, are consistent
with external sources of information, and, if not, how and why
they differ from past experience or external sources of
information; and
f) if a reasonably possible change in the key assumption(s) would HKAS 36.135e
cause the aggregate of the carrying amounts to exceed the
aggregate of their recoverable amounts:
i) the amount by which the aggregate of the units' (or groups HKAS 36.135e
of units') recoverable amounts exceeds the aggregate of
their carrying amounts;
ii) the value(s) assigned to the key assumption(s); and HKAS 36.135e
iii) the amount by which the value(s) assigned to the key HKAS 36.135e
assumption(s) must change, after incorporating any
consequential effects of the change on the other variables
used to measure recoverable amount, in order for the
aggregate of the recoverable amounts to be equal to the
aggregate of the carrying amounts of the units (or groups of
units).
22.10 Where the most recent detailed calculation made in a preceding HKAS 36.136
period of the recoverable amount of a cash-generating unit (group of
units) is carried forward and used in the impairment test for that unit
(group of units) in the current period (in accordance with the
provisions in HKAS 36), the information for that unit (or group of units)
that is incorporated into the disclosures required by HKAS 26.134
&135 relate to the carried forward calculation of recoverable amount.

Reference Yes No
N/A
Note. This is required by HKAS 36.134 below, in respect of estimates

used to measure the recoverable amount of a cash generating unit
when goodwill or an intangible asset with an indefinite useful life is
included in the carrying amount of that unit.
23.0 Related party transactions

23.01 Relationships between parents and subsidiaries are disclosed HKAS 24.12
irrespective of whether there have been transactions between those
related parties.
a) the name of the entity's parent; HKAS 24.12
b) if different, the ultimate controlling party; and HKAS 24.12
c) if neither the entity's parent nor the ultimate controlling party HKAS 24.12,
produces consolidated financial statements available for public HKAS 24.15
use, the name of the next most senior parent that does so.
23.03 Disclose any related party relationship where control exists, HKAS 24.13
irrespective of whether there have been transactions between the
related parties.
23.04 Disclose key management personnel compensation in total, and for HKAS 24.16
each of the following categories:
a) short-term employee benefits; HKAS 24.16a
b) post-employment benefits; HKAS 24.16b
c) other long-term benefits; HKAS 24.16c
d) termination benefits; and HKAS 24.16d
e) share-based payment. HKAS 24.16e
23.05 If there have been transactions between related parties, disclose: HKAS 24.17
a) the nature of the related party relationship; and HKAS 24.17
b) information about the transactions and outstanding balances HKAS 24.17
necessary for an understanding of the potential effect of the
relationship on the financial statements.
23.06 At a minimum, the disclosures required by the above shall include: HKAS 24.17
a) the amount of the transactions; HKAS 24.17a

b) the amount of outstanding balances and: HKAS 24.17b
i) their terms and conditions, including whether they are HKAS 24.17b
secured, and the nature of the consideration to be provided
in settlement; and
ii) details of any guarantees given or received; HKAS 24.17b
c) provisions for doubtful debts related to the amount of outstanding HKAS 24.17c
balances; and
d) the expense recognised during the period in respect of bad or HKAS 24.17d
doubtful debts due from related parties.
23.07 The disclosures required by HKAS 24.17 are made separately for HKAS 24.18
each of the following categories:
a) the parent; HKAS 24.18a
b) entities with joint control or significant influence over the entity; HKAS 24.18b
c) subsidiaries; HKAS 24.18c

d) associates; HKAS 24.18d
e) joint ventures in which the entity is a venturer; HKAS 24.18e

Reference Yes No
N/A
f) key management personnel of the entity or its parent; and HKAS 24.18f
g) other related parties. HKAS 24.18g
23.08 Disclosures that related party transactions were made on terms HKAS 24.21
equivalent to those that prevail in arm's length transactions are made
only if such terms can be substantiated.
23.09 Items of a similar nature may be disclosed in aggregate except when HKAS 24.22
separate disclosure is necessary for an understanding of the effects
of related party transactions on the financial statements of the entity.
23.11 All aspects of a service concession arrangement should be HKAS Int 29.6
considered in determining the appropriate disclosures in the notes. A
Concession Operator and a Concession Provider should disclose the
following in each period:
a) a description of the arrangement; HKAS Int 29.6a
b) significant terms of the arrangement that may affect the amount, HKAS Int 29.6b
timing and certainty of future cash flows (e.g., the period of the
concession, repricing dates and the basis upon which re-pricing
or re-negotiation is determined);
c) the nature and extent (e.g., quantity, time period or amount as HKAS Int 29.6c
appropriate) of:
(i) rights to use specified assets; HKAS Int 29.6c
(ii) obligations to provide or rights to expect provision of HKAS Int 29.6c
services;
(iii) obligations to acquire or build items of property, plant and HKAS Int 29.6c
equipment;
(iv) obligations to deliver or rights to receive specified assets at HKAS Int 29.6c
the end of the concession period;
(v) renewal and termination options; and HKAS Int 29.6c
(vi) other rights and obligations (e.g., major overhauls); and HKAS Int 29.6c
d) changes in the arrangement occurring during the period. HKAS Int 29.6d
23.12 The disclosures required in accordance with HKAS Int 29.6 should be HKAS Int 29.7
provided individually for each service concession arrangement or in
aggregate for each class of service concession arrangements. A
class is a grouping of service concession arrangements involving
services of a similar nature.
Note. Disclosures in the following sections are not required where a
loan is made by the company or a subsidiary to an employee, it does
not exceed HK$100k and it is certified by the directors as having
been made in accordance with the company's usual practice.
23.13 In respect of loans to officers etc. the following particulars of every s161B(1)
relevant transaction entered into by the company after 13 February
2004 should be disclosed:
(a) the name of the borrower; s161B(1)a
(b) if this subsection applies to a relevant transaction: s161B(1)b
(i) by reason of the fact that the borrower is connected with a s161B(1)b
director of the company or of its holding company; or

Reference Yes No
N/A
(ii) where the borrower is a body corporate, by reason of the s161B(1)b

fact that a director of the company or a person connected
with him has held (jointly or severally or directly or indirectly)
a controlling interest therein,
the name of that director;
(c) the terms of the relevant transaction including: s161B(1)c
(i) the amounts payable thereunder (whether in a lump sum or s161B(1)c
instalments or by way of periodical payments or otherwise);
(ii) the rate of interest; and s161B(1)c

(iii) the security. s161B(1)c
(d) the amount outstanding on the relevant transaction, in respect of s161B(1)d
principal and interest or otherwise:
(i) at the beginning of the year; s161B(1)d
(ii) at the end of the year; and s161B(1)d
(iii) the maximum amount outstanding during the year. s161B(1)d
(e) In respect of any failure or anticipated failure by the borrower to s161B(1)e
pay the whole or any part of the principal amount of the relevant
transaction or any other amount owing under that transaction
disclose:
(i) the amount, if any, that, having fallen due, has not been s161B(1)e
paid; and
(ii) the amount of any provision made. s161B(1)e
23.14 In the case of relevant transactions that consist of quasi-loans or s161B(2)
company, in lieu of the particulars required above a statement
showing, with respect to each borrower in relation to whom particulars
are required to be given under that subsection:
(a) the name of that person; s161B(2)a
(b) where the borrower is connected with a director of the company s161B(2)b
or of its holding company disclose the name of the relevant
director;
(c) the aggregate of the amounts outstanding on all such relevant s161B(2)c
transactions of which that person is the borrower, in respect of
principal and interest or otherwise:
(i) at the beginning of the year; and s161B(2)c
(ii) at the end of the company's financial year; and s161B(2)c
(d) the aggregate of the amounts, if any: s161B(2)d
(i) that, having fallen due, have not been paid; and s161B(2)d
(ii) the aggregate of the amounts of any provision made in s161B(2)d
respect of any failure or anticipated failure by that person to
pay the whole or any part of the principal amount of any
such relevant transaction or any other amount owing under it.
23.15 Disclose the following particulars in respect of a guarantee entered s161B(3)

into, or security provided, by the company in connection with a
relevant transaction where the liability of the company in respect of
the guarantee or security has not been discharged before the
beginning of the financial year.
(a) in respect of the relevant transaction in connection with which the s161B(4)a
guarantee is entered into or the security provided disclose:

Reference Yes No
N/A
(i) the name of the borrower; and s161B(4)a

(ii) where the borrower is connected with a director of the s161B(4)a
company or of its holding company give the name of the
relevant director;
(b) the maximum liability of the company under the guarantee or in s161B(4)b
respect of the security both:
(i) at the beginning of the year; and s161B(4)b
(ii) at the end of the financial year; and s161B(4)b
(c) any amount paid and any liability incurred by the company for the s161B(4)c
purpose of fulfilling the guarantee or discharging the security
(including any loss incurred by the company by reason of the
enforcement of the guarantee or security).
23.16 In the case of guarantees entered into or security provided in s161B(5)

connection with relevant transactions that consist of quasi-loans or
company, in lieu of the particulars specified above, a statement
showing, with respect to each borrower in relation to whom particulars
are required to be given under those subsections:

b) where the borrower is connected with a director of the company s161B(5)b
or of its holding company, the name of the relevant director;
c) in respect of all guarantees entered into security and provided by s161B(5)c

the company in connection with all such relevant transactions of
which that person is the borrower disclose the maximum liability
of the company:
i) at the beginning; and s161B(5)c
ii) at the end of the financial year s161B(5)c
d) the aggregate of the amounts paid and of all liabilities incurred by s161B(5)d
the company for the purpose of fulfilling the guarantees or
discharging the security (including the aggregate of all losses
incurred by the company by reason of the enforcement of such
guarantees or security).
23.17 Where a relevant transaction is undertaken by a subsidiary company s161B(6)

disclose the following particulars:
a) the principal amount of any loan or quasi-loan made by the s161B(6)a
subsidiary to, or any credit transaction entered into by the
subsidiary as creditor for, a director or other officer of the
company (whether or not he was a director or other officer of the
company at the time the loan, quasi-loan or credit transaction
was made or entered into);
b) the name of the director or officer; s161B(6)a
c) the terms of the loan, quasi-loan or credit transaction including: s161B(6)a
i) the amounts payable thereunder (whether in a lump sum or s161B(6)a

instalments or by way of periodical payments or otherwise);
ii) the rate of interest s161B(6)a

iii) and the security s161B(6)a

Reference Yes No
N/A
d) the amount outstanding on the loan, quasi-loan or credit s161B(6)a

transaction, in respect of principal and interest or otherwise:
i) at the beginning of the year; s161B(6)a

ii) at the end of the year; and s161B(6)a
iii) the maximum amount outstanding during that financial year; s161B(6)a
e) the amount, if any, that, having fallen due, has not been paid; and s161B(6)a
f) the amount of any provision made in respect of any failure or s161B(6)a

anticipated failure by the director or officer to pay the whole or
any part of the principal amount of the transaction in question or
any other amount owing under that transaction; and
g) Where a subsidiary has entered into a guarantee or provided s161B(6)b

security in respect of a relevant transaction with a director or
other officer that has not been discharged before the beginning
of the company's financial year, and disclose:
i) the principal amount of any loan, quasi-loan or other credit s161B(6)b

transaction involved;
ii) the name of the director or officer; s161B(6)b
iii) the maximum liability of the subsidiary under the guarantee s161B(6)b
or in respect of the security both at the beginning and at the
end of the financial year; and
iv) any amount paid and any liability incurred by the subsidiary s161B(6)b
for the purpose of fulfilling the guarantee or discharging the
security (including any loss incurred by the subsidiary by
reason of the enforcement of the guarantee or security),
being a loan, quasi-loan or credit transaction that either is
made or entered into during the company's financial year or,
if made or entered into before it, is outstanding at any time
during that financial year.
23.18 In the case of quasi-loans and credit transactions, there may be s161B(7)
included in the accounts or group accounts of the company, in lieu of
the particulars required above, a statement showing, with respect to
each director or other officer in relation to whom particulars are
required to be given under that subsection:

b) the aggregate of the principal amounts of all quasi-loans made s161B(7)b
by the subsidiary to, and all credit transactions entered into by
the subsidiary as creditor for, that person;
c) the aggregate of the amounts outstanding on all such quasi- s161B(7)c

loans and credit transactions, in respect of principal and interest
or otherwise:
i) at the beginning of the year; and
ii) at the end of the company's financial year;
d) the aggregate of the amounts, if any, that, having fallen due, s161B(7)d
have not been paid; and

Reference Yes No
N/A
e) the aggregate of the amounts of any provision made in respect of s161B(7)d

any failure or anticipated failure by that person to pay the whole
or any part of the principal amount of any such quasi-loan or
credit transaction or any other amount owing under it;
f) the aggregate of the principal amounts of all quasi-loans made s161B(7)e

by any person to, and all credit transactions entered into by any
person as creditor for, that person under all guarantees entered
into and all security provided by the subsidiary and in respect of
which the liability of the subsidiary has not been discharged
before the beginning of the company's financial year;
g) the maximum liability of the subsidiary under the guarantees and s161B(7)f
security referred to above:
i) at the beginning of the year; and s161B(7)f
ii) at the end of the financial year, s161B(7)f
h) the aggregate of the amounts paid and of all liabilities incurred by s161B(7)g
the subsidiary for the purpose of fulfilling the guarantees or
discharging the security referred to in paragraph (e) (including
the aggregate of all losses incurred by the subsidiary by reason
of the enforcement of such guarantees or security).
Note. There are exceptions form the above disclosures for authorised
financial institutions lending in the ordinary course of business. These
are set out in sections 161B(8) to (10) but are not addressed in this
checklist. (s161B(8))
24.0 Leases
24.01 A lease is classified as a finance lease if it transfers substantially all HKAS 17.8
the risks and rewards incidental to ownership.
24.02 The liabilities for leased assets should not be disclosed as a HKAS 17.23
deduction from the leased assets. If, for the disclosure of liabilities on
the face of the balance sheet, distinction is made between current
and non-current liabilities, the same distinction is made for lease
liabilities.
Finance leases - lessees
24.03 In addition to the disclosure requirements of HKAS 32, lessees HKAS 17.31
should disclose, in respect of finance leases:
a) for each class of asset, the net carrying amount at the balance HKAS 17.31a
sheet date;
b) the total of future minimum lease payments at the balance sheet HKAS 17.31b
date, and their present value, for each of the following periods:
i) not later than one year; HKAS 17.31b

ii) later than one year and not later than five years; HKAS 17.31b
iii) later than five years. HKAS 17.31b
c) a reconciliation between the total of future minimum lease HKAS 17.31b
payments at the balance sheet date, and their present value;
d) contingent rents recognised as an expense in the period; HKAS 17.31c

e) the total of future minimum sublease payments expected to be HKAS 17.31d
received under non-cancellable subleases at the balance sheet
date;

Reference Yes No
N/A
f) a general description of the lessee's material leasing HKAS 17.31e

arrangements including, but not limited to:
i) the basis on which contingent rent payable is determined; HKAS 17.31e
ii) the existence and terms of renewal or purchase options and HKAS 17.31e
escalation clauses; and
iii) restrictions imposed by lease arrangements, such as those HKAS 17.31e
concerning dividends, additional debt, and further leasing.
24.04 The leasing disclosure requirements in HKASs 16, 36, 38, 40 and 41 HKAS 17.32
also apply to lessees for assets leased under finance leases.
Finance leases - lessors

24.05 In addition to the disclosure requirements of HKAS 32, lessors should HKAS 17.47
disclose, in respect of finance leases:
a) the gross investment in the lease and the present value of HKAS 17.47a
minimum lease payments receivable at the balance sheet date,
for each of the following periods:
i) not later than one year; HKAS 17.47a
ii) later than one year and not later than five years; HKAS 17.47a
iii) later than five years. HKAS 17.47a
b) a reconciliation between the gross investment in the lease at the HKAS 17.47a
balance sheet date, and the present value of minimum lease
payments receivable at the balance sheet date;
c) unearned finance income. HKAS 17.47b
d) the unguaranteed residual values accruing to the benefit of the HKAS 17.47c
lessor;
e) the accumulated allowance for uncollectible minimum lease HKAS 17.47d
payments receivable;
f) contingent rents recognised as income in the period; and HKAS 17.47e
g) a general description of the lessor's material leasing HKAS 17.47f
arrangements.
24.06 Disclosure is also encouraged of the gross investment less unearned HKAS 17.48
income in new business added during the period, after deducting the
relevant amounts for cancelled leases.
24.07 Disclosure requirements for lessees and lessors apply equally to sale HKAS 17.65
and leaseback transactions. Disclosure of material leasing
arrangements includes unique or unusual provisions of the
agreement or terms of sale and leaseback transactions.
24.08 Sale and leaseback transactions may trigger the separate disclosure HKAS 17.66
criteria in HKAS 1.
24.09 A lease is classified as an operating lease if it does not transfer HKAS 17.8
substantially all the risks and rewards incidental to ownership.
24.10 Has the land element of a lease for land and building been classified HKAS 17.15
as an operating lease where it is not expected that title will pass to the
lessee?
Operating leases - lessees
24.11 In addition to the disclosure requirements of HKAS 32, lessees HKAS 17.35
should disclose, in respect of operating leases:

Reference Yes No
N/A
a) the total of future minimum lease payments under non- HKAS 17.35a
cancellable operating leases for each of the following periods:

b) the total of future minimum sublease payments expected to be HKAS 17.35b
received under non-cancellable subleases at the balance sheet
date;
c) lease and sublease payments recognised as an expense in the HKAS 17.35c
period, with separate amounts for minimum lease payments,
contingent rents, and sublease payments; and
d) a general description of the lessee's significant leasing HKAS 17.35d
arrangements including, but not limited to, the following:
i) the basis on which contingent rent payable is determined; HKAS 17.35d
ii) the existence and terms of renewal or purchase options and HKAS 17.35d
escalation clauses; and
iii) restrictions imposed by lease arrangements, such as those HKAS 17.35d
concerning dividends, additional debt and further leasing.
Operating leases - lessors

24.12 In addition to the disclosure requirements of HKAS 32, lessors should HKAS 17.56
disclose, in respect of operating leases:
a) the future minimum lease payments under non-cancellable HKAS 17.56a
operating leases in the aggregate and for each of the following
periods:
b) total contingent rents recognised as income in the period; and HKAS 17.56b
c) a general description of the lessor's leasing arrangements. HKAS 17.56c
24.13 The leasing disclosure requirements in HKASs 16, 36, 38, 40 and 41 HKAS 17.57
also apply to lessors for assets provided under operating leases.
24.14 If a purchaser concludes that it is impracticable to separate the lease HKFRS-Int 4.15b
payments reliably from other payments, it shall, in the case of an
operating lease, treat all payments under the arrangement as lease
payments for the purposes of complying with the disclosure
requirements of HKAS 17, but
a) disclose those payments separately from minimum lease HKFRS-Int
payments of other arrangements that do not include payments 4.15bi
for non-lease elements, and
b) state that the disclosed payments also include payments for non- HKFRS-Int
lease elements in the arrangement. 4.15bii
24.15 An entity shall apply this Interpretation for annual periods beginning HKFRS-Int 4.16
on or after 1 January 2006. Earlier application is encouraged. If an
entity applies this Interpretation for a period beginning before 1
January 2006, it shall disclose that fact.

Reference Yes No
N/A
24.16 All aspects of an arrangement that does not, in substance, involve a HKAS-Int 27.10
lease under HKAS 17 should be considered in determining the
appropriate disclosures that are necessary to understand the
arrangement and the accounting treatment adopted. An Enterprise
should disclose the following in each period that an arrangement
exists:
a) a description of the arrangement including: HKAS-Int 27.10a
(i) the underlying asset and any restrictions on its use; HKAS-Int 27.10a
(ii) the life and other significant terms of the arrangement; HKAS-Int 27.10a
(iii) the transactions that are linked together, including any HKAS-Int 27.10a
options; and
b) the accounting treatment applied to any fee received, the amount HKAS-Int 27.10b
recognised as income in the period, and the line item of the
income statement in which it is included.
24.17 The disclosures required in accordance with HKAS Int 27.10 should HKAS-Int 27.11
be provided individually for each arrangement or in aggregate for
each class of arrangement. A class is a grouping of arrangements
with underlying assets of a similar nature (e.g., power plants).
25.0 Loans and other liabilities

25.01 Where any liability of the company is secured otherwise than by Sch 10.10
operation of law on any assets of the company, the fact that that
liability is so secured shall be stated, but it shall not be necessary to
specify the assets on which the liability is secured.
a) the aggregate amount of loans, other than bank loans or Sch 10.9(1)d
overdrafts, made to the company which:
i) are repayable otherwise than by instalments and fall due for Sch 10.9(1)d
repayment after the expiration of the period of 5 years
beginning with the day next following the expiration of the
financial year; or
ii) are repayable by instalments any of which fall due for Sch 10.9(1)d
payment after the expiration of that period;
b) the terms on which it is repayable and Sch 10.9(4)
c) the rate at which interest is payable thereon. Sch 10.9(4)
Note. If the number of loans is such that, in the opinion of the
directors, compliance with the foregoing requirement would result in a
statement of excessive length, it shall be sufficient to give a general
indication of the terms on which the loans are repayable and the
rates at which interest is payable thereon. (Sch 10.9(4))
25.02 Where any of the company's debentures are held by a nominee of or Sch 10.11
trustee for the company disclose:
a) the nominal amount of the debentures and Sch 10.11
b) the amount at which they are stated in the books of the company Sch 10.11
25.03 Disclose any amounts provided for redemption of loans. Sch 10.13(1)d
26.0 Provisions and contingencies
26.01 Where material disclose the aggregate amounts of provisions (other Sch 10.6a
than provisions for depreciation, renewals or diminution in value of
assets).

Reference Yes No
N/A
Note. The Financial Secretary may direct that a separate statement Sch 10.6b
of the amount of provisions is not required in the public interest where
that would prejudice the company, but subject to the condition that
any heading stating an amount arrived at after taking into account a
provision (other than as aforesaid) shall be so framed or marked as
to indicate that fact.
26.02 There shall be shown for both provisions and reserves: Sch 10.7(1)
a) the source from which any increase, compared to the previous Sch 10.7(1)a
year, has been derived; and
b) the application of any decreases compared to the amount at the Sch 10.7(1)b
end of the immediately preceding financial year;
Note. Where reserves or provisions are divided into sub-headings Sch 10.7(2)
these requirements apply to each separate sub-heading.
26.03 In respect of provisions disclose: Sch 10.13(1)f

a) any amounts set aside to provisions (other than provisions for Sch 10.13(1)f
depreciation, renewals or diminution in value of assets); or
b) withdrawn from such provisions and not applied for the purposes Sch 10.13(1)f
thereof.
26.04 Where an amount set aside to provisions is not disclosed under the Sch 10.13(2)
directions of the Financial Secretary because it would prejudice the
position of the company; this fact should be disclosed.
26.05 Contingent liabilities and contingent assets may arise from such items HKAS 11.45
as warranty costs, claims, penalties or possible losses on contracts.
Any such contingent liabilities or contingent assets should be
disclosed in accordance with HKAS 37.
26.06 Disclose any tax-related contingent liabilities and contingent assets HKAS 12.88
(e.g. unresolved disputes with the taxation authorities) in accordance
with the requirements of HKAS 37.
26.07 In accordance with HKAS 37, also disclose: HKAS 28.40
a) the entity's share of the contingent liabilities of an associate HKAS 28.40
incurred jointly with other investors; and
b) those contingent liabilities that arise because the investor is HKAS 28.40
severally liable for all or part of the liabilities of the associate.
26.08 For each class of provision, disclose: HKAS 37.84

a) the carrying amount at the beginning and end of the period; HKAS 37.84a
b) additional provisions made in the period, including increases to HKAS 37.84b
existing provisions;
c) amounts used (i.e. incurred and charged against the provision) HKAS 37.84c
during the period;
d) unused amounts reversed during the period; HKAS 37.84d
e) the increase during the period in the discounted amount arising HKAS 37.84e
from the passage of time and the effect of any change in the
discount rate;
f) a brief description of the nature of the obligation and the HKAS 37.85a
expected timing of any resulting outflows of economic benefits;

Reference Yes No
N/A
g) an indication of the uncertainties about the amount or timing of HKAS 37.85b

those outflows. Where necessary to provide adequate
information, disclose the major assumptions made concerning
future events; and
h) the amount of any expected reimbursement, stating the amount HKAS 37.85c
of any asset that has been recognised for that expected
reimbursement.
Note. Comparative information is not required by (a) to (e). (HKAS
37.84)
26.9 Unless the possibility of any outflow in settlement is remote, disclose HKAS 37.86
for each class of contingent liability at the balance sheet date a brief Sch 10.12(5)
description of the nature of the contingent liability and, where
practicable:
a) an estimate of its financial effect; HKAS 37.86a
b) an indication of the uncertainties relating to the amount or timing HKAS 37.86b
of any outflow; and
c) the possibility of any reimbursement. HKAS 37.86c
26.10 Where a provision and a contingent liability arise from the same set of HKAS 37.88
circumstances, disclosure should be given in a way that shows the
link between the provision and the contingent liability.
Where an inflow of economic benefits is probable, disclose: HKAS 37.89
a) a brief description of the nature of the contingent assets at the HKAS 37.89
balance sheet date; and
b) where practicable, an estimate of their financial effect. HKAS 37.89
26.11 Ensure that the disclosures required by HKAS 37.89 avoid giving HKAS 37.90
misleading indications of the likelihood of income arising.
26.12 Where any of the disclosures required by HKAS 37.86 and HKAS HKAS 37.91
37.89 are not given because it is not practicable to do so, that fact
should be disclosed.
26.13 In extremely rare cases, some or all of the disclosures in HKAS 37 HKAS 37.92
can be expected to prejudice seriously the position of the entity in a
dispute with other parties on the subject matter of the provision,
contingent liability or contingent asset. In such cases, the information
need not be disclosed, but disclosure should be given of:
a) the general nature of the dispute; and HKAS 37.92

b) the fact that, and reason why, the information has not been HKAS 37.92
disclosed.
26.14 If the entity applies HKAS 37 for a period beginning before 1 July HKAS 37.95
26.15 A contributor shall disclose the nature of its interest in a HKFRS-Int 5.11
decommissioning fund and any restrictions on access to the assets in
the fund.
26.16 When a contributor has an obligation to make potential additional HKFRS-Int 5.12
contributions that is not recognised as a liability, it shall make the
disclosures required by HKAS 37.86.
26.17 When a contributor accounts for its interest in the fund in accordance HKFRS-Int 5.13
with HKFRS-Int 5.9 (does not have significant influence and
recognises right to reimbursement), it shall make the disclosures
required by HKAS 37.85c.

Reference Yes No
N/A
26.18 An entity shall apply this Interpretation for annual periods beginning HKFRS-Int 5.14
on or after 1 January 2006. Earlier application is encouraged. If an
entity applies this Interpretation to a period beginning before 1
27.0 Deferred tax
27.01 If an amount is set aside for the purpose of its being used to prevent Sch 10.8
undue fluctuations in charges for taxation, it shall be stated.
27.02 If a sum set aside for the purpose of its being used to prevent undue Sch 10.12(12)
fluctuations in charges for taxation has been used during the financial
year for another purpose disclose:
a) the amount thereof; and
b) the fact that it has been so used.
27.03 Disclose the amount of any deferred tax asset and the nature of the HKAS 12.82
evidence supporting its recognition, when:
a) the utilisation of the deferred tax asset is dependent on future HKAS 12.82a
taxable profits in excess of the profits arising from the reversal of
existing taxable temporary differences; and
b) a loss has been suffered by the entity in either the current or HKAS 12.82b
preceding period in the tax jurisdiction to which the deferred tax
asset relates.
27.04 If the rate used to calculate income taxes payable or the timing of HKAS 12.82A
income tax payments varies with jurisdiction or whether part or all of
the net profit or retained earnings are paid out as a dividend to
shareholders disclose:
a) the nature of the potential income tax consequences that would HKAS 12.82A
result from the payment of dividends to shareholders, including:
i) the important features of the income tax system(s); and HKAS 12.87A
ii) the factors that will affect the amount of the potential income HKAS 12.87A
tax consequences of dividends.
b) the amounts of the potential income tax consequences HKAS 12.82A
practicably determinable; and
c) whether there are any potential income tax consequences not HKAS 12.82A
practicably determinable.
Note. In the separate financial statements of a parent company,
this disclosure relates to the parent's retained earnings. (HKAS
12.87B)
27.05 Disclose any significant effects on current and deferred tax assets HKAS 12.88
and liabilities of changes in tax rates or tax laws that are enacted or
announced after the balance sheet date in accordance with the
requirements of HKAS 10.
28.0 Share Capital and Reserves
28.01 There shall be specified: Sch 10.2
a) in respect of redeemable shares: Sch 10.2a
i) any part of the issued capital that consists of redeemable Sch 10.2a
shares;
ii) the earliest and latest dates on which the company has Sch 10.2a
power to redeem those shares;

Reference Yes No
N/A
iii) whether those shares must be redeemed in any event or are Sch 10.2a
liable to be redeemed at the option of the company; and
iv) whether any (and, if so, what) premium is payable on Sch 10.2a
redemption
b) so far as the information is not given in the profit and loss Sch 10.2b
account:
i) any share capital on which interest has been paid out of
capital during the financial year; and
ii) the rate at which interest as been so paid;
c) the amount of the share premium account; Sch 10.2c
d) particulars of any redeemed debentures which the company has Sch 10.2d
power to reissue.
28.02 There shall be stated under separate headings, so far as they are not Sch 10.3
written off:
a) the preliminary expenses; Sch 10.3a
b) any expenses incurred in connexion with any issue of share Sch 10.3b
capital or debentures;
c) any sums paid by way of commission in respect of any shares or Sch 10.3c
debentures;
d) any sums allowed by way of discount in respect of any Sch 10.3d
debentures; and
e) the amount of the discount allowed on any issue of shares at a Sch 10.3e
discount.
28.03 Disclose any amounts provided for redemption of share capital. Sch 10.13(1)d
28.04 An entity shall disclose the following, either on the face of the balance HKAS 1.76
sheet or in the notes:
a) for each class of share capital: HKAS 1.76a
(i) the number of shares authorised; HKAS 1.76ai
(ii) the number of shares issued and fully paid, and issued but HKAS 1.76aii
not fully paid;
(iii) par value per share, or that the shares have no par value; HKAS 1.76aiii
(iv) a reconciliation of the number of shares outstanding at the HKAS 1.76aiv

beginning and at the end of the period;
(v) the rights, preferences and restrictions attaching to that HKAS 1.76av
class including restrictions on the distribution of dividends
and the repayment of capital;
(vi) shares in the entity held by the entity or by its subsidiaries or HKAS 1.76avi
associates; and
(vii) shares reserved for issue under options and contracts for HKAS 1.76avii
the sale of shares, including the terms and amounts; and
b) a description of the nature and purpose of each reserve within HKAS 1.76b
equity.
c) An entity without share capital should disclose information HKAS 1.77
equivalent to that required by paragraph (a), showing changes
during the period in each category of equity interest, and the
rights, preferences and restrictions attaching to each category of
equity interest.

Reference Yes No
N/A
28.05 Where the company issued shares at a premium, whether for cash or s48B(1)
otherwise, was a sum equal to the aggregate amount or value of the
premiums on those shares shown as being transferred to "the share
premium account"?
28.06 Where material disclose the aggregate amount of reserves. Sch 10.6a
28.07 The amount of treasury shares held should be disclosed separately HKAS 32.34
either on the face of the balance sheet or in the notes.
29.0 Accounting policies

29.01 An entity shall disclose in the summary of significant accounting HKAS 1.108
policies:
a) the measurement basis (or bases) used in preparing the financial HKAS 1.108a
statements; and
b) the other accounting policies used that are relevant to an HKAS 1.108b
understanding of the financial statements.
c) the judgements, apart from those involving estimations, HKAS 1.113
management has made in the process of applying the entity's
accounting policies that have the most significant effect on the
amounts recognised in the financial statements.
29.02 If an entity applies HKAS 17 (Leases) for a period beginning before 1 HKAS 17.69
January 2005 it shall disclose that fact.
29.03 Disclose the accounting policy adopted for borrowing costs. HKAS 23.9,
HKAS 23.29a
29.04 Disclose the accounting policy adopted in determining the HKAS 7.46
composition of cash and cash equivalents.
29.05 Disclose the effect of any change in the policy for determining HKAS 7.47
components of cash and cash equivalents.
29.06 When initial application of a Standard or an Interpretation has an HKAS 8.28
effect on the current period or any prior period, would have such an
effect except that it is impracticable to determine the amount of the
adjustment, or might have an effect on future periods, disclose:
a) the title of the Standard or Interpretation; HKAS 8.28a

b) when applicable, that the change in accounting policy is made in HKAS 8.28b
accordance with its transitional provisions;
c) the nature of the change in accounting policy; HKAS 8.28c
d) when applicable, a description of the transitional provisions; HKAS 8.28d
e) when applicable, the transitional provisions that might have an HKAS 8.28e
effect on future periods;
f) for the current period and each prior period presented, to the HKAS 8.28f
extent practicable, the amount of the adjustment:
i) for each financial statement line item affected; and HKAS 8.28fi
ii) if HKAS 33 applies to the entity, for basic and diluted HKAS 8.28fii
earnings per share;
g) the amount of the adjustment relating to periods before those HKAS 8.28g
presented, to the extent practicable; and

Reference Yes No
N/A
h) if retrospective application required by HKAS 8 is impracticable HKAS 8.28h

for a particular prior period, or for periods before those
presented, the circumstances that led to the existence of that
condition and a description of how and from when the change in
accounting policy has been applied.
Note. Financial statements of subsequent periods need not repeat

these disclosures. (HKAS 8.28)
29.07 When a voluntary change in accounting policy has an effect on the HKAS 8.29
current period or any prior period, would have an effect on that period
except that it is impracticable to determine the amount of the
adjustment, or might have an effect on future periods, an entity shall
disclose:
a) the nature of the change in accounting policy; HKAS 8.29a
b) the reasons why applying the new accounting policy provides HKAS 8.29b
reliable and more relevant information;
c) for the current period and each prior period presented, to the HKAS 8.29c
extent practicable, the amount of the adjustment:
i) for each financial statement line item affected; and HKAS 8.29ci
ii) if HKAS 33 applies to the entity, for basic and diluted HKAS 8.29cii
earnings per share;
d) the amount of the adjustment relating to periods before those HKAS 8.29d
presented, to the extent practicable; and
e) if retrospective application is impracticable for a particular prior HKAS 8.29e
period, or for periods before those presented, the circumstances
that led to the existence of that condition and a description of
how and from when the change in accounting policy has been
applied.
Note. Financial statements of subsequent periods need not repeat
these disclosures. (HKAS 8.29)
29.08 When a new Standard or Interpretation that has been issued but is HKAS 8.30
not yet effective, is not yet being applied by the entity, disclose:
a) this fact; and HKAS 8.30a

b) known or reasonably estimable information relevant to assessing HKAS 8.30b
the possible impact that application of the new Standard or
Interpretation will have on the entity's financial statements in the
period of initial application.
29.09 When a new Standard or Interpretation that has been issued that is HKAS 8.31
not yet effective and is not yet being applied by the entity, consider
disclosing:
a) the title of the new Standard or Interpretation; HKAS 8.31a
b) the nature of the impending change or changes in accounting HKAS 8.31b
policy;
c) the date by which application of the Standard or Interpretation is HKAS 8.31c
required;
d) the date as at which it plans to apply the Standard or HKAS 8.31d
Interpretation initially; and either
e) a discussion of the impact that initial application of the Standard HKAS 8.31ei
or Interpretation is expected to have on the entity's financial
statements; or

Reference Yes No
N/A
f) if that impact is not known or reasonably estimable, a statement HKAS 8.31eii

to that effect.
Financial instruments
The specific disclosures required by HKFRS 7 below apply for
periods commencing 1 January 2007. However, earlier adoption
is encouraged and similar disclosures are required by HKAS 32.
29.10 Discloses, in the summary of significant accounting policies, the HKFRS 7.21
measurement basis (or bases) used in preparing the financial
statements and the other accounting policies used that are relevant to
an understanding of the financial statements. Such disclosure may
include:
a) for financial assets or financial liabilities designated as at fair HKFRS 7.B5a
value through profit or loss:
i) the nature of the financial assets or financial liabilities the HKFRS 7.B5a
entity has designated as at fair value through profit or loss;
ii) the criteria for so designating such financial assets or HKFRS 7.B5a
financial liabilities on initial recognition; and
iii) how the entity has satisfied the conditions in HKAS 39 for HKFRS 7.B5a
such designation.
b) the criteria for designating financial assets as available for sale. HKFRS 7.B5b
c) whether regular way purchases and sales of financial assets are HKFRS 7.B5c
accounted for at trade date or at settlement date (see HKAS
39.38).
d) when an allowance account is used to reduce the carrying HKFRS 7.B5d
amount of financial assets impaired by credit losses:
i) the criteria for determining when the carrying amount of HKFRS 7.B5d
impaired financial assets is reduced directly (or, in the case
of a reversal of a write-down, increased directly) and when
the allowance account is used; and
ii) the criteria for writing off amounts charged to the allowance HKFRS 7.B5d
account against the carrying amount of impaired financial
assets (see paragraph 16).
e) how net gains or net losses on each category of financial HKFRS 7.B5e
instrument are determined;
f) the criteria the entity uses to determine that there is objective HKFRS 7.B5
evidence that an impairment loss has occurred;
g) when the terms of financial assets that would otherwise be past HKFRS 7.B5
due or impaired have been renegotiated, the accounting policy
for financial assets that are the subject of renegotiated terms.
30.0 Accounting estimates & errors

30.01 Where a change in accounting estimate has an effect in the current HKAS 8.39
period; or
a) the nature of the change; and HKAS 8.39
b) the amount of the change. HKAS 8.39
30.02 If the amount of the effect in future periods is not disclosed because HKAS 8.40
estimating it is impracticable, an entity shall disclose that fact.

Reference Yes No
N/A
30.03 In respect of the retrospective correction of material prior period HKAS 8.49
errors, disclose:
a) the nature of the prior period error; HKAS 8.49a
b) for each prior period presented, to the extent practicable, the HKAS 8.49b
amount of the correction:
i) for each financial statement line item affected; and HKAS 8.49bi
ii) if HKAS 33 applies to the entity, for basic and diluted HKAS 8.49bii
earnings per share;
c) the amount of the correction at the beginning of the earliest prior HKAS 8.49c
period presented; and
d) if retrospective restatement is impracticable for a particular prior HKAS 8.49d
period:
i) the circumstances that led to the existence of that condition; HKAS 8.49d
and
ii) a description of how and from when the error has been HKAS 8.49d
corrected.
Note. Financial statements of subsequent periods need not repeat HKAS 8.49
these disclosures.
31.0 Events after the balance sheet date
31.01 Where there is a significant risk of material adjustment to the carrying HKAS 1.116
amounts of assets and liabilities within the next financial year, an
entity shall disclose in the notes:
a) information about the key assumptions concerning the future, and HKAS 1.116
b) other key sources of estimation uncertainty at the balance sheet HKAS 1.116
date,
c) the nature of those assets and liabilities; and HKAS 1.116a
d) their carrying amount as at the balance sheet date. HKAS 1.116b
Note. These disclosures are not required for assets and liabilities
measured at fair value based on recently observed market prices.
(HKAS 1.119)
31.02 When it is impracticable to disclose the extent of the possible effects HKAS 1.122
of a key assumption or another key source of estimation uncertainty
at the balance sheet date, the entity discloses:
a) that it is reasonably possible, based on existing knowledge, that HKAS 1.122
outcomes within the next financial year that are different from
assumptions could require a material adjustment to the carrying
amount of the asset or liability affected; and
b) the nature and carrying amount of the specific asset or liability (or HKAS 1.122
class of assets or liabilities) affected by the assumption.
31.03 In respect of the authorisation and issue of the financial statements HKAS 10.17
disclose:
a) disclose the date the financial statements were authorised for HKAS 10.17
issue; and
b) who gave that authorisation. HKAS 10.17
31.04 If the entity's owners or others have the power to amend the financial HKAS 10.17
statements after issue, disclose that fact.

Reference Yes No
N/A
31.05 If information is received after the balance sheet date about HKAS 10.19
conditions that existed at the balance sheet date, the disclosures that
relate to those conditions shall be updated in the light of the new
information.
31.06 For each material category of non-adjusting event after the balance HKAS 10.21
sheet date, disclose:
a) the nature of the event; and HKAS 10.21a
b) an estimate of its financial effect, or a statement that such an HKAS 10.21b
estimate cannot be made.
31.07 Non-adjusting events after the balance sheet date that would HKAS 10.22
generally result in disclosure include, but are not limited to:
a) a major business combination after the balance sheet date; or HKAS 10.22a
b) disposing of a major subsidiary; HKAS 10.22a

c) announcement of a plan to discontinue an operation; HKAS 10.22b
d) disposing of assets or settling liabilities attributable to a HKAS 10.22b
discontinuing operation or
e) entering into binding agreements to sell such assets or settle HKAS 10.22b
such liabilities
f) major purchases and disposals of asset.; or HKAS 10.22c
g) expropriation of major assets by government; HKAS 10.22c
h) the destruction of a major production plant by a fire after the HKAS 10.22d
balance sheet date;
i) announcement or start of implementation of a major restructuring; HKAS 10.22e
j) major ordinary share transactions and potential ordinary share HKAS 10.22f
transactions after the balance sheet date;
k) abnormally large changes after the balance sheet date in asset HKAS 10.22g
prices or foreign exchange rates;
l) changes in tax rates or tax laws enacted or announced after the HKAS 10.22h
balance sheet date that have a significant effect on current and
deferred tax assets and liabilities;
m) entering into significant commitments or contingent liabilities, for HKAS 10.22i
example, by issuing significant guarantees; and
n) commencement of major litigation arising solely out of events HKAS 10.22j

that occurred after the balance sheet date.
32.0 Cash flow Statements
32.01 All entities are required to present a cash flow statement in their HKAS 7.3
32.02 The cash flow statement should be presented as an integral part of HKAS 7.1
the financial statements for the period.
32.03 The cash flow statement should disclose cash flows during the period HKAS 7.10
in a manner which is most appropriate to the business of the entity
classified by:
a) operating activities; HKAS 7.10
b) investing activities; and HKAS 7.10
c) financing activities, HKAS 7.10

Reference Yes No
N/A
32.04 Cash flows from operating activities should be disclosed using either: HKAS 7.18
a) the direct method; or HKAS 7.18a

b) the indirect method. HKAS 7.18b
32.05 Major classes of gross cash receipts and gross cash payments HKAS 7.21
arising from investing and financing activities should be disclosed
separately.
32.06 However, cash flows arising from the following operating, investing or HKAS 7.22
financing activities may be disclosed on a net basis:
a) cash receipts and payments on behalf of customers when the HKAS 7.22a
cash flows reflect the activities of the customer rather than those
of the enterprise; and
b) cash receipts and payments for items in which the turnover is HKAS 7.22b
quick, the amounts are large, and the maturities are short.
32.07 Cash flows arising from each of the following activities of a financial HKAS 7.24
institution may be disclosed on a net basis:
a) cash receipts and payments for the acceptance and repayment HKAS 7.24a
of deposits with a fixed maturity date;
b) the placement of deposits with and withdrawal of deposits from HKAS 7.24b
other financial institutions; and
c) cash advances and loans made to customers and the repayment HKAS 7.24c
of those advances and loans.
32.08 Disclose the effect of exchange rate changes on cash and cash HKAS 7.28
equivalents held or due in a foreign currency in the cash flow
statement in order to reconcile cash and cash equivalents at the
beginning and the end of the period.
32.09 Disclose this amount separately from: HKAS 7.28
a) cash flows from operating, investing and financing activities; and HKAS 7.28
b) include the differences arising, if any, had those cash flows been HKAS 7.28
reported at end of period exchange rates.
32.10 Each should be classified in a consistent manner from period to HKAS 7.31
period as either operating, investing or financing activities and
separately disclosed:
a) interest received; HKAS 7.31
b) interest paid; HKAS 7.31
c) dividends received; HKAS 7.31
d) dividends paid. HKAS 7.31
Note. The total amount of interest paid during a period should be
disclosed in the cash flow statement whether it has been recognised
as an expense in the income statement or capitalised in accordance
with the allowed alternative treatment in HKAS 23 Borrowing Costs.
(HKAS 7.32)
32.11 Cash flows arising from taxes on income should be separately HKAS 7.35
disclosed and classified as cash flows from operating activities unless
they can be specifically identified with financing and investing
activities.
32.12 The aggregate cash flows arising from acquisitions and from HKAS 7.39
disposals of subsidiaries or other business units should be disclosed
separately and classified as investing activities.

Reference Yes No
N/A
32.13 Disclose, in aggregate, in respect of both acquisitions and disposals HKAS 7.40
of subsidiaries or other business units during the period each of the
following:
a) the total purchase or disposal consideration; HKAS 7.40a
b) the portion of the purchase or disposal consideration discharged HKAS 7.40b
by means of cash and cash equivalents;
c) the amount of cash and cash equivalents in the subsidiary or HKAS 7.40c
business unit acquired or disposed of; and
d) the amount of the assets and liabilities other than cash or cash HKAS 7.40d
equivalents in the subsidiary or business unit acquired or
disposed of, summarised by each major category.
Note. The aggregate amount of the cash paid or received as
purchase or sale consideration is reported in the cash flow statement
net of cash and cash equivalents acquired or disposed of. (HKAS
7.42)
32.14 Investing and financing transactions that do not require the use of HKAS 7.43
cash or cash equivalents should be excluded from a cash flow
statement and disclosed elsewhere in the financial statements,
ensuring all relevant information about these investing and financing
activities is given.
32.15 In respect of cash and cash equivalents, disclose: HKAS 7.45
a) the components thereof; and HKAS 7.45
b) a reconciliation of the amounts in the cash flow statement with HKAS 7.45
the equivalent items reported in the balance sheet.
a) the amount of significant cash and cash equivalent balances held HKAS 7.48
by the entity that are not available for use by the group; and
b) commentary by management thereon. HKAS 7.48

32.17 Disclosure of additional information which may be relevant to users of HKAS 7.50
the financial statements, together with commentary by management
as appropriate, is encouraged and may include:
a) the amount of undrawn borrowing facilities that may be available HKAS 7.50a
for future operating activities and to settle capital commitments,
indicating any restrictions on the use of these facilities;
b) the aggregate amounts of the cash flows from each of operating, HKAS 7.50b
investing and financing activities related to interests in joint
ventures reported using proportionate consolidation;
c) the aggregate amount of cash flows that represent increases in HKAS 7.50c
operating capacity separately from those cash flows that are
required to maintain operating capacity; and
d) the amount of the cash flows arising from the operating, investing HKAS 7.50d
and financing activities of each reported industry and
geographical segment.
33.0 Other disclosures
The disclosures required by HKAS 1.124A & B below: apply for
periods commencing 1 January 2007 although earlier adoption is
encouraged.

Reference Yes No
N/A
33.01 An entity shall disclose information (based on the information HKAS 1.124A
provided internally to the entity‟s key management personnel) that
enables users of its financial statements to evaluate the entity‟s
objectives, policies and processes for managing capital including:
a) qualitative information about its objectives, policies and HKAS 1.124Ba

processes for managing capital, including (but not limited to):
i) a description of what it manages as capital; HKAS 1.124Ba

ii) when an entity is subject to externally imposed capital HKAS 1.124Ba
requirements, the nature of those requirements and how
those requirements are incorporated into the management
of capital; and
iii) how it is meeting its objectives for managing capital. HKAS 1.124Ba
b) summary quantitative data about what it manages as capital. HKAS 1.124Bb
c) any changes in (a) and (b) from the previous period. HKAS 1.124Bc
d) whether during the period it complied with any externally imposed HKAS 1.124Bd
capital requirements to which it is subject.
e) when the entity has not complied with such externally imposed HKAS 1.124Be
capital requirements, the consequences of such non-compliance.
33.02 An entity shall disclose the following, if not disclosed elsewhere in HKAS 1.126
information published with the financial statements:
a) its domicile; HKAS 1.126a
b) legal form; HKAS 1.126a
c) country of incorporation; HKAS 1.126a
d) the address of its registered office (or principal place of business, HKAS 1.126a
if different from the registered office);
e) a description of the nature of the entity's operations and its HKAS 1.126b
principal activities; and
f) the name of the parent and the ultimate parent of the group. HKAS 1.126c
33.03 An entity shall apply this Standard for annual periods beginning on or HKAS 1.127
after 1 January 2005. Earlier application is encouraged. If an entity
applies this Standard for a period beginning before 1 January 2005, it
shall disclose that fact.
33.04 In respect of any charge on the assets of the company to secure the Sch 10.12(4)
liabilities of any other person disclose:
a) particulars of any such charge; and Sch 10.12(4)
b) where practicable, the amount secured. Sch 10.12(4)
33.05 Where practicable disclose the aggregate amount or estimated Sch 10.12(6)
amount, if it is material, of:
a) contracts for capital expenditure, so far as not provided for; and Sch 10.12(6)
b) of capital expenditure authorized by the directors which has not Sch 10.12(6)
been contracted for.

APPENDIX 1 - SHARE BASED PAYMENT
Reference Yes No
N/A
1.01 An entity shall disclose information that enables users of the HKFRS 2.44
financial statements to understand the nature and extent of share-
based payment arrangements that existed during the period.
1.02 Disclosures concerning the nature and extent of share based HKFRS 2.45
payment shall include at least the following:
a) a description of each type of share-based payment HKFRS 2.45a
arrangement that existed at any time during the period,
including the general terms and conditions of each
arrangement, such as:
i) vesting requirements, HKFRS 2.45a
ii) the maximum term of options granted, and HKFRS 2.45a
iii) the method of settlement (e.g. whether in cash or equity). HKFRS 2.45a
iv) an entity with substantially similar types of share-based HKFRS 2.45a
payment arrangements may aggregate this information if
this provides sufficient information to users to
understand the nature and extent of arrangements.
b) the number and weighted average exercise prices of share HKFRS 2.45b
options for each of the following groups of options:
i) outstanding at the beginning of the period; HKFRS 2.45b
ii) granted during the period; HKFRS 2.45b
iii) forfeited during the period; HKFRS 2.45b
iv) exercised during the period; HKFRS 2.45b
v) expired during the period; HKFRS 2.45b
vi) outstanding at the end of the period; and HKFRS 2.45b
vii) exercisable at the end of the period. HKFRS 2.45b
c) for share options exercised during the period: HKFRS 2.45c
i) the weighted average share price at the date of
exercise; or
ii) if options were exercised on a regular basis throughout HKFRS 2.45c
the period, the entity may instead disclose the weighted
average share price during the period.
d) for share options outstanding at the end of the period: HKFRS 2.45d
(i) the range of exercise prices and HKFRS 2.45d
(ii) weighted average remaining contractual life. HKFRS 2.45d
e) If the range of exercise prices is wide, the outstanding HKFRS 2.45d
options shall be divided into ranges that are meaningful for
assessing the number and timing of additional shares that
may be issued and the cash that may be received upon
exercise of those options.
1.03 If the entity has measured the fair value of goods or services HKFRS 2.46
received as consideration for equity instruments of the entity
indirectly, by reference to the fair value of the equity instruments
granted the entity shall disclose at least the following:
a) For share options granted during the period disclose the HKFRS 2.47a
weighted average fair value of those options at the
measurement date; and
b) information on how that fair value was measured, including: HKFRS 2.47a

(i) the option pricing model used and the inputs to that HKFRS 2.47a
model, including the weighted average share price,
exercise price, expected volatility, option life, expected
dividends, the risk-free interest rate and any other inputs
to the model, including the method used and the
assumptions made to incorporate the effects of
expected early exercise;
(ii) how expected volatility was determined, including an HKFRS 2.47a
explanation of the extent to which expected volatility was
based on historical volatility; and
(iii) whether and how any other features of the option grant HKFRS 2.47a
were incorporated into the measurement of fair value,
such as a market condition.
1.04 For other equity instruments granted during the period (ie other HKFRS 2.47b
than share options) disclose:
a) the number and weighted average fair value of those equity HKFRS 2.47b
instruments at the measurement date, and
b) information on how that fair value was measured, including: HKFRS 2.47b
(i) if fair value was not measured on the basis of an HKFRS 2.47b
observable market price, how it was determined;
(ii) whether and how expected dividends were incorporated HKFRS 2.47b
into the measurement of fair value; and
(iii) whether and how any other features of the equity HKFRS 2.47b
instruments granted were incorporated into the
measurement of fair value.
1.05 For share-based payment arrangements that were modified HKFRS 2.47c
during the period disclose:
a) an explanation of those modifications; HKFRS 2.47c
b) the incremental fair value granted (as a result of those HKFRS 2.47c
modifications); and
c) information on how the incremental fair value granted was HKFRS 2.47c
measured.
1.06 If the entity has measured directly the fair value of goods or HKFRS 2.48
services received during the period, the entity shall disclose how
that fair value was determined.
1.07 If the entity has rebutted the presumption that the fair value of the HKFRS 2.49
goods or services received can be estimated reliably, it shall
disclose that fact, and give an explanation of why the presumption
was rebutted.
1.08 An entity shall disclose information that enables users of the HKFRS 2.50
financial statements to understand the effect of share-based
payment transactions on the entity's profit or loss for the period
and on its financial position.
1.09 Disclosures concerning the effect of share-based payment HKFRS 2.51
transactions on the entity's profit or loss for the period and on its
financial position shall include at least the following:
(a) the total expense recognised for the period arising from HKFRS 2.51a
share-based payment transactions in which the goods or
services received did not qualify for recognition as assets
and hence were recognised immediately as an expense,
including separate disclosure of that portion of the total
expense that arises from transactions accounted for as
equity-settled share-based payment transactions;
(b) for liabilities arising from share-based payment transactions: HKFRS 2.51b
(i) the total carrying amount at the end of the period; and HKFRS 2.51b

(ii) the total intrinsic value at the end of the period of HKFRS 2.51b
liabilities for which the counterparty's right to cash or
other assets had vested by the end of the period.
1.10 If the information disclosed in respect of share based payment HKFRS 2.52
arrangements does not satisfy the principles in HKFRS 1, the
entity shall disclose such additional information as is necessary to
satisfy them.
1.11 For all grants of equity instruments to which this HKFRS has not HKFRS 2.56
been applied (eg equity instruments granted on or before 7
November 2002), the entity shall nevertheless disclose the
information concerning the nature and extent of such
arrangements (see HKFRS 1.44-45).
1.12 An entity shall apply HKFRS 1 for annual periods beginning on or HKFRS 2.60
after 1 January 2005. Earlier application is encouraged. If an
entity applies the HKFRS for a period beginning before 1 January
1.13 Disclose the following particulars in respect of any shares in Sch 10.12(2)
which a person has options to subscribe:
a) the number; Sch 10.12(2)
b) a description; Sch 10.12(2)
c) the amount; Sch 10.12(2)
d) the period during which it is exercisable; Sch 10.12(2)a
e) the price to be paid or shares subscribed for under it. Sch 10.12(2)b

APPENDIX 2 - INVESTMENT PROPERTIES
Reference Yes No
N/A
1.01 The following disclosures shall be applied in accounting for HKAS 40.2
investment property. Accordingly, these disclosures do not apply HKAS 40.9
to:
a) property intended for sale in the ordinary course of business HKAS 40.9a
or in the process of construction or development for such
sale, e.g. property acquired exclusively with a view to
subsequent disposal in the near future or for development
and resale.
b) property being constructed or developed on behalf of third HKAS 40.9b
parties.
c) owner-occupied property, including (among other things) HKAS 40.9c
property held for future use as owner-occupied property,
property held for future development and subsequent use as
owner-occupied property, property occupied by employees
(whether or not the employees pay rent at market rates) and
owner-occupied property awaiting disposal.
d) property that is being constructed or developed for future use HKAS 40.9d
as investment property, except existing investment property
that is being redeveloped for continued future use as
investment property.
e) property that is leased to another entity under a finance lease. HKAS 40.9e
1.02 Disclose whether the entity applies the fair value model or the HKAS 40.75a
cost model to investment properties.
1.03 If the entity applies the fair value model to investment properties, HKAS 40.75b
disclose:
a) whether, and in what circumstances, property interests held HKAS 40.75b
under operating leases are classified and accounted for as
investment property.
b) when classification is difficult, the criteria used to distinguish HKAS 40.75c
investment property from owner-occupied property and from
property held for sale in the ordinary course of business.
c) the methods and significant assumptions applied in HKAS 40.75d
determining the fair value of investment property, including a
statement whether the determination of fair value was
supported by market evidence or was more heavily based on
other factors (which the entity shall disclose) because of the
nature of the property and lack of comparable market data.
d) the extent to which the fair value of investment property (as HKAS 40.75e
measured or disclosed in the financial statements) is based
on a valuation by an independent valuer who holds a
recognised and relevant professional qualification and has
recent experience in the location and category of the
investment property being valued. If there has been no such
valuation, that fact shall be disclosed.
e) the amounts recognised in profit or loss for: HKAS 40.75f
i) rental income from investment property; HKAS 40.75f
ii) direct operating expenses (including repairs and HKAS 40.75f
maintenance) arising from investment property that
generated rental income during the period;

iii) direct operating expenses (including repairs and HKAS 40.75f
maintenance) arising from investment property that did
not generate rental income during the period;
iv) the cumulative change in fair value recognised in profit HKAS 40.75f
or loss on a sale of investment property, from a pool of
assets in which the cost model is used, into a pool in
which the fair value model is used.
f) the existence and amounts of restrictions on the realisability HKAS 40.75g
of investment property or the remittance of income and
proceeds of disposal.
g) contractual obligations to purchase, construct or develop HKAS 40.75h
investment property or for repairs, maintenance or
enhancements.
1.04 In addition to the disclosures required above, an entity that HKAS 40.76
applies the fair value model shall also disclose a reconciliation
between the carrying amounts of investment property at the
beginning and end of the period, showing:
a) additions, disclosing separately those additions resulting HKAS 40.76a
from acquisitions and those resulting from subsequent
expenditure recognised in the carrying amount of an asset;
b) additions resulting from acquisitions through business HKAS 40.76b
combinations;
c) assets classified as held for sale or included in a disposal HKAS 40.76c
group classified as held for sale in accordance with HKFRS 5
and other disposals;
d) net gains or losses from fair value adjustments; HKAS 40.76d
e) the net exchange differences arising on the translation of the HKAS 40.76e
financial statements into a different presentation currency,
and on translation of a foreign operation into the presentation
currency of the reporting entity;
f) transfers to and from inventories and owner-occupied HKAS 40.76f
property; and
g) any other changes. HKAS 40.76g
1.05 When a valuation obtained for investment property is adjusted HKAS 40.77
significantly for the purpose of the financial statements disclose:
a) a reconciliation between the valuation obtained and the HKAS 40.77
adjusted valuation included in the financial statements;
b) show separately the aggregate amount of any recognised HKAS 40.77
lease obligations that have been added back; and
c) any other significant adjustments. HKAS 40.77
1.06 In the exceptional cases when an entity measures investment HKAS 40.78
property using the cost model in HKAS 16, the reconciliation
required by sections HKAS 40.77 shall disclose:
a) amounts relating to that investment property separately from HKAS 40.78
amounts relating to other investment property;
b) a description of the investment property; HKAS 40.78a
c) an explanation of why fair value cannot be determined HKAS 40.78b
reliably;
d) if possible, the range of estimates within which fair value is HKAS 40.78c
highly likely to lie; and
e) on disposal of investment property not carried at fair value: HKAS 40.78d
i) the fact that the entity has disposed of investment HKAS 40.78d
property not carried at fair value;

ii) the carrying amount of that investment property at the HKAS 40.78d
time of sale; and
iii) the amount of gain or loss recognised. HKAS 40.78d
1.07 In addition to the disclosures required by HKAS 40.75, an entity HKAS 40.79
that applies the cost model shall also disclose:
a) the depreciation methods used; HKAS 40.79a
b) the useful lives or the depreciation rates used; HKAS 40.79b
c) the gross carrying amount and the accumulated depreciation HKAS 40.79c
d) a reconciliation of the carrying amount of investment property HKAS 40.79d
at the beginning and end of the period, showing the following:
i) additions, disclosing separately those additions resulting HKAS 40.79d

from acquisitions and those resulting from subsequent
expenditure recognised as an asset;
ii) additions resulting from acquisitions through business HKAS 40.79d
combinations;
iii) assets classified as held for sale or included in a HKAS 40.79d
disposal group classified as held for sale in accordance
with HKFRS 5 and other disposals;
iv) depreciation; HKAS 40.79d
v) the amount of impairment losses recognised, and the HKAS 40.79d
amount of impairment losses reversed, during the period
vi) the net exchange differences arising on the translation HKAS 40.79d
of the financial statements into a different presentation
currency, and on translation of a foreign operation into
the presentation currency of the reporting entity;
vii) transfers to and from inventories and owner-occupied HKAS 40.79d
property; and
viii) any other changes; and HKAS 40.79d
e) the fair value of investment property. HKAS 40.79e
f) In the exceptional cases described in HKAS 40.53, when an HKAS 40.79e
entity cannot determine the fair value of the investment
property reliably, disclose:
i) a description of the investment property; HKAS 40.79e
ii) an explanation of why fair value cannot be determined HKAS 40.79e
reliably; and
iii) if possible, the range of estimates within which fair value HKAS 40.79e
is highly likely to lie.
1.08 If an entity applies HKAS 40 for a period beginning before 1 HKAS 40.85

Financial Instruments
APPENDIX 3 - FINANCIAL INSTRUMENTS

Reference Yes No
N/A
1.0 General
1.01 The issuer of a financial instrument shall classify the instrument, HKAS 32.15
or its component parts, on initial recognition in accordance with
the substance of the contractual arrangement and the definitions
in HKAS 32 as:
a) a financial liability; HKAS 32.15
b) a financial asset; or HKAS 32.15
c) an equity instrument HKAS 32.15
1.02 Have all instruments where the entity does not have an HKAS 32.19
unconditional right to avoid delivering cash or another financial
assets to settle a contractual obligation been treated as a
financial liability?
1.03 Have all derivative financial instruments that give one party a HKAS 32.26
choice over how they are settled been treated as a financial asset
or a financial liability unless all of the settlement alternatives
would result in it being an equity instrument?
1.04 Where a financial instrument contains both a liability and an HKAS 32.28
equity component, have such components been classified
separately as financial liabilities, financial assets or equity
instruments in accordance with HKAS 32.15 (see above).
1.05 Have interest, dividends, losses and gains relating to a financial HKAS 32.35
instrument or a component that is a financial liability been
recognised as income or expense in profit or loss?
1.06 Have distributions to holders of an equity instrument been debited HKAS 32.35
by the entity directly to equity, net of any related income tax
benefit?
The disclosures in HKAS 32.56 - 32.66c below apply for
periods commencing before 1 January 2007 unless HKFRS 7
is adopted early in which case they are not required.
1.07 An entity shall describe its financial risk management objectives HKAS 32.56
and policies, including its policy for hedging each main type of
forecast transaction for which hedge accounting is used.
1.08 The entity should provide a discussion of: HKAS 32.57
a) the extent to which financial instruments are used; HKAS 32.57
b) the associated risks; HKAS 32.57
c) the business purposes served; HKAS 32.57
d) policies on matters such as hedging of risk exposures; and HKAS 32.57
e) avoidance of undue concentrations of risk and requirements HKAS 32.57
for collateral to mitigate credit risk.
Terms, Conditions and Accounting Policies
1.09 For each class of financial asset, financial liability and equity HKAS 32.60
instrument, an entity shall disclose:
a) information about the extent and nature of the financial HKAS 32.60a
instruments, including significant terms and conditions that
may affect the amount, timing and certainty of future cash
flows; and

b) the accounting policies and methods adopted, including the HKAS 32.60b
criteria for recognition and the basis of measurement applied.
1.10 As part of the disclosure of an entity's accounting policies, an HKAS 32.61

entity shall disclose, for each category of financial assets,
whether regular way purchases and sales of financial assets are
accounted for at trade date or at settlement date (see HKAS 39,
paragraph 38).
1.11 When financial instruments are significant, either individually or HKAS 32.62
as a class, to the financial position of an entity or its future
operating results disclose their terms and conditions.
1.12 If no single instrument is individually significant to the future cash HKAS 32.62
flows of the entity, disclose the essential characteristics of the
instruments by reference to appropriate groupings of like
instruments.
1.13 When financial instruments held or issued by an entity, either HKAS 32.63
individually or as a class, create a potentially significant risk
exposure terms and conditions that warrant disclosure include:
a) the principal, stated, face or other similar amount, which, for HKAS 32.63a
some derivative instruments, such as interest rate swaps,
might be the amount (referred to as the notional amount) on
which future payments are based;
b) the date of maturity, expiry or execution; HKAS 32.63b
c) early settlement options held by either party to the HKAS 32.63c
instrument, including:
i) the period in which, or date at which, the options can be HKAS 32.63c
exercised; and
ii) the exercise price or range of prices; HKAS 32.63c
d) options held by either party to the instrument to convert the HKAS 32.63d
instrument into, or exchange it for, another financial
instrument or some other asset or liability, including:
i) the period in which, or date at which, the options can be HKAS 32.63d
exercised; and
ii) the conversion or exchange ratio(s); HKAS 32.63d
e) the amount and timing of scheduled future cash receipts or HKAS 32.63e
payments of the principal amount of the instrument, including
instalment repayments and any sinking fund or similar
requirements;
f) stated rate or amount of interest, dividend or other periodic HKAS 32.63f
return on principal and the timing of payments;
g) collateral held, in the case of a financial asset, or pledged, in HKAS 32.63g
the case of a financial liability;
h) in the case of an instrument for which cash flows are HKAS 32.63h
denominated in a currency other than the entity's functional
currency, the currency in which receipts or payments are
required;
i) in the case of an instrument that provides for an exchange, HKAS 32.63i
information described in items (a)-(h) for the instrument to be
acquired in the exchange; and
j) any condition of the instrument or an associated covenant HKAS 32.63j
that, if contravened, would significantly alter any of the other
terms.

1.14 When the balance sheet presentation of a financial instrument HKAS 32.64
differs from the instrument's legal form, it is desirable for an entity
to explain in the notes the nature of the instrument.
Note. The usefulness of information about the extent and nature
of financial instruments is enhanced when it highlights any
relationship between individual instruments that can significantly
affect the amount, timing or certainty of the future cash flows of
an entity. The extent to which a risk exposure is altered by the
relationship among the assets and liabilities may be apparent to
financial statement users from information already disclosed, but
in some circumstances further disclosure is necessary. (HKAS
32.65)
1.15 In accordance with HKAS 1, an entity provides disclosure of all HKAS 32.66
significant accounting policies, including the general principles
adopted and the method of applying those principles to
transactions, other events and conditions arising in the entity's
business. In the case of financial instruments, such disclosure
includes:
a) the criteria applied in determining when to recognise a HKAS 32.66a
financial asset or financial liability and when to derecognise it;
b) the basis of measurement applied to financial assets and HKAS 32.66b

financial liabilities on initial recognition and subsequently;
c) the basis on which income and expenses arising from HKAS 32.66c
financial assets and financial liabilities are recognised and
measured; and
Note. HKAS 32.66d was inserted by the Fair Value Option
amendment to HKAS 39 Published in July 2005. This
paragraph applies for periods commencing on or after 1
January 2006 but before 1 January 2007 unless HKFRS 7 is
adopted early in which case it does not apply.
d) for financial assets or financial liabilities designated as at fair HKAS 32.66d
value through profit or loss:
i) the criteria for so designating such financial assets or HKAS 32.66d
financial liabilities on initial recognition.
ii) how the entity has satisfied the conditions in paragraph HKAS 32.66d
9, 11A or 12 of HKAS 39 for such designation.
- For instruments designated in accordance with HKAS 32.66d
paragraph 9(b)(i) of HKAS 39, that disclosure
includes a narrative description of the circumstances
underlying the measurement or recognition
inconsistency that would otherwise arise.
- For instruments designated in accordance with HKAS 32.66d

paragraph 9(b)(ii) of HKAS 39, that disclosure
includes a narrative description of how designation
as at fair value through profit or loss is consistent
with the entity's documented risk management or
investment strategy.
iii) the nature of the financial assets or financial liabilities HKAS 32.66d
the entity has designated as at fair value through profit
or loss.

Derecognition
The disclosures in HKAS 32.94a - 32.94e below apply for
1.16 a) Where an entity has either transferred a financial asset or HKAS 32.94a
entered into the type of arrangement does not qualify as a
transfer of a financial asset: if the entity either continues to
recognise all of the asset or continues to recognise the asset
to the extent of the entity's continuing involvement it shall
disclose for each class of financial asset:
i) the nature of the assets; HKAS 32.94a
ii) the nature of the risks and rewards of ownership to HKAS 32.94a
which the entity remains exposed;
iii) when the entity continues to recognise all of the asset, HKAS 32.94a
the carrying amounts of the asset and of the associated
liability; and
iv) when the entity continues to recognise the asset to the HKAS 32.94a
extent of its continuing involvement:
- the total amount of the asset; HKAS 32.94a
- the amount of the asset that the entity continues to HKAS 32.94a
recognise; and
- the carrying amount of the associated liability. HKAS 32.94a
Collateral
b) In respect of collateral an entity shall disclose: HKAS 32.94b
i) the carrying amount of financial assets pledged as HKAS 32.94b
collateral for liabilities;
ii) the carrying amount of financial assets pledged as HKAS 32.94b
collateral for contingent liabilities;
iii) any material terms and conditions relating to assets HKAS 32.94b
pledged as collateral.
c) When an entity has accepted collateral that it is permitted to HKAS 32.94c
sell or repledge in the absence of default by the owner of the
collateral, it shall disclose:
i) the fair value of the collateral accepted (financial and HKAS 32.94c
non-financial assets);
ii) the fair value of any such collateral sold or repledged HKAS 32.94c
and whether the entity has an obligation to return it; and
iii) any material terms and conditions associated with its HKAS 32.94c
use of this collateral.
Compound financial instruments with multiple embedded
derivatives
d) If an entity has issued an instrument that contains both a HKAS 32.94d
liability and an equity component and the instrument has
multiple embedded derivative features whose values are
interdependent it shall disclose:
i) the existence of those features; and HKAS 32.94d
ii) the effective interest rate on the liability component HKAS 32.94d
(excluding any embedded derivatives that are accounted
for separately).

Financial assets and financial liabilities at fair value through

profit or loss
e) For financial assets and liabilities at fair value through the HKAS 32.94e
profit and loss an entity shall disclose the carrying amounts
of:
i) financial assets that are classified as held for trading; HKAS 32.94e
ii) financial liabilities that are classified as held for trading; HKAS 32.94e
iii) financial assets that, upon initial recognition, were HKAS 32.94e
designated by the entity as financial assets at fair value
through profit or loss (ie those that are not financial
assets classified as held for trading).
iv) financial liabilities that, upon initial recognition, were HKAS 32.94e
designated by the entity as financial liabilities at fair
value through profit or loss (ie those that are not
financial liabilities classified as held for trading).
HKAS 32.94f to 32.94i were amended by the Fair Value
Option amendment to HKAS 39 Published in July 2005.
These paragraphs apply for periods commencing 1 January
2006 unless HKFRS 7 is adopted early in which case they do
not apply.
f) An entity shall disclose separately net gains or net losses on HKAS 32.94f
financial assets or financial liabilities designated by the entity (amended)
as at fair value through profit or loss.
g) If the entity has designated a loan or receivable (or group of HKAS 32.94g
loans or receivables) as at fair value through profit or loss, it (amended)
shall disclose:
i) the maximum exposure to credit risk at the reporting HKAS 32.94g
date of the loan or receivable (or group of loans or (amended)
receivables),
ii) the amount by which any related credit derivative or HKAS 32.94g
similar instrument mitigates that maximum exposure to (amended)
credit risk,
iii) the amount of change during the period and HKAS 32.94g
cumulatively in the fair value of the loan or receivable (or (amended)
group of loans or receivables) that is attributable to
changes in credit risk determined either as the amount
of change in its fair value that is not attributable to
changes in market conditions that give rise to market
risk; or using an alternative method that more faithfully
represents the amount of change in its fair value that is
attributable to changes in credit risk.
iv) the amount of the change in the fair value of any related HKAS 32.94g
credit derivative or similar instrument that has occurred (amended)
during the period and cumulatively since the loan or
receivable was designated.
h) If the entity has designated a financial liability as at fair value HKAS 32.94h
through profit or loss, it shall disclose: (amended)

i) the amount of change during the period and HKAS 32.94h

cumulatively in the fair value of the financial liability that (amended)
is attributable to changes in credit risk determined either
as the amount of change in its fair value that is not
attributable to changes in market conditions that give
rise to market risk; or using an alternative method that
more faithfully represents the amount of change in its
fair value that is attributable to changes in credit risk.
ii) the difference between the carrying amount of the HKAS 32.94h
financial liability and the amount the entity would be (amended)
contractually required to pay at maturity to the holder of
the obligation.
i) The entity shall disclose: HKAS 32.94i
i) the methods used to comply with the requirement in (amended)
HKAS 32.94i
(g)(iii) and (h)(i) above (amended)
ii) if the entity considers that the disclosure it has given to HKAS 32.94i
comply with the requirements in (g)(iii) or (h)(i) does not (amended)
faithfully represent the change in the fair value of the
financial asset or financial liability attributable to
changes in credit risk, the reasons for reaching this
conclusion and the factors the entity believes to be
relevant.
Reclassification
j) If the entity has reclassified a financial asset as one HKAS 32.94g
measured at cost or amortised cost rather than at fair value,
it shall disclose the reason for that reclassification.
Income statement and equity
k) An entity shall disclose material items of income, expense HKAS 32.94h
and gains and losses resulting from financial assets and
financial liabilities, whether included in profit or loss or as a
separate component of equity. For this purpose, the
disclosure shall include at least the following items:
i) total interest income and total interest expense HKAS 32.94h
(calculated using the effective interest method) for
financial assets and financial liabilities that are not at fair
value through profit or loss;
ii) for available-for-sale financial assets, the amount of any HKAS 32.94h
gain or loss recognised directly in equity during the
period and the amount that was removed from equity
and recognised in profit or loss for the period; and
iii) the amount of interest income accrued on impaired HKAS 32.94h

financial assets, in accordance with HKAS 39.
Impairment
l) An entity shall disclose the nature and amount of any HKAS 32.94i
impairment loss recognised in profit or loss for a financial
asset, separately for each significant class of financial asset.
Defaults and breaches

m) With respect to any defaults of principal, interest, sinking HKAS 32.94j

fund or redemption provisions during the period on loans
payable recognised as at the balance sheet date, and any
other breaches during the period of loan agreements when
those breaches can permit the lender to demand repayment
(except for breaches that are remedied, or in response to
which the terms of the loan are renegotiated, on or before the
balance sheet date), an entity shall disclose:
i) details of those breaches; HKAS 32.94j
ii) the amount recognised as at the balance sheet date in HKAS 32.94j
respect of the loans payable on which the breaches
occurred; and
iii) with respect to amounts disclosed under (ii), whether the HKAS 32.94j
default has been remedied or the terms of the loans
payable renegotiated before the date the financial
statements were authorised for issue.
Note. Loans payable include issued debt instruments and
financial liabilities other than short-term trade payables on
normal credit terms. When such a breach occurred during
the period, and the breach has not been remedied or the
terms of the loan payable have not been renegotiated by the
balance sheet date, the effect of the breach on the
classification of the liability as current or non-current is
determined under HKAS 1. (HKAS 32.95)
The disclosures below in HKFRS 7.7 - 7.20e apply for
periods commencing 1 January 2007. If they are adopted
early the disclosures in HKAS 32.56 - 32.94 are not required.
1.17 An entity shall disclose information that enables users of its HKFRS 7.7
financial statements to evaluate the significance of financial
instruments for its financial position and performance.
Categories of financial assets and financial liabilities
1.18 The carrying amounts of each of the following categories, as HKFRS 7.8
defined in HKAS 39, shall be disclosed either on the face of the
balance sheet or in the notes:
a) financial assets at fair value through profit or loss, showing HKFRS 7.8a
separately:
i) those designated as such upon initial recognition; and HKFRS 7.8a
ii) those classified as held for trading in accordance with HKFRS 7.8a
HKAS 39;
b) held-to-maturity investments; HKFRS 7.8b
c) loans and receivables; HKFRS 7.8c
d) available-for-sale financial assets; HKFRS 7.8d
e) financial liabilities at fair value through profit or loss, showing HKFRS 7.8e
separately:
i) those designated as such upon initial recognition; and HKFRS 7.8e
ii) those classified as held for trading in accordance with HKFRS 7.8e
HKAS 39; and
f) financial liabilities measured at amortised cost. HKFRS 7.8f
Financial assets or financial liabilities at fair value through
profit or loss

1.19 If the entity has designated a loan or receivable (or group of loans HKFRS 7.9
or receivables) as at fair value through profit or loss, it shall
disclose:
a) the maximum exposure to credit risk (see paragraph 36(a)) HKFRS 7.9a
of the loan or receivable (or group of loans or receivables) at
the reporting date.
b) the amount by which any related credit derivatives or similar HKFRS 7.9b
instruments mitigate that maximum exposure to credit risk.
c) the amount of change, during the period and cumulatively, in HKFRS 7.9c
the fair value of the loan or receivable (or group of loans or
receivables) that is attributable to changes in the credit risk
of the financial asset determined either:
i) as the amount of change in its fair value that is not HKFRS 7.9c
rise to market risk; or
ii) using an alternative method the entity believes more HKFRS 7.9c
faithfully represents the amount of change in its fair
value that is attributable to changes in the credit risk of
the asset.
Note. Changes in market conditions that give rise to market
risk include changes in an observed (benchmark) interest
rate, commodity price, foreign exchange rate or index of
prices or rates. (HKFRS 7.9c)
d) the amount of the change in the fair value of any related HKFRS 7.9d
credit derivatives or similar instruments that has occurred
during the period and cumulatively since the loan or
receivable was designated.
1.20 If the entity has designated a financial liability as at fair value HKFRS 7.10
through profit or loss in accordance with paragraph 9 of HKAS 39,
it shall disclose:
a) the amount of change, during the period and cumulatively, in HKFRS 7.10a
the fair value of the financial liability that is attributable to
changes in the credit risk of that liability determined either:
i) as the amount of change in its fair value that is not HKFRS 7.10a
rise to market risk (see Appendix B, paragraph B4); or
ii) using an alternative method the entity believes more HKFRS 7.10a
faithfully represents the amount of change in its fair
value that is attributable to changes in the credit risk of
the liability.
b) the difference between the financial liabilities carrying HKFRS 7.10b
amount and the amount the entity would be contractually
required to pay at maturity to the holder of the obligation.
1.21 The entity shall disclose: HKFRS 7.11
a) the methods used to comply with the requirements in HKFRS 7.11a
paragraphs 9(c) and 10(a).
b) if the entity believes that the disclosure it has given to comply HKFRS 7.11b
with the requirements in paragraph 9(c) or 10(a) does not
faithfully represent the change in the fair value of the
financial asset or financial liability attributable to changes in
its credit risk, the reasons for reaching this conclusion and
the factors it believes are relevant.

Reclassification
1.22 If the entity has reclassified a financial asset as one measured: HKFRS 7.12
a) at cost or amortised cost, rather than at fair value; or HKFRS 7.12a
b) at fair value, rather than at cost or amortised cost, HKFRS 7.12b
it shall disclose the amount reclassified into and out of each HKFRS 7.12
category and the reason for that reclassification.
Derecognition
1.23 An entity may have transferred financial assets in such a way that HKFRS 7.13
part or all of the financial assets do not qualify for derecognition
(see paragraphs 15-37 of HKAS 39). The entity shall disclose for
each class of such financial assets:
a) the nature of the assets; HKFRS 7.13a
b) the nature of the risks and rewards of ownership to which the HKFRS 7.13b
entity remains exposed;
c) when the entity continues to recognise all of the assets, the HKFRS 7.13c
carrying amounts of the assets and of the associated
liabilities; and
d) when the entity continues to recognise the assets to the HKFRS 7.13d
extent of its continuing involvement, the total carrying amount
of the original assets, the amount of the assets that the entity
continues to recognise, and the carrying amount of the
associated liabilities.
1.24 When a change in the redemption prohibition leads to a transfer HKFRS-Int 2.13
between financial liabilities and equity, the entity shall disclose
separately:
a) the amount; HKFRS-Int 2.13
b) timing; and HKFRS-Int 2.13
c) reason for the transfer. HKFRS-Int 2.13
Collateral
1.25 An entity shall disclose: HKFRS 7.14
a) the carrying amount of financial assets it has pledged as HKFRS 7.14a
collateral for liabilities or contingent liabilities, including
amounts that have been reclassified in accordance with
paragraph 37(a) of HKAS 39; and
b) the terms and conditions relating to its pledge. HKFRS 7.14b
1.26 When an entity holds collateral (of financial or non-financial HKFRS 7.15
assets) and is permitted to sell or repledge the collateral in the
absence of default by the owner of the collateral, it shall disclose:
a) the fair value of the collateral held; HKFRS 7.15a

b) the fair value of any such collateral sold or repledged, and HKFRS 7.15b
whether the entity has an obligation to return it; and
c) the terms and conditions associated with its use of the HKFRS 7.15c
collateral.
Allowance account for credit losses
1.27 When financial assets are impaired by credit losses and the entity HKFRS 7.16
records the impairment in a separate account rather than directly
reducing the carrying amount of the asset, it shall disclose a
reconciliation of changes in that account during the period for
each class of financial assets.
Compound financial instruments with multiple embedded
derivatives

1.28 If an entity has issued an instrument that contains both a liability HKFRS 7.17
and an equity component and the instrument has multiple
embedded derivatives whose values are interdependent it shall
disclose the existence of those features.
Defaults and breaches
1.29 For loans payable recognised at the reporting date, an entity shall HKFRS 7.18
disclose:
a) details of any defaults during the period of principal, interest, HKFRS 7.18a
sinking fund, or redemption terms of those loans payable;
b) the carrying amount of the loans payable in default at the HKFRS 7.18b
reporting date; and
c) whether the default was remedied, or the terms of the loans HKFRS 7.18c
payable were renegotiated, before the financial statements
were authorised for issue.
1.30 If, during the period, there were breaches of loan agreement HKFRS 7.19
terms other than those described in HKFRS 7.18, an entity shall
disclose the same information as required by that paragraph if
those breaches permitted the lender to demand accelerated
repayment (unless the breaches were remedied, or the terms of
the loan were renegotiated, on or before the reporting date).
Items of income, expense, gains or losses

1.31 An entity shall disclose the following items of income, expense, HKFRS 7.20
gains or losses either on the face of the financial statements or in
the notes:
a) net gains or net losses on: HKFRS 7.20a
i) financial assets or financial liabilities at fair value HKFRS 7.20a
through profit or loss, showing separately:
- those on financial assets or financial liabilities HKFRS 7.20a
designated as such upon initial recognition, and
- those on financial assets or financial liabilities that HKFRS 7.20a
are classified as held for trading in accordance with
HKAS 39;
ii) available-for-sale financial assets, showing separately: HKFRS 7.20a
- the amount of gain or loss recognised directly in HKFRS 7.20a

equity during the period and
- the amount removed from equity and recognised in HKFRS 7.20a
profit or loss for the period;
iii) held-to-maturity investments; HKFRS 7.20a
iv) loans and receivables; and HKFRS 7.20a
v) financial liabilities measured at amortised cost; HKFRS 7.20a
b) total interest income and total interest expense (calculated HKFRS 7.20b
using the effective interest method) for financial assets or
financial liabilities that are not at fair value through profit or
loss;
c) fee income and expense (other than amounts included in HKFRS 7.20c
determining the effective interest rate) arising from:
i) financial assets or financial liabilities that are not at fair HKFRS 7.20c
value through profit or loss; and

ii) trust and other fiduciary activities that result in the HKFRS 7.20c
holding or investing of assets on behalf of individuals,
trusts, retirement benefit plans, and other institutions;
d) interest income on impaired financial assets accrued in HKFRS 7.20d
accordance with paragraph AG93 of HKAS 39; and
e) the amount of any impairment loss for each class of financial HKFRS 7.20e
asset.
2.0 Hedge accounting
The disclosures in HKAS 32.38 - 32.59 below apply for
2.01 An entity shall disclose the following separately for designated fair HKAS 32.58
value hedges, cash flow hedges and hedges of a net investment
in a foreign operation:
a) a description of the hedge; HKAS 32.58a
b) a description of the financial instruments designated as HKAS 32.58b
hedging instruments;
c) their fair values at the balance sheet date; HKAS 32.58b
d) the nature of the risks being hedged; and HKAS 32.58c
e) for cash flow hedges: HKAS 32.58d
i) the periods in which the cash flows are expected to HKAS 32.58d
occur;
ii) when they are expected to enter into the determination HKAS 32.58d
of profit or loss;
iii) a description of any forecast transaction for which hedge HKAS 32.58d
accounting had previously been used but which is no
longer expected to occur.
2.02 When a gain or loss on a hedging instrument in a cash flow HKAS 32.59
hedge has been recognised directly in equity, through the
statement of changes in equity, an entity shall disclose:
a) the amount that was so recognised in equity during the HKAS 32.59a
period;
b) the amount that was removed from equity and included in HKAS 32.59b
profit or loss for the period; and
c) the amount that was removed from equity during the period HKAS 32.59c
and included in the initial measurement of the acquisition
cost or other carrying amount of a non-financial asset or non-
financial liability in a hedged highly probable forecast
transaction.
The disclosures below in HKFRS 7.22 - 7.24 apply for
2.03 An entity shall disclose the following separately for each type of HKFRS 7.22
hedge described in HKAS 39 (ie fair value hedges, cash flow
hedges, and hedges of net investments in foreign operations):
a) a description of each type of hedge; HKFRS 7.22a
b) a description of the financial instruments designated as HKFRS 7.22b
hedging instruments and their fair values at the reporting
date; and
c) the nature of the risks being hedged. HKFRS 7.22c
2.04 For cash flow hedges, an entity shall disclose: HKFRS 7.23

a) the periods when the cash flows are expected to occur and HKFRS 7.23a
when they are expected to affect profit or loss;
b) a description of any forecast transaction for which hedge HKFRS 7.23b
accounting had previously been used, but which is no longer
expected to occur;
c) the amount that was recognised in equity during the period; HKFRS 7.23c
d) the amount that was removed from equity and included in HKFRS 7.23d
profit or loss for the period, showing the amount included in
each line item in the income statement; and
e) the amount that was removed from equity during the period HKFRS 7.23e
and included in the initial cost or other carrying amount of a
non-financial asset or non-financial liability whose acquisition
or incurrence was a hedged highly probable forecast
transaction.
2.05 An entity shall disclose separately: HKFRS 7.24
a) in fair value hedges, gains or losses: HKFRS 7.24a
i) on the hedging instrument; and HKFRS 7.24a
ii) on the hedged item attributable to the hedged risk. HKFRS 7.24a
b) the ineffectiveness recognised in profit or loss that arises HKFRS 7.24b
from cash flow hedges; and
c) the ineffectiveness recognised in profit or loss that arises HKFRS 7.24c
from hedges of net investments in foreign operations.
3.0 Fair Values
3.01 Except as set out in HKAS 32.90 for each class of financial HKAS 32.86
assets and financial liabilities, an entity shall disclose the fair
value of that class of assets and liabilities in a way that permits it
to be compared with the corresponding carrying amount in the
balance sheet.
a) When an entity does not measure a financial asset or HKAS 32.87
financial liability in its balance sheet at fair value, it provides
fair value information through supplementary disclosures.
3.02 For financial instruments such as short-term trade receivables HKAS 32.88
and payables, no disclosure of fair value is required when the
carrying amount is a reasonable approximation of fair value.
3.03 In disclosing fair values, an entity groups financial assets and HKAS 32.89
financial liabilities into classes and offsets them only to the extent
that their related carrying amounts are offset in the balance sheet.
3.04 If investments in unquoted equity instruments or derivatives HKAS 32.90

linked to such equity instruments are measured at cost under
HKAS 39 because their fair value cannot be measured reliably
disclose:
a) the fact that they cannot be reliably measured; HKAS 32.90
b) a description of the financial instruments; HKAS 32.90
c) their carrying amount; HKAS 32.90
d) an explanation of why fair value cannot be measured reliably HKAS 32.90
and; if possible,
e) the range of estimates within which fair value is highly likely HKAS 32.90
to lie.

3.05 If financial assets whose fair value previously could not be reliably HKAS 32.90
measured are sold, that fact, the carrying amount of such
financial assets at the time of sale and the amount of gain or loss
recognised shall be disclosed.
3.06 If investments in unquoted equity instruments or derivatives HKAS 32.91
linked to such equity instruments are measured at cost under
HKAS 39 because their fair values cannot be measured reliably:
a) the information about fair value set out in HKAS 32.86 and HKAS 32.91
92 is not required to be disclosed;
b) Instead, information should be provided to assist users of the HKAS 32.91
financial statements in making their own judgements about
the extent of possible differences between the carrying
amount of such financial assets and financial liabilities and
their fair value.
3.07 When it has a reasonable basis for doing so, management may HKAS 32.91
indicate its opinion on the relationship between fair value and the
carrying amount of financial assets and financial liabilities for
which it is unable to determine fair value reliably.
3.08 Some financial assets and financial liabilities contain a HKAS 32.91A
discretionary participation feature as described in HKFRS 4 (Inserted by
Insurance Contracts. If an entity cannot measure reliably the fair HKFRS 4)
value of that feature, the entity shall disclose:
a) the fact that the fair value of a feature cannot be measured HKAS 32.91A
reliably;
b) a description of the contract; HKAS 32.91A
c) its carrying amount; HKAS 32.91A
d) an explanation of why fair value cannot be measured reliably; HKAS 32.91A
and, if possible
e) the range of estimates within which fair value is highly likely HKAS 32.91A
to lie.
3.09 In respect of fair values an entity shall disclose: HKAS 32.92
a) the methods and significant assumptions applied in HKAS 32.92a
determining fair values of financial assets and financial
liabilities separately for significant classes of financial assets
and financial liabilities.
b) whether fair values of financial assets and financial liabilities HKAS 32.92b
are determined directly, in full or in part, by reference to
published price quotations in an active market or are
estimated using a valuation technique.
c) whether its financial statements include financial instruments HKAS 32.92c
measured at fair values that are determined in full or in part
using a valuation technique based on assumptions that are
not supported by observable market prices or rates.
d) If changing any such assumption to a reasonably possible HKAS 32.92c

alternative would result in a significantly different fair value,
the entity shall:
i) state this fact; and HKAS 32.92c
ii) disclose the effect on the fair value of a range of HKAS 32.92c
reasonably possible alternative assumptions.

Note. For this purpose, significance shall be judged with

respect to profit or loss and total assets or total liabilities.
(HKAS 32.92c)
e) the total amount of the change in fair value estimated using a HKAS 32.92d
valuation technique that was recognised in profit or loss
during the period.
3.10 Disclosure of fair value information includes: HKAS 32.93
a) disclosure of the method used in determining fair value; and HKAS 32.93
b) the significant assumptions made in its application. HKAS 32.93

3.11 Except as set out in HKFRS 7.29 (see below), for each class of HKFRS 7.25
financial assets and financial liabilities, an entity shall disclose the
fair value of that class of assets and liabilities in a way that
permits it to be compared with its carrying amount.
3.12 In disclosing fair values, an entity shall group financial assets and HKFRS 7.26
financial liabilities into classes, but shall offset them only to the
extent that their carrying amounts are offset in the balance sheet.

a) the methods and, when a valuation technique is used, the HKFRS 7.27a
assumptions applied in determining fair values of each class
of financial assets or financial liabilities.
b) whether fair values are determined, in whole or in part, HKFRS 7.27b
directly by reference to published price quotations in an
active market or are estimated using a valuation technique.
c) whether the fair values recognised or disclosed in the HKFRS 7.27c
financial statements are determined in whole or in part using
a valuation technique based on assumptions that are not
supported by prices from observable current market
transactions in the same instrument (ie without modification
or repackaging) and not based on available observable
market data.
d) for fair values that are recognised in the financial statements, HKFRS 7.27c
if changing one or more of those assumptions to reasonably
possible alternative assumptions would change fair value
significantly, the entity shall state this fact and disclose the
effect of those changes.
Note. For this purpose, significance shall be judged with
respect to profit or loss, and total assets or total liabilities, or,
when changes in fair value are recognised in equity, total
equity. (HKFRS 7.27c)
e) if (c) applies, the total amount of the change in fair value HKFRS 7.27d
estimated using such a valuation technique that was
recognised in profit or loss during the period.
3.14 If a difference exists between the fair value at initial recognition HKFRS 7.28
and the amount that would be determined at that date using a
valuation technique, an entity shall disclose, by class of financial
instrument:

a) its accounting policy for recognising that difference in profit HKFRS 7.28a
or loss to reflect a change in factors (including time) that
market participants would consider in setting a price; and
b) the aggregate difference yet to be recognised in profit or loss HKFRS 7.28b
at the beginning and end of the period and a reconciliation of
changes in the balance of this difference.
3.15 Disclosures of fair value are not required: HKFRS 7.29
a) when the carrying amount is a reasonable approximation of HKFRS 7.29a
fair value;
b) for an investment in equity instruments that do not have a HKFRS 7.29b
quoted market price in an active market, or derivatives linked
to such equity instruments, that is measured at cost in
accordance with HKAS 39 because its fair value cannot be
measured reliably; or
c) for a contract containing a discretionary participation feature HKFRS 7.29c
(as described in HKFRS 4) if the fair value of that feature
cannot be measured reliably.
3.16 In the cases described in HKFRS7.29(b) & (c), an entity shall HKFRS 7.30
disclose information to help users of the financial statements
make their own judgements about the extent of possible
differences between the carrying amount of those financial assets
or financial liabilities and their fair value, including:
a) the fact that fair value information has not been disclosed for HKFRS 7.30a
these instruments because their fair value cannot be
measured reliably;
b) a description of the financial instruments, their carrying HKFRS 7.30b
amount, and an explanation of why fair value cannot be
measured reliably;
c) information about the market for the instruments; HKFRS 7.30c
d) information about whether and how the entity intends to HKFRS 7.30d
dispose of the financial instruments; and
e) if financial instruments whose fair value previously could not HKFRS 7.30e
be reliably measured are derecognised:
i) that fact; HKFRS 7.30e
ii) their carrying amount at the time of derecognition; and HKFRS 7.30e
iii) the amount of gain or loss recognised. HKFRS 7.30e
4.0 Nature and extent of risks arising from financial instruments
4.01 For each class of financial assets and financial liabilities, an entity HKAS 32.67
shall disclose information about its exposure to interest rate risk,
including:
a) contractual repricing or maturity dates, whichever dates are HKAS 32.67a
earlier; and
b) effective interest rates, when applicable. HKAS 32.67b

Note. This requirement applies to bonds, notes, loans and

similar financial instruments involving future payments that
create a return to the holder and a cost to the issuer
reflecting the time value of money. The requirement does not
apply to financial instruments such as investments in equity
instruments and derivative instruments that do not bear a
determinable effective interest rate. (HKAS 32.72)
4.02 Disclose information about the entity's exposure to the effects of HKAS 32.68
future changes in the prevailing level of interest rates.
Note. Changes in market interest rates have a direct effect on the
contractually determined cash flows associated with some
financial assets and financial liabilities (cash flow interest rate
risk) and on the fair value of others (fair value interest rate risk).
(HKAS 32.68)
4.03 Disclose information about maturity dates (or repricing dates HKAS 32.69
when they are earlier) indicating the length of time for which
interest rates are fixed, and information about effective interest
rates and the levels at which they are fixed.
Note. Disclosure of this information provides users of financial
statements with a basis for evaluating the fair value interest rate
risk to which an entity is exposed and, thus, the potential for gain
or loss. For instruments that are repriced to a market rate of
interest before maturity, disclosure of the period until the next
repricing is more important for this purpose than disclosure of the
period to maturity. (HKAS 32.69)
4.04 To supplement the information about contractual repricing and HKAS 32.70
maturity dates, an entity may elect to disclose information about
expected repricing or maturity dates when those dates differ
significantly from the contractual dates.
Note. The additional information includes disclosure that it is
based on management's expectations of future events and an
explanation of the assumptions made about repricing or maturity
dates and how those assumptions differ from the contractual
dates. (HKAS 32.70)
4.05 An entity should disclose which of its financial assets and HKAS 32.71
financial liabilities are:
a) exposed to fair value interest rate risk, such as financial HKAS 32.71a
assets and financial liabilities with a fixed interest rate;
b) exposed to cash flow interest rate risk, such as financial HKAS 32.71b
assets and financial liabilities with a floating interest rate that
is reset as market rates change; and
c) not directly exposed to interest rate risk, such as some HKAS 32.71c
investments in equity instruments.
4.06 When providing effective interest rate information, an entity HKAS 32.72
discloses the effect on its interest rate risk exposure of hedging
transactions such as interest rate swaps.
4.07 An entity may become exposed to interest rate risk as a result of HKAS 32.73
a transaction in which no financial asset or financial liability is
recognised on its balance sheet. In such circumstances, the entity
discloses information that permits users of its financial statements
to understand the nature and extent of its exposure. For example:

a) the stated principal;

b) interest rate;
c) term to maturity of the amount to be lent; and
d) the significant terms of the transaction giving rise to the
exposure to interest rate risk.
4.08 An entity may adopt one or more of the following approaches to HKAS 32.74
presenting information concerning interest rate risk:
a) The carrying amounts of financial instruments exposed to HKAS 32.74a
interest rate risk may be presented in tabular form, grouped
by those that are contracted to mature or be repriced in the
following periods after the balance sheet date:
i) in one year or less; HKAS 32.74a

ii) in more than one year but not more than two years; HKAS 32.74a
iii) in more than two years but not more than three years; HKAS 32.74a
iv) in more than three years but not more than four years; HKAS 32.74a
v) in more than four years but not more than five years; and HKAS 32.74a
vi) in more than five years. HKAS 32.74a

b) When the performance of an entity is significantly affected by HKAS 32.74b
the level of its exposure to interest rate risk or changes in
that exposure, more detailed information is desirable. An
entity such as a bank may disclose, for example, separate
groupings of the carrying amounts of financial instruments
contracted to mature or be repriced:
i) in one month or less after the balance sheet date; HKAS 32.74b
ii) in more than one month but not more than three months HKAS 32.74b
after the balance sheet date; and
iii) in more than three months but not more than twelve HKAS 32.74b
months after the balance sheet date.
c) Similarly, an entity may indicate its exposure to cash flow HKAS 32.74c
interest rate risk through a table indicating the aggregate
carrying amount of groups of floating rate financial assets
and financial liabilities maturing within various future time
periods.
d) Interest rate information may be disclosed for individual HKAS 32.74d
financial instruments. Alternatively, weighted average rates
or a range of rates may be presented for each class of
financial instrument. An entity may group into separate
classes instruments denominated in different currencies or
having substantially different credit risks when those factors
result in instruments having substantially different effective
interest rates.
4.09 Consider whether, an entity may be able to provide useful HKAS 32.75
information about its exposure to interest rate risks by indicating
the effect of a hypothetical change in market interest rates on the
fair value of its financial instruments and future profit or loss and
cash flows.

4.10 Disclosure of interest rate sensitivity may be restricted to the HKAS 32.75
direct effects of an interest rate change on interest-bearing
financial instruments recognised at the balance sheet date
because the indirect effects of a rate change on financial markets
and individual entities cannot normally be predicted reliably.
Note. When disclosing interest rate sensitivity information, an

entity indicates the basis on which it has prepared the
information, including any significant assumptions. (HKAS 32.75)
4.11 For each class of financial assets and other credit exposures, an HKAS 32.76
entity shall disclose information about its exposure to credit risk,
including:
a) the amount that best represents its maximum credit risk HKAS 32.76a
exposure at the balance sheet date, without taking account
of the fair value of any collateral, in the event of other parties
failing to perform their obligations under financial
instruments; and
b) significant concentrations of credit risk. HKAS 32.76b
Note. In the case of financial assets exposed to credit risk, the
carrying amount of the assets in the balance sheet, net of any
applicable provisions for loss, usually represents the amount
exposed to credit risk. (HKAS 32.79)
4.12 A financial asset subject to a legally enforceable right of set-off HKAS 32.80
against a financial liability is not presented on the balance sheet
net of the liability unless settlement is intended to take place on a
net basis or simultaneously. Nevertheless, an entity should
disclose the existence of the legal right of set-off.
4.13 When a master netting arrangement significantly reduces the HKAS 32.81
credit risk associated with financial assets not offset against
financial liabilities with the same counterparty, an entity provides
additional information concerning the effect of the arrangement.
Such disclosure indicates that:
a) the credit risk associated with financial assets subject to a HKAS 32.81a
master netting arrangement is eliminated only to the extent
that financial liabilities due to the same counterparty will be
settled after the assets are realised; and
b) the extent to which an entity's overall exposure to credit risk HKAS 32.81b
is reduced through a master netting arrangement may
change substantially within a short period following the
balance sheet date because the exposure is affected by
each transaction subject to the arrangement.
c) It is also desirable for an entity to disclose the terms of its HKAS 32.81c
master netting arrangements that determine the extent of the
reduction in its credit risk.
4.14 An entity may be exposed to credit risk as a result of a transaction HKAS 32.82
in which no financial asset is recognised on its balance sheet,
such as for a financial guarantee or credit derivative contract.
Guaranteeing an obligation of another party creates a liability and
exposes the guarantor to credit risk that should be disclosed.

4.15 Concentrations of credit risk should be disclosed where they are HKAS 32.83
not apparent from other disclosures about the nature of the
business and financial position of the entity and result in a
significant exposure to loss in the event of default by other parties.
4.16 Disclosure of concentrations of credit risk includes a description HKAS 32.85

of the shared characteristic that identifies each concentration and
the amount of the maximum credit risk exposure associated with
all financial assets sharing that characteristic.

financial statements to evaluate the nature and extent of risks
arising from financial instruments to which the entity is exposed at
the reporting date.
4.18 For each type of risk arising from financial instruments, an entity HKFRS 7.33
shall disclose:
a) the exposures to risk and how they arise; HKFRS 7.33a
b) its objectives, policies and processes for managing the risk HKFRS 7.33b
and the methods used to measure the risk; and
c) any changes in (a) or (b) from the previous period. HKFRS 7.33c
4.19 For each type of risk arising from financial instruments, an entity HKFRS 7.34
shall disclose:
a) summary quantitative data about its exposure to that risk at HKFRS 7.34a
the reporting date. This disclosure shall be based on the
information provided internally to key management personnel
of the entity (as defined in HKAS 24 Related Party
Disclosures), for example the entity's board of directors or
chief executive officer.
b) the disclosures required by paragraphs 36-42, to the extent HKFRS 7.34b
not provided in (a), unless the risk is not material (see
paragraphs 29-31 of HKAS 1 for a discussion of materiality).
c) concentrations of risk if not apparent from (a) and (b). HKFRS 7.34c
Disclosure of concentrations of risk shall include:
i) a description of how management determines HKFRS 7.B8a
concentrations;
ii) a description of the shared characteristic that identifies HKFRS 7.B8b
each concentration (eg counterparty, geographical area,
currency or market); and
iii) the amount of the risk exposure associated with all HKFRS 7.B8c
financial instruments sharing that characteristic.
Credit risk
4.20 An entity shall disclose by class of financial instrument: HKFRS 7.36
a) the amount that best represents its maximum exposure to HKFRS 7.36
credit risk at the reporting date without taking account of any
collateral held or other credit enhancements such as:
i) any amounts offset in accordance with HKAS 32; and HKFRS 7.B9a
ii) any impairment losses recognised in accordance with HKFRS 7.B9b
HKAS 39.
b) in respect of the amount disclosed in (a), a description of HKFRS 7.36a
collateral held as security and other credit enhancements;

c) information about the credit quality of financial assets that HKFRS 7.36b
are neither past due nor impaired; and
d) the carrying amount of financial assets that would otherwise HKFRS 7.36c
be past due or impaired whose terms have been
renegotiated.
4.21 An entity shall disclose by class of financial asset: HKFRS 7.37
a) an analysis of the age of financial assets that are past due as HKFRS 7.37a
at the reporting date but not impaired;
b) an analysis of financial assets that are individually HKFRS 7.37b
determined to be impaired as at the reporting date, including
the factors the entity considered in determining that they are
impaired; and
c) for the amounts disclosed in (a) and (b), a description of HKFRS 7.37c
collateral held by the entity as security and other credit
enhancements and, unless impracticable, an estimate of
their fair value.
4.22 When an entity obtains financial or non-financial assets during HKFRS 7.38
the period by taking possession of collateral it holds as security or
calling on other credit enhancements (eg guarantees), and such
assets meet the recognition criteria in other Standards, an entity
shall disclose:
a) the nature and carrying amount of the assets obtained; and HKFRS 7.38a
b) when the assets are not readily convertible into cash, its HKFRS 7.38b
policies for disposing of such assets or for using them in its
operations.
Liquidity risk
a) a maturity analysis for financial liabilities that shows the HKFRS 7.39a
remaining contractual maturities; and
b) a description of how it manages the liquidity risk inherent in HKFRS 7.39b
(a).
Market risk
4.24 Unless an entity complies with paragraph 41, it shall disclose: HKFRS 7.40
a) a sensitivity analysis for each type of market risk to which the HKFRS 7.40a
entity is exposed at the reporting date, showing how profit or
loss and equity would have been affected by changes in the
relevant risk variable that were reasonably possible at that
date;
b) the methods and assumptions used in preparing the HKFRS 7.40b
sensitivity analysis; and
c) changes from the previous period in the methods and HKFRS 7.40c
assumptions used, and the reasons for such changes.
4.25 If an entity prepares a sensitivity analysis, such as value-at-risk, HKFRS 7.41
that reflects interdependencies between risk variables (eg interest
rates and exchange rates) and uses it to manage financial risks, it
may use that sensitivity analysis in place of the analysis specified
in paragraph 40. The entity shall also disclose:
a) an explanation of the method used in preparing such a HKFRS 7.41a

sensitivity analysis, and of the main parameters and
assumptions underlying the data provided; and

b) an explanation of the objective of the method used and of HKFRS 7.41b

limitations that may result in the information not fully
reflecting the fair value of the assets and liabilities involved.
4.26 When the sensitivity analyses disclosed in accordance with HKFRS 7.42
paragraph HKFRS 7.40 or 41 are unrepresentative of a risk
inherent in a financial instrument, the entity shall disclose that fact
and the reason it believes the sensitivity analyses are
unrepresentative.
Adoption of HKFRS 7
4.27 HKFRS 7 applies for annual periods beginning on or after 1 HKFRS 7.43
January 2007. Earlier application is encouraged. If an entity
applies this HKFRS for an earlier period, it shall disclose that fact.
4.28 If an entity applies HKFRS 7 for annual periods beginning before HKFRS 7.44
1 January 2006, it need not present comparative information for
the disclosures required by paragraphs 31-42 about the nature
and extent of risks arising from financial instruments.

APPENDIX 4 - GROUP COMPANIES, ASSOCIATES & JOINT VENTURES
Reference Yes No
N/A
1.0 General
1.01 When separate financial statements are prepared for a parent HKAS 27.41
that elects not to prepare consolidated financial statements, those
separate financial statements shall disclose:
a) the fact that the financial statements are separate financial HKAS 27.41a
statements;
b) that the exemption from consolidation has been used; HKAS 27.41a
c) the name and country of incorporation or residence of the HKAS 27.41a
entity whose consolidated financial statements that comply
with HKFRSs have been produced for public use;
d) the address from where the consolidated financial HKAS 27.41a
statements are obtainable;
e) a list of significant investments in subsidiaries, jointly HKAS 27.41b
controlled entities and associates, including:
i) the name; HKAS 27.41b
ii) country of incorporation or residence; HKAS 27.41b
iii) proportion of ownership interest; and HKAS 27.41b
iv) if different, proportion of voting power held. HKAS 27.41b
f) a description of the method used to account for the HKAS 27.41c
investments listed in (e).
1.02 When a parent (other than a parent covered by HKAS 27.41), HKAS 27.42
venturer with an interest in a jointly controlled entity or an investor
in an associate prepares separate financial statements, those
separate financial statements shall:
a) disclose the fact that the statements are separate financial HKAS 27.42a
statements and the reasons why those statements are
prepared if not required by law;
b) include a list of significant investments in subsidiaries, jointly HKAS 27.42b
controlled entities and associates, including:
i) the name; HKAS 27.42b
ii) country of incorporation or residence; HKAS 27.42b
iii) proportion of ownership interest; and HKAS 27.42b
iv) if different, proportion of voting power held. HKAS 27.42b
c) give a description of the method used to account for the HKAS 27.42c
investments listed in (b).
d) identify the financial statements prepared in accordance with HKAS 27.42
HKAS 27.9, HKAS 28 and HKAS 31 to which they relate.
1.03 Where group accounts are not submitted, there shall be annexed Sch 10.18(6)
to the balance sheet a statement showing, in relation to the
subsidiaries (if any) whose financial years did not end with that of
the company:
a) the reasons why the company's directors consider that the Sch 10.18(6)a
subsidiaries' financial years should not end with that of the
company; and
b) the dates on which the subsidiaries' financial years ending Sch 10.18(6)b
last before that of the company respectively ended or the
earliest and latest of those dates.
1.04 Disclose separately: Sch 10.18(2)
Falcon CPAs - 2010 Page 118 of 356 HKICPA Jun 07 Supp 00

a) the aggregate amount of assets consisting of shares in Sch 10.18(2)
subsidiary companies;
b) the aggregate amount of assets consisting of amounts owing Sch 10.18(2)
by subsidiary companies;
c) the aggregate of amounts owing to the company's Sch 10.18(2)
subsidiaries.
1.05 Disclose by way of note on the balance sheet or in a statement or Sch 10.18(3)
report annexed thereto the following information concerning
shares in and debentures of the company held by its subsidiaries
or their nominees:
a) the number; Sch 10.18(3)

b) a description; and Sch 10.18(3)
c) the amounts involved. Sch 10.18(3)
Note. This should exclude any of those shares or debentures in
the case of which the subsidiary is concerned as personal
representative or in the case of which it is concerned as trustee
and neither the company nor any subsidiary thereof is
beneficially interested under the trust, otherwise than by way of
security only for the purposes of a transaction entered into by it in
the ordinary course of a business which includes the lending of
money. (Sch 10.18(3))
d) Disclose details of any qualifications contained in the report Sch 10.18(4)d
of the auditors of the subsidiaries or any note or saving
contained in those accounts that calls attention to a matter
which, apart from the note or saving, would properly have
been referred to in such a qualification, in so far as the
matter which is the subject of the qualification or note is not
covered by the company's own accounts.
1.06 The consolidated balance sheet and profit and loss account shall Sch 10.20
combine the information contained in the separate balance
sheets and profit and loss accounts of the holding company and
of the subsidiaries dealt with by the consolidated accounts, but
with such adjustments (if any) as the directors of the holding
company think necessary.
1.07 The consolidated accounts shall, in giving the said information, Sch 10.21
comply so far as practicable, with the requirements of the
Companies Ordinance as if they were the accounts of an actual
company.
1.08 In consolidated financial statements, minority interests shall be HKAS 27.33
presented in the consolidated balance sheet within equity,
separately from the parent shareholders' equity.
1.09 Minority interests in the profit or loss of the group shall also be HKAS 27.33
separately disclosed.
1.10 In the consolidated financial statements, disclose: HKAS 27.40
a) the nature of the relationship between the parent and a HKAS 27.40c
subsidiary when the parent does not own, directly or
indirectly through subsidiaries, more than half of the voting
power;
b) the reasons why the ownership, directly or indirectly through HKAS 27.40d
subsidiaries, of more than half of the voting or potential
voting power of an investee does not constitute control;

c) the reporting date of the financial statements of a subsidiary HKAS 27.40e
when such financial statements are used to prepare
consolidated financial statements and are as of a reporting
date or for a period that is different from that of the parent,
and the reason for using a different reporting date or period;
and
d) the nature and extent of any significant restrictions (e.g. HKAS 27.40f
resulting from borrowing arrangements or regulatory
requirements) on the ability of subsidiaries to transfer funds
to the parent in the form of cash dividends or to repay loans
or advances.
1.11 If the entity applies HKAS 27 for a period beginning before 1 HKAS 27.43
1.12 Where at the end of its financial year a company has 124(1,2)
subsidiaries, group accounts are required unless:
(a) company is at the end of its financial year the wholly owned 124(1,2)
subsidiary of another body corporate;
(b) group accounts need not deal with a subsidiary of the 124(1,2)
company if the company's directors are of opinion that:
(i) it is impracticable, or would be of no real value to 124(1,2)
members of the company, in view of the insignificant
amount involved, or would involve expense or delay out
of proportion to the value to members of the company; or
(ii) the result would be misleading, or harmful to the 124(1,2)

business of the company or any of its subsidiaries; or
(iii) the business of the holding company and that of the 124(1,2)
subsidiary are so different that they cannot reasonably
be treated as a single undertaking.
1.13 Unless the directors agree otherwise the group accounts laid s125(1)
before a holding company shall be consolidated accounts
comprising:
(a) a consolidated balance sheet dealing with the state of affairs s125(1)
of the company and all the subsidiaries to be dealt with in
group accounts;
(b) a consolidated profit and loss account dealing with the profit s125(1)
or loss of the company and those subsidiaries.
1.14 If the company's directors are of opinion that it is better for the s125(2)
purpose of presenting the same or equivalent information about
the state of affairs and profit or loss of the company and those
subsidiaries; and of so presenting it that it may be readily
appreciated by the company's members; the group accounts may
be prepared in a form other than a single set of consolidated
accounts, and in particular may consist of more than one set of
consolidated accounts or the individual accounts of each of the
subsidiaries.
1.15 The group accounts laid before a company shall give a true and 126(1)
fair view of the state of affairs and profit or loss of the company
and the subsidiaries dealt with thereby as a whole, so far as
concerns members of the company.
1.16 Group accounts, if prepared as consolidated accounts, shall s126(3)
comply with the requirements of the Tenth Schedule, so far as
applicable thereto, and if not so prepared shall give the same or
equivalent information.

1.17 Where, at the end of its financial year, a company is the s129A(1)
subsidiary of another undertaking, there shall be stated in, or in a
note on, or statement annexed to, the company's accounts:
(a) the name of the undertaking regarded by the directors as s129A(1)a
being the company's ultimate parent undertaking; and
(b) if known to them: s129A(1)b
(i) where the undertaking is a body corporate, the country s129A(1)b
in which it is incorporated; and
(ii) where the undertaking is not a body corporate, the s129A(1)b
address of its principal place of business.
1.18 The disclosure concerning the ultimate parent is not required by a s129A(2)
company which carries on business outside Hong Kong if:
(a) the disclosure would be harmful to the business of that s129A(2)
parent undertaking or of the company or any other of that
parent undertaking's subsidiaries; and
(b) the Financial Secretary agrees that the information need not s129A(2)
be disclosed.
2.0 Groups - subsidiaries
2.01 The balance sheet of a company which is a subsidiary of another Sch 10.19(1)
undertaking, whether or not it is itself a holding company, shall
show:
a) the aggregate amount of its indebtedness to all undertakings Sch 10.19(1)
of which it is a subsidiary or fellow subsidiary in respect of
debentures;
b) the aggregate amount of its indebtedness to all undertakings Sch 10.19(1)
of which it is a subsidiary or fellow subsidiary in respect of
other debt;
c) the aggregate amount of indebtedness of all subsidiaries and Sch 10.19(1)
fellow subsidiaries to it;
d) the aggregate amount of assets consisting of shares in Sch 10.19(1)
fellow subsidiaries.
2.02 Where at the end of a financial year a company has subsidiaries s128(1)
disclose the following:
(a) the subsidiary's name; s128(1)a
(b) where the subsidiary is a body corporate, the country in s128(1)b
which it is incorporated;
(c) where the subsidiary is not a body corporate, the address of s128(1)ba
its principal place of business;
(d) in relation to shares of each class of the subsidiary held by s128(1)c
the company:
(i) the identity of the class; and s128(1)c
(ii) the proportion (percentage) of the nominal value of the s128(1)c
issued shares of that class represented by the shares
held;
(e) with reference to the proportion (percentage) of the nominal s128(1)d
value of the issued shares of a class represented by the
shares held by the company:
(i) the extent (if any) to which it consists of shares held by, s128(1)d
or by a nominee for, a subsidiary of the company; and
(ii) the extent (if any) to which it consists of shares held by, s128(1)d
or by a nominee for, the company itself.

Note. The proportion of the nominal value of the issued shares of
any class represented by the shares held by the company shall
be stated by way of a percentage, and:
(a) any such percentage may be stated to the nearest whole
number per cent except;
(b) where it is between 49% and 50% or between 50% and
51%, in either of which events it shall be stated to as many
decimal places as would be required to indicate the
percentage, to one significant figure, of the proportion of the
nominal value of the issued shares of that class represented
by one share. (s128(2)b, s129(7)b)
2.03 Disclosure of information is not required with respect to an s128(3)
undertaking which:
(a) is the subsidiary of another undertaking; and s128(3)a
(b) is established under the laws of a place outside Hong Kong s128(3)b
or carries on business outside Hong Kong, if:
(i) the disclosure would, in the opinion of the directors of s128(3)c
that other undertaking, be harmful to the business of that
other undertaking or of any of its subsidiaries; and
(ii) the Financial Secretary agrees that the information need s128(3)d
not be disclosed.
2.04 Where the number of subsidiaries is such that compliance with s128(4)
s128(1) would result in particulars of excessive length being
given, then disclosure is only required of the principal subsidiaries.
2.05 Where a company that is not a private company having a share 128(5)
capital takes advantage of the exemption from disclosing
information about all subsidiaries:
(a) Disclose the fact that the information given relates only to the 128(5)a
principal subsidiaries.
(b) Send a statement to the Registrar at the same time as the 128(5)b
company's annual return first made after the AGM setting out
the information for the excluded subsidiaries.
2.06 Where a private company having a share capital takes advantage 128(5)A
of the exemption from disclosing information about all
subsidiaries:
(a) Disclose the fact that the information given relates only to the 128(5)Aa
principal subsidiaries.
(b) Send a statement to the Registrar within 42 days of the AGM 128(5)Ab
setting out the information for the excluded subsidiaries.
2.07 In relation to any subsidiaries (whether or not dealt with by the Sch 10.25
consolidated accounts), whose financial years did not end with
that of the company, there shall be annexed the like statement as
is required where there are non-coterminous year-ends and no
group accounts prepared.
3.0 Subsidiaries excluded from consolidation
3.01 Where group accounts are not submitted, there shall be annexed Sch 10.18(4)
to the balance sheet a statement showing:
a) the reasons why subsidiaries are not dealt with in group Sch 10.18(4)a
accounts;
b) the net aggregate amount, so far as it concerns members of Sch 10.18(4)b
the holding company and is not dealt with in the company's
accounts, of the subsidiaries' profits after deducting the
subsidiaries' losses (or vice versa):

i) for the respective financial years of the subsidiaries
ending with or during the financial year of the company;
and
ii) for their previous financial years since they respectively
became the holding company's subsidiary;
c) the net aggregate amount of the subsidiaries' profits after Sch 10.18(4)c
deducting the subsidiaries' losses (or vice versa):
i) for the respective financial years of the subsidiaries
ending with or during the financial year of the company;
and
ii) for their other financial years since they respectively
became the holding company's subsidiary; so far as
those profits are dealt with, or provision is made for
those losses, in the company's accounts;
3.02 In relation to any subsidiaries of the holding company not dealt Sch 10.24
with by the consolidated accounts:
a) Disclose details of shareholdings and indebtedness for the Sch 10.24a
purpose of those accounts as if those accounts were the
accounts of an actual company of which they were
subsidiaries; and
b) there shall be annexed the like statement as is required Sch 10.24b

where there are no group accounts, but as if references
therein to the holding company's accounts were references
to the consolidated accounts.
4.0 Associates
4.01 The disclosures in this section apply to investments in associates. HKAS 28.1
However, they do not apply to investments in associates held by
the following which upon initial recognition are designated as at
fair value through profit or loss or are classified as held for trading
and accounted for in accordance with HKAS 39.
a) venture capital organisations; or HKAS 28.1a

b) mutual funds, unit trusts and similar entities including HKAS 28.1b
investment-linked insurance funds,
4.02 An investment in an associate shall be accounted for in the HKAS 27.35
investor‟s separate financial statements in accordance with HKAS
27.37-42.
4.03 In respect of investments in associates disclose: HKAS 28.37
a) the fair value of investments in associates for which there are HKAS 28.37a
published price quotations;
b) summarised financial information of associates, including the HKAS 28.37b
aggregated amounts of assets, liabilities, revenues and profit
or loss;
c) the reasons why the presumption that an investor does not HKAS 28.37c
have significant influence is overcome if the investor holds,
directly or indirectly through subsidiaries, less than 20 per
cent of the voting or potential voting power of the investee
but concludes that it has significant influence;
d) the reasons why the presumption that an investor has HKAS 28.37d
significant influence is overcome if the investor holds, directly
or indirectly through subsidiaries, 20 per cent or more of the
voting or potential voting power of the investee but concludes
that it does not have significant influence;

e) the reporting date of the financial statements of an associate, HKAS 28.37e
when such financial statements are used in applying the
equity method and are as of a reporting date or for a period
that is different from that of the investor, together with the
reason for using a different reporting date or different period;
f) the nature and extent of any significant restrictions (e.g. HKAS 28.37f
resulting from borrowing arrangements or regulatory
requirements) on the ability of associates to transfer funds to
the investor in the form of cash dividends, or repayment of
loans or advances;
g) the unrecognised share of losses of an associate, both for HKAS 28.37g
the period and cumulatively, if an investor has discontinued
recognition of its share of losses of an associate;
h) if applicable, the fact that an associate is not accounted for HKAS 28.37h
using the equity method in accordance with HKAS 28.13; and
i) summarised financial information of associates, either HKAS 28.37i

individually or in groups, that are not accounted for using the
equity method, including the amounts of total assets, total
liabilities, revenues and profit or loss.
4.04 In respect of associates accounted for using the equity method: HKAS 28.38
a) classify investments in such associates as non-current HKAS 28.38
assets; and
b) also disclose separately: HKAS 28.38
i) the entity's share of the profit or loss of such associates; HKAS 28.38
ii) the carrying amount of those investments; and HKAS 28.38

iii) the investor's share of any discontinued operations of HKAS 28.38
such associates.
4.05 The entity's share of changes recognised directly in the HKAS 28.39
associate's equity are recognised directly in equity by the entity
and are disclosed in the statement of changes in equity as
required by HKAS 1.
5.0 Joint Ventures
5.01 The disclosures in this section apply to investments in joint HKAS 31.1
ventures. However, they do not apply to investments in joint
ventures held by the following which upon initial recognition are
designated as at fair value through profit or loss or are classified
as held for trading and accounted for in accordance with HKAS
39.
a) venture capital organisations; or HKAS 31.1a
b) mutual funds, unit trusts and similar entities including HKAS 31.1b
investment-linked insurance funds,
5.02 When accounting for a joint venture using the proportionate HKAS 31.34
consolidation method, disclosure of the entity's share of each of
the assets, liabilities, income and expenses may be given in one
of two formats, by either:
a) combining them with the entity's own similar items, line by HKAS 31.34
line; or
b) using separate line items. HKAS 31.34

5.03 Whichever format method is adopted, assets or liabilities are not HKAS 31.35
offset unless a legal right of set-off exists, and the offsetting
represents the expectation as to the realisation of the asset or the
settlement of the liability.
5.04 If the entity recognises its interests in jointly controlled entities HKAS 31.56
using the line-by-line reporting format for proportionate
consolidation or the equity method, disclose the aggregate
amounts of each of:
a) current assets; HKAS 31.56
b) long-term assets; HKAS 31.56
c) current liabilities; HKAS 31.56
d) long-term liabilities; and HKAS 31.56
e) income and expenses related to its interests in joint ventures. HKAS 31.56
5.05 Disclose, separately from other contingent liabilities, the HKAS 31.54
aggregate amount of the following contingent liabilities (unless
the probability of loss is remote):
a) any contingent liabilities that the entity has incurred in HKAS 31.54a
relation to its interests in joint ventures and its share in each
of the contingent liabilities that have been incurred jointly with
other venturers;
b) the entity's share of the contingent liabilities of the joint HKAS 31.54b
ventures themselves for which it is contingently liable; and
c) those contingent liabilities that arise because the entity is HKAS 31.54c
contingently liable for the liabilities of the other venturers of a
joint venture.
5.06 Disclose, separately from other commitments, the aggregate HKAS 31.55
amount of the following commitments:
a) any capital commitments of the entity in relation to its HKAS 31.55a
interests in joint ventures and its share in the capital
commitments that have been incurred jointly with other
entities; and
b) the entity's share of the capital commitments of the joint HKAS 31.55b
ventures themselves.
5.07 Disclose a listing and description of interests in significant joint HKAS 31.56
ventures and the proportion of ownership interest held in jointly
controlled entities.
5.08 Disclose the method used to recognise interests in jointly HKAS 31.57
controlled entities.
6.0 Groups - other
6.01 Where the financial year of a subsidiary does not coincide with s126(2)
that of the holding company, the group accounts shall:
(a) deal with the subsidiary's state of affairs as at the end of its s126(2)a
financial year ending with or last before that of the holding
company, and with the subsidiary's profit or loss for that year;
and
(b) state the reasons why the financial year of the subsidiary s126(2)b
does not coincide with that of the holding company.

APPENDIX 5 - BUSINESS COMBINATIONS & GOODWILL
Reference Yes No
N/A
1.01 If the acquirer recognises separately a contingent liability of the HKFRS 3.47b
acquiree as part of allocating the cost of a business combination
and its fair value cannot be measured reliably: disclose the
information about that contingent liability required to be disclosed
by HKAS 37.
1.02 Contingent liabilities recognised separately as part of allocating HKFRS 3.50
the cost of a business combination are excluded from the scope
of HKAS 37. However, the acquirer shall disclose for those
contingent liabilities the information required to be disclosed by
HKAS 37 for each class of provision.
1.03 An acquirer shall disclose information that enables users of its HKFRS 3.66
financial statements to evaluate the nature and financial effect of
business combinations that were effected:
a) during the period. HKFRS 3.66a
b) after the balance sheet date but before the financial HKFRS 3.66b
statements are authorised for issue.
1.04 The acquirer shall disclose the following information concerning HKFRS 3.67
the nature and financial effect for each business combination that
was effected during the period:
a) the names and descriptions of the combining entities or HKFRS 3.67a
businesses.
b) the acquisition date. HKFRS 3.67b
c) the percentage of voting equity instruments acquired. HKFRS 3.67c
d) the cost of the combination; HKFRS 3.67d
e) a description of the components of that cost, including any HKFRS 3.67d
costs directly attributable to the combination;
f) when equity instruments are issued or issuable as part of the HKFRS 3.67d
cost, the following shall also be disclosed:
i) the number of equity instruments issued or issuable; and HKFRS 3.67d
ii) the fair value of those instruments and the basis for HKFRS 3.67d
determining that fair value;
iii) if a published price does not exist for the instruments at HKFRS 3.67d
the date of exchange, the significant assumptions used
to determine fair value shall be disclosed;
iv) if a published price exists at the date of exchange but HKFRS 3.67d
was not used as the basis for determining the cost of the
combination, that fact shall be disclosed;
v) in addition disclose: HKFRS 3.67d
- the reasons the published price was not used; HKFRS 3.67d
- the method and significant assumptions used to HKFRS 3.67d
attribute a value to the equity instruments; and
- the aggregate amount of the difference between HKFRS 3.67d
the value attributed to, and the published price of,
the equity instruments;
g) details of any operations the entity has decided to dispose of HKFRS 3.67e
as a result of the combination.
h) the amounts recognised at the acquisition date for each HKFRS 3.67f
class of the acquiree‟s assets, liabilities and contingent
liabilities, and, unless disclosure would be impracticable:
i) the carrying amounts of each of those classes, HKFRS 3.67f
determined in accordance with HKFRSs, immediately
before the combination; and
ii) if such disclosure would be impracticable, that fact shall HKFRS 3.67f
be disclosed, together with an explanation of why this is
the case.
i) the amount of any excess of net fair value over the cost of HKFRS 3.67g
the combination (see HKFRS 3.56) recognised in profit or
loss and the line item in the income statement in which the
excess is recognised.
j) a description of the factors that contributed to a cost that HKFRS 3.67h
results in the recognition of goodwill including:
i) a description of each intangible asset that was not HKFRS 3.67h
recognised separately from goodwill; and
ii) an explanation of why the intangible asset‟s fair value HKFRS 3.67h
could not be measured reliably;
iii) or a description of the nature of any excess recognised HKFRS 3.67h
in profit or loss.
k) the amount of the acquiree‟s profit or loss since the HKFRS 3.67i
acquisition date included in the acquirer‟s profit or loss for
the period; or
l) if such disclosure would be impracticable, that fact shall be HKFRS 3.67i
disclosed, together with an explanation of why this is the
case.
1.05 The above information shall be disclosed in aggregate for HKFRS 3.68
business combinations effected during the reporting period that
are individually immaterial.
1.06 If the initial accounting for a business combination that was HKFRS 3.69
effected during the period was determined only provisionally, that
fact shall also be disclosed together with an explanation of why
this is the case.
1.07 The acquirer shall disclose the following information, unless such HKFRS 3.70
disclosure would be impracticable:
a) the revenue of the combined entity for the period as though HKFRS 3.70a
the acquisition date for all business combinations effected
during the period had been the beginning of that period.
b) the profit or loss of the combined entity for the period as HKFRS 3.70b
though the acquisition date for all business combinations
effected during the period had been the beginning of the
period.
1.08 If disclosure of this information would be impracticable, that fact HKFRS 3.70
shall be disclosed, together with an explanation of why this is the
case.
1.09 The acquirer shall disclose the information required by HKFRS HKFRS 3.71
3.67 (see above) for each business combination effected after the
balance sheet date but before the financial statements are
authorised for issue.
1.10 If disclosure of any of that information would be impracticable, HKFRS 3.71
that fact shall be disclosed, together with an explanation of why
this is the case.
1.11 An acquirer shall disclose information that enables users of its HKFRS 3.72
financial statements to evaluate the financial effects of gains,
losses, error corrections and other adjustments recognised in the
current period that relate to business combinations that were
effected in the current or in previous periods.
1.12 Disclosures concerning the financial effects of gains, losses and HKFRS 3.73
other adjustments arising from business combinations should
include the following information:
a) the amount and an explanation of any gain or loss HKFRS 3.73a
recognised in the current period that:
(i) relates to the identifiable assets acquired or liabilities or HKFRS 3.73ai
contingent liabilities assumed in a business combination
that was effected in the current or a previous period; and
(ii) is of such size, nature or incidence that disclosure is HKFRS 3.73aii

relevant to an understanding of the combined entity‟s
financial performance.
b) if the initial accounting for a business combination that was HKFRS 3.73b
effected in the immediately preceding period was determined
only provisionally at the end of that period, the amounts and
explanations of the adjustments to the provisional values
recognised during the current period.
c) the information about error corrections required to be HKFRS 3.73c
disclosed by HKAS 8 for any of the acquiree‟s identifiable
assets, liabilities or contingent liabilities, or changes in the
values assigned to those items, that the acquirer recognises
during the current period.
financial statements to evaluate changes in the carrying amount
of goodwill during the period.
1.14 The entity shall disclose a reconciliation of the carrying amount of HKFRS 3.75
goodwill at the beginning and end of the period, showing
separately:
a) the gross amount and accumulated impairment losses at the HKFRS 3.75a
beginning of the period;
b) additional goodwill recognised during the period except HKFRS 3.75b
goodwill included in a disposal group that, on acquisition,
meets the criteria to be classified as held for sale in
accordance with HKFRS 5;
c) adjustments resulting from the subsequent recognition of HKFRS 3.75c
deferred tax assets during the period;
d) goodwill included in a disposal group classified as held for HKFRS 3.75d
sale in accordance with HKFRS 5; and
e) goodwill derecognised during the period without having HKFRS 3.75d
previously been included in a disposal group classified as
held for sale;
f) impairment losses recognised during the period in HKFRS 3.75e
accordance with HKAS 36;
g) net exchange differences arising during the period in HKFRS 3.75f
accordance with HKAS 21;
h) any other changes in the carrying amount during the period; HKFRS 3.75g
and
i) the gross amount and accumulated impairment losses at the HKFRS 3.75h
end of the period.
1.15 Discloses information about the recoverable amount and HKFRS 3.76
impairment of goodwill in accordance with HKAS 36 in addition to
the information required above.
1.16 If in any situation the information required to be disclosed does HKFRS 3.77
not satisfy the objectives set out in HKFRS 3 the entity shall
disclose such additional information as is necessary to meet
those objectives.
1.17 When a Hong Kong incorporated company acquires an HKFRS 3.77A
enterprise which would be a subsidiary as defined in this
Standard but is not accounted for as a subsidiary as a result of
HKFRS 5.23A, it should disclose in the notes details of the effect
on the group accounts had paragraph 23A not applied.
1.18 Entities applying the Accounting Guideline Merger Accounting for AG 5.16
Common Control Combinations in accounting for a common
control combination using the principles of merger accounting
should disclose in their consolidated financial statements the fact
that this Guideline has been used.
1.19 Entities should disclose the accounting policy applied in AG 5.17
accounting for a common control combination by using the
principles of merger accounting. Details of the accounting policy
should include, but not be limited to, a discussion of the specific
principles and bases applied under merger accounting.
1.20 Bearing in mind the necessity of showing a true and fair view, AG 5.18
entities applying this Accounting Guideline shall disclose in their
consolidated financial statements significant details of the
common control combinations.
1.21 For each common control combination accounted for by using AG 5.19
merger accounting, the following information shall be disclosed:
a) the names of the combining entities (other than the reporting AG 5.19a
entity);
b) the date of the common control combination; AG 5.19b
c) the composition of the consideration and fair value of the AG 5.19c
d) consideration other than shares issued;
the nature and amount of significant accounting adjustments AG 5.19d
made to the net assets and net profit or loss of any entities or
businesses to achieve consistency of accounting policies,
and an explanation of any other significant adjustments
made to the net assets and net profit or loss of any entity or
business as a consequence of the common control
combination; and
e) a statement of the adjustments to consolidated reserves. AG 5.19e
Non current assets
APPENDIX 6 - NON CURRENT ASSETS & DISPOSAL GROUPS

Reference Yes No
N/A
1.01 If the criteria for classifying an asset as held for resale are met HKFRS 5.12
after the balance sheet date, an entity shall not classify a non-
current asset (or disposal group) as held for sale in those
financial statements when issued.
1.02 Where the criteria for classifying an asset as held for resale are HKFRS 5.12
met after the balance sheet date but before the authorisation of
the financial statements for issue, the entity shall disclose the
information specified by HKFRS 5.41(a, b, & d) (see below).
1.03 An entity shall not classify as held for sale a non-current asset (or HKFRS 5.13
disposal group) that is to be abandoned as its carrying amount
will be recovered principally through continuing use.
1.04 If the disposal group to be abandoned meets the criteria for a HKFRS 5.13
discontinued operation, the entity shall present the results and
cash flows of the disposal group as discontinued operations at
the date on which it ceases to be used.
1.05 Note. Non-current assets (or disposal groups) to be abandoned
include non-current assets (or disposal groups) that are to be
used to the end of their economic life and non-current assets (or
disposal groups) that are to be closed rather than sold. (HKFRS
5.13)
1.06 An entity shall present and disclose information that enables HKFRS 5.30
users of the financial statements to evaluate the financial effects
of discontinued operations and disposals of non-current assets
(or disposal groups).
1.07 Disclose the following information concerning the effects of HKFRS 5.33
discontinued operations and non-current assets:
a) a single amount on the face of the income statement HKFRS 5.33a
comprising the total of:
i) the post-tax profit or loss of discontinued operations and HKFRS 5.33a
ii) the post-tax gain or loss recognised on the HKFRS 5.33a

measurement to fair value less costs to sell or on the
disposal of the assets or disposal group(s) constituting
the discontinued operation.
b) an analysis presented in the notes or on the face of the HKFRS 5.33b
income statement of the above single amount into:
i) the revenue, expenses and pre-tax profit or loss of HKFRS 5.33b
discontinued operations;
ii) the related income tax expense as required by HKFRS 5.33b
paragraph 81(h) of HKAS 12;
iii) the gain or loss recognised on the measurement to fair HKFRS 5.33b
value less costs to sell or on the disposal of the assets
or disposal group(s) constituting the discontinued
operation; and
iv) the related income tax expense as required by HKFRS 5.33b
paragraph 81(h) of HKAS 12.

Non current assets
v) if the analysis is presented on the face of the income HKFRS 5.33b

statement it shall be presented in a section identified as
relating to discontinued operations, ie separately from
continuing operations.
vi) the analysis is not required for disposal groups that are HKFRS 5.33b
newly acquired subsidiaries that meet the criteria to be
classified as held for sale on acquisition.
d) the net cash flows attributable to the operating, investing and HKFRS 5.33c
financing activities of discontinued operations.
i) These disclosures may be presented either in the notes HKFRS 5.33c
or on the face of the financial statements.
ii) These disclosures are not required for disposal groups HKFRS 5.33c
that are newly acquired subsidiaries that meet the
criteria to be classified as held for sale on acquisition.
1.08 An entity shall re-present the disclosures required by HKFRS 5.33 HKFRS 5.34
(see above) for prior periods presented in the financial
statements so that the disclosures relate to all operations that
have been discontinued by the balance sheet date for the latest
period presented.
1.09 Adjustments in the current period to amounts previously HKFRS 5.35
presented in discontinued operations that are directly related to
the disposal of a discontinued operation in a prior period shall be
classified separately in discontinued operations.
1.10 The nature and amount of such adjustments shall be disclosed. HKFRS 5.35
Examples of circumstances in which these adjustments may arise
include the following:
a) the resolution of uncertainties that arise from the terms of the HKFRS 5.35a
disposal transaction, such as the resolution of purchase price
adjustments and indemnification issues with the purchaser.
b) the resolution of uncertainties that arise from and are directly HKFRS 5.35b
related to the operations of the component before its
disposal, such as environmental and product warranty
obligations retained by the seller.
c) the settlement of employee benefit plan obligations, provided HKFRS 5.35c
that the settlement is directly related to the disposal
transaction.
1.11 Non current assets and liabilities and disposal groups should be HKFRS 5.38
presented as follows:
a) An entity shall present a non-current asset classified as held HKFRS 5.38
for sale and the assets of a disposal group classified as held
for sale separately from other assets in the balance sheet.
b) The liabilities of a disposal group classified as held for sale HKFRS 5.38
shall be presented separately from other liabilities in the
balance sheet.
c) Those assets and liabilities shall not be offset and presented HKFRS 5.38
as a single amount.
d) The major classes of assets and liabilities classified as held HKFRS 5.38
for sale shall be separately disclosed either on the face of
the balance sheet or in the notes, except as permitted by
HKFRS 5.39.

Non current assets
e) An entity shall present separately any cumulative income or HKFRS 5.38

expense recognised directly in equity relating to a non-
current asset (or disposal group) classified as held for sale.
1.12 If the disposal group is a newly acquired subsidiary that meets the HKFRS 5.39
criteria to be classified as held for sale on acquisition, disclosure
of the major classes of assets and liabilities is not required.
1.13 An entity shall not reclassify or re-present amounts presented for HKFRS 5.40
non-current assets or for the assets and liabilities of disposal
groups classified as held for sale in the balance sheets for prior
periods to reflect the classification in the balance sheet for the
latest period presented.
1.14 An entity shall disclose the following information in the notes in HKFRS 5.41
the period in which a non-current asset (or disposal group) has
been either classified as held for sale or sold:
a) a description of the non-current asset (or disposal group); HKFRS 5.41a
b) a description of the facts and circumstances of the sale, or HKFRS 5.41b
leading to the expected disposal, and the expected manner
and timing of that disposal;
c) any impairment loss or reversal and, if not separately HKFRS 5.41c
presented on the face of the income statement, the caption
in the income statement that includes that gain or loss;
d) if applicable, the segment in which the non-current asset (or HKFRS 5.41d
disposal group) is presented in accordance with HKAS 14
Segment Reporting.
1.15 If there are changes to a plan of sale, an entity shall disclose, in HKFRS 5.42
the period of the decision to change the plan to sell the non-
current asset (or disposal group):
a) a description of the facts and circumstances leading to the HKFRS 5.42
decision; and
b) the effect of the decision on the results of operations for the HKFRS 5.42
period and any prior periods presented.
Note. The HKFRS shall be applied prospectively to non-current
assets (or disposal groups) that meet the criteria to be classified
as held for sale and operations that meet the criteria to be
classified as discontinued after the effective date of the HKFRS.
An entity may apply the requirements of the HKFRS to all non-
current assets (or disposal groups) that meet the criteria to be
classified as held for sale and operations that meet the criteria to
be classified as discontinued after any date before the effective
date of the HKFRS, provided the valuations and other information
needed to apply the HKFRS were obtained at the time those
criteria were originally met. (HKFRS 5.43)

Defined benefit costs
APPENDIX 7 - DEFINED BENEFIT COSTS

Reference Yes No
N/A
1.0 The disclosures in HKAS 19.120 below apply for periods
commencing before 1 January 2006
1.01 In respect of defined benefit plans, disclose: HKAS 19.120
a) the entity's accounting policy for recognising actuarial gains HKAS 19.120a
and losses;
b) a general description of the type of plan. HKAS 19.120b,
HKAS 19.121
c) a reconciliation of the assets and liabilities recognised in the HKAS 19.120c

balance sheet, showing at least:
i) the present value at the balance sheet date of defined HKAS 19.120c
benefit obligations that are wholly unfunded;
ii) the present value (before deducting the fair value of plan HKAS 19.120c
assets) at the balance sheet date of defined benefit
obligations that are wholly or partly funded;
iii) the fair value of any plan assets at the balance sheet HKAS 19.120c
date;
iv) the net actuarial gains or losses not recognised in the HKAS 19.120c
balance sheet;
v) the past service cost not yet recognised in the balance HKAS 19.120c
sheet;
vi) any amount not recognised as an asset; HKAS 19.120c
vii) the fair value at the balance sheet date of any HKAS 19.120c
reimbursement right recognised as an asset with a brief
description of the link between the reimbursement right
and the related obligation; and
viii) the other amounts recognised in the balance sheet; HKAS 19.120c
d) the amounts included in the fair value of plan assets for: HKAS 19.120d
i) each category of the reporting entity's own financial HKAS 19.120d
instruments; and
ii) any property occupied by, or other assets used by, the HKAS 19.120d
reporting entity;
e) a reconciliation showing the movements during the period in HKAS 19.120e
the net liability or asset recognised in the balance sheet;
f) the total expense recognised in the income statement for HKAS 19.120f
each of the following, and the line item(s) of the income
statement in which they are included:
i) current service cost; HKAS 19.120f
ii) interest cost; HKAS 19.120f
iii) expected return on plan assets; HKAS 19.120f
iv) expected return on any reimbursement right recognised HKAS 19.120f
as an asset;
v) actuarial gains and losses; HKAS 19.120f
vi) past service cost; and HKAS 19.120f
vii) the effect of any curtailment or settlement; HKAS 19.120f
g) the actual return on plan assets as well as the actual return HKAS 19.120g
on any reimbursement right recognised as an asset; and

h) the principal actuarial assumptions used as at the balance HKAS 19.120h

sheet date, including, those set out below. Each actuarial
assumption should be disclosed in absolute terms (for
example as an absolute percentage) and not just as a
margin between different percentages or other variables.
i) the discount rates; HKAS 19.120h
ii) the expected rates of return on any plan assets for the HKAS 19.120h
periods presented in the financial statements;
iii) the expected rates of return for the periods presented in HKAS 19.120h
the financial statements on any reimbursement right
recognised as an asset;
iv) the expected rates of salary increases (and of changes HKAS 19.120h
in an index or other variable specified in the formal or
constructive terms of a plan as the basis for future
benefit increases);
v) medical cost trend rates; and HKAS 19.120h
vi) any other material actuarial assumptions used. HKAS 19.120h
2.0 The disclosures below in HKAS 19.120A apply for periods
commencing on or after 1 January 2006 and are set out in
HKAS 19 Amendment
2.01 In respect of defined benefit plans, disclose information that HKAS 19.120
enables users of financial statements to evaluate the nature of
defined benefit plans and the financial effects of changes in those
plans during the period.
2.02 In respect of defined benefit plans, disclose: HKAS 19.120A
a) the entity's accounting policy for recognising actuarial gains HKAS 19.120Aa
and losses;
b) a general description of the type of plan. HKAS
19.120Ab,
HKAS 19.121
c) a reconciliation of opening and closing balances of the HKAS 19.120Ac
present value of the defined benefit obligation showing
separately, if applicable, the effects during the period
attributable to each of the following:
i) current service cost; HKAS 19.120Ac
ii) interest cost; HKAS 19.120Ac
iii) contributions by plan participants; HKAS 19.120Ac
iv) actuarial gains and losses; HKAS 19.120Ac
v) foreign currency exchange rate changes on plans HKAS 19.120Ac
measured in a currency different from the entity's
presentation currency;
vi) benefits paid; HKAS 19.120Ac
vii) past service cost; HKAS 19.120Ac
viii) business combinations; HKAS 19.120Ac
ix) curtailments; and HKAS 19.120Ac
x) settlements; HKAS 19.120Ac
d) an analysis of the defined benefit obligation into amounts HKAS 19.120Ad
arising from plans that are wholly unfunded and amounts
arising from plans that are wholly or partly funded.

e) a reconciliation of the opening and closing balances of the HKAS 19.120Ae

fair value of plan assets and of the opening and closing
balances of any reimbursement right recognised as an asset
showing separately, if applicable, the effects during the
period attributable to each of the following:
i) expected return on plan assets, HKAS 19.120Ae
ii) actuarial gains and losses, HKAS 19.120Ae
iii) foreign currency exchange rate changes on plans HKAS 19.120Ae
measured in a currency different from the entity's
presentation currency,
iv) contributions by the employer, HKAS 19.120Ae
v) contributions by plan participants, HKAS 19.120Ae
vi) benefits paid, HKAS 19.120Ae
vii) business combinations and HKAS 19.120Ae
viii) settlements. HKAS 19.120Ae
f) a reconciliation of the present value of the defined benefit HKAS 19.120Af
obligation and the fair value of the plan assets to the assets
and liabilities recognised in the balance sheet, showing at
least:
i) the net actuarial gains or losses not recognised in the HKAS 19.120Af
balance sheet;
ii) the past service cost not yet recognised in the balance HKAS 19.120Af
sheet;
iii) any amount not recognised as an asset because of the HKAS 19.120Af
limit in paragraph 58(b) of ISA 19;
iv) the fair value at the balance sheet date of any HKAS 19.120Af
reimbursement right recognised as an asset, with a brief
description of the link between the reimbursement right
and the related obligation; and
v) the other amounts recognised in the balance sheet; HKAS 19.120Af
g) the total expense recognised in the income statement profit HKAS 19.120Ag
or loss for each of the following, and the line item(s) of the
income statement in which they are included:
i) current service cost; HKAS 19.120Ag
ii) interest cost; HKAS 19.120Ag
iii) expected return on plan assets; HKAS 19.120Ag
iv) expected return on any reimbursement right recognised HKAS 19.120Ag
as an asset;
v) actuarial gains and losses; HKAS 19.120Ag
vi) past service cost; HKAS 19.120Ag
vii) the effect of any curtailment or settlement; HKAS 19.120Ag
viii) the effect of the limit in paragraph 58(b) of HKAS 19; HKAS 19.120Ag
h) the total amount recognised in the statement of recognised HKAS 19.120Ah
income and expense for each of the following:
i) actuarial gains and losses; and HKAS 19.120Ah
ii) the effect of the limit in paragraph 58(b) of HKAS 19; HKAS 19.120Ah
i) for entities that recognise actuarial gains and losses in the HKAS 19.120Ai
statement of recognised income and expense, the
cumulative amount of actuarial gains and losses recognised
in the statement of recognised income and expense;

j) for each major category of plan assets, which shall include, HKAS 19.120Aj
but is not limited to, equity instruments, debt instruments,
property, and all other assets, the percentage or amount that
each major category constitutes of the fair value of the total
plan assets;
k) the amounts included in the fair value of plan assets for: HKAS 19.120Ak
i) each category of the entity's own financial instruments; HKAS 19.120Aki
and
ii) any property occupied by, or other assets used by, the HKAS
entity. 19.120Akii
l) a narrative description of the basis used to determine the HKAS 19.120Al

overall expected rate of return on assets, including the effect
of the major categories of plan assets;
m) the actual return on plan assets, as well as the actual return HKAS 19.120Am
on any reimbursement right recognised as an asset; and
n) the principal actuarial assumptions used as at the balance HKAS 19.120An
sheet date (in absolute terms (for example, as an absolute
percentage) and not just as a margin between different
percentages or other variables), including, where applicable:
i) the discount rates; HKAS 19.120Ani

ii) the expected rates of return on any plan assets for the HKAS
periods presented in the financial statements; 19.120Anii
iii) the expected rates of return for the periods presented in HKAS
the financial statements on any reimbursement right 19.120Aniii
recognised as an asset;
iv) the expected rates of salary increases (and of changes HKAS
in an index or other variable specified in the formal or 19.120Aniv
constructive terms of a plan as the basis for future
benefit increases);
v) medical cost trend rates; and HKAS
19.120Anv
vi) any other material actuarial assumptions used. HKAS

19.120Anvi
o) the effect of an increase of one percentage point and the HKAS 19.120Ao
effect of a decrease of one percentage point in the assumed
medical cost trend rates on:
i) the aggregate of the current service cost and interest HKAS 19.120Aoi
cost components of net periodic post-employment
medical costs; and
ii) the accumulated post-employment benefit obligation for HKAS 19.120Aoi
medical costs
Note. For the purposes of the disclosure required in HKAS HKAS 19.120Ao
120A(o), all other assumptions are held constant. For plans
operating in a high inflation environment, the disclosure shall
be the effect of a percentage increase or decrease in the
assumed medical cost trend rate of a significance similar to
one percentage point in a low inflation environment.
p) the amounts for the current annual period and previous four HKAS 19.120Ap
annual periods of:

i) the present value of the defined benefit obligation, the HKAS 19.120Api
fair value of the plan assets and the surplus or deficit in
the plan; and
ii) the experience adjustments arising on: HKAS
19.120Apii
- the plan liabilities expressed either as an amount HKAS 19.120Ap

or a percentage of the plan liabilities at the balance
sheet date; and
- the plan assets expressed either as an amount or HKAS 19.120Ap
a percentage of the plan assets at the balance sheet
date; and
q) the employer's best estimate, as soon as it can reasonably HKAS 19.120Aq
be determined, of contributions expected to be paid to the
plan during the annual period beginning after the balance
sheet date.
2.03 When an entity has more than one defined benefit plan, HKAS 19.122
disclosures may be made in total, separately for each plan, or in
such groupings as are considered to be the most useful.
2.04 Where disclosures are provided in total for a grouping of plans, HKAS 19.122
such disclosures are provided in the form of weighted averages
or of relatively narrow ranges.
2.05 Where required by HKAS 24, disclose information about: HKAS 19.124
a) related party transactions with post-employment benefit HKAS 19.124a
plans; and
b) post-employment benefits for key management personnel. HKAS 19.124b
2.06 Where required by HKAS 37, disclose information about HKAS
contingent liabilities arising from post-employment benefit 19.35/32B,
obligations. HKAS 19.125
2.07 Actuarial gains and losses recognised outside profit or loss shall HKAS 19.93B
be presented in a statement of changes in equity titled "statement
of recognised income and expense" that comprises only the
following:
a) profit or loss for the period; HKAS 19.93B,
HKAS1.96a
b) each item of income and expense for the period that is HKAS 19.93B,
recognised directly in equity, and the total of these items; HKAS1.96b
c) total income and expense for the period (calculated as the HKAS 19.93B,
sum of (a) and (b)), showing separately the total amounts HKAS1.96c
attributable to equity holders of the parent and to minority
interest; and
d) for each component of equity, the effects of changes in HKAS 19.93B,
accounting policies and corrections of errors recognised in HKAS1.96d
2.08 Actuarial gains and losses recognised outside profit or loss shall HKAS 19.93B
not be presented in a statement of changes in equity in the
columnar format referred to in paragraph 101 of HKAS 1 or any
other format that includes the items specified in paragraph 97 of
HKAS 1.
2.09 When sufficient information is not available to use defined benefit HKAS 19.30
accounting for a multi-employer plan that is a defined benefit
plan, disclose:
a) the fact that the plan is a defined benefit plan; HKAS 19.30bi

b) the reason why sufficient information is not available to HKAS 19.30bii

enable the entity to account for the plan as a defined benefit
plan; and
c) to the extent that a surplus or deficit in the plan may affect HKAS 19.30c
the amount of future contributions, also disclose:
i) any available information about that surplus or deficit; HKAS 19.30ci
ii) the basis used to determine that surplus or deficit; and HKAS 19.30cii
iii) the implications, if any, for the entity. HKAS 19.30ciii
2.10 An asset relating to one plan should only be offset against a HKAS 19.116
liability relating to another plan when, and only when, the entity:
a) has a legally enforceable right to use a surplus in one plan to HKAS 19.116a
settle obligations under the other plan; and
b) intends either to settle the obligations on a net basis, or to HKAS 19.116b
realise the surplus in one plan and settle its obligation under
the other plan simultaneously.

Pension plan accounts
APPENDIX 8 - PENSION PLAN ACCOUNTS

Reference Yes No
N/A
1.0 General
1.01 The disclosures in this section apply to the report of retirement HKAS 26.2
benefit plans. All other disclosure requirements of HKASs also
apply to the financial statements of retirement benefit plans to the
extent that they are not superseded by the disclosures in this
section.
1.02 The report of a retirement benefit plan, whether defined benefit or HKAS 26.34
defined contribution, should also contain the following:
a) a statement of changes in net assets available for benefits; HKAS 26.34a
b) a summary of significant accounting policies; and HKAS 26.34b
c) a description of the plan and the effect of any changes in the HKAS 26.34c
plan during the period.
1.03 The plan description may be included either as part of the HKAS 26.36
financial information or in a separate report, and may contain:
a) the names of the employers and the employee groups HKAS 26.36a
covered;
b) the number of participants receiving benefits and the number HKAS 26.36b
of other participants, classified as appropriate;
c) the type of plan - defined contribution or defined benefit; HKAS 26.36c
d) a note as to whether participants contribute to the plan; HKAS 26.36d
e) a description of the retirement benefits promised to HKAS 26.36e
participants;
f) a description of any plan termination terms; and HKAS 26.36f
g) changes in the disclosures required by (a) to (f) above during HKAS 26.36g
the period covered by the report.
1.04 This description may refer to other documents that are readily HKAS 26.36
available to users and in which the plan is described, and may
include only information on subsequent changes.
1.05 The report should also disclose, if applicable: HKAS 26.35
a) a statement of net assets available for benefits disclosing: HKAS 26.35a
i) assets at the end of the period suitably classified; HKAS 26.35a
ii) the basis of valuation of assets; HKAS 26.35a
iii) details of any single investment exceeding either 5% of HKAS 26.35a
the net assets available for benefits or 5% of any class
or type of security;
iv) details of any investment in the employer; and HKAS 26.35a
v) liabilities other than the actuarial present value of HKAS 26.35a
promised retirement benefits;
b) a statement of changes in net assets available for benefits HKAS 26.35b
showing the following:
i) employer contributions; HKAS 26.35b
ii) employee contributions; HKAS 26.35b
iii) investment income such as interest and dividends; HKAS 26.35b
iv) other income; HKAS 26.35b
v) benefits paid or payable (analysed, for example, as HKAS 26.35b
retirement, death and disability benefits, and lump sum
payments);

vi) administrative expenses; HKAS 26.35b

vii) other expenses; HKAS 26.35b
viii) taxes on income; HKAS 26.35b
ix) profits and losses on disposal of investments and HKAS 26.35b
changes in value of investments; and
x) transfers from and to other plans; HKAS 26.35b
c) a description of the funding policy; HKAS 26.35c
2.0 Defined contribution plans
2.01 The report of defined contribution plans should disclose: HKAS 26.13
a) a statement of net assets available for benefits; HKAS 26.13
b) a description of the funding policy; HKAS 26.13
c) a description of significant activities for the period and the HKAS 26.16a
effect of any changes relating to the plan, and its
membership and terms and conditions;
d) statements reporting on the transactions and investment HKAS 26.16b
performance for the period and the financial position of the
plan at the end of the period; and
e) a description of the investment policies. HKAS 26.16c
3.0 Defined benefit plans
3.01 The report of defined benefit plans should disclose either: HKAS 26.17
a) a statement that shows: HKAS 26.17a
i) the net assets available for benefits; HKAS 26.17a
ii) the actuarial present value of promised retirement HKAS 26.17a
benefits, distinguishing between vested benefits and
non-vested benefits; and
iii) the resulting excess or deficit; or HKAS 26.17a
b) a statement of net assets available for benefits including HKAS 26.17b
either:
i) a note disclosing the actuarial present value of promised HKAS 26.17b
retirement benefits, distinguishing between vested
benefits and non-vested benefits; or
ii) a reference to this information in an accompanying HKAS 26.17b
actuarial report.
3.02 If an actuarial valuation has not been prepared at the date of the HKAS 26.17
report, the most recent valuation should be used as a base and
the date of the valuation disclosed.
3.03 Disclosure should be given of the basis used to calculate the HKAS 26.18
actuarial present value of promised retirement benefits, namely
either:
a) current salary levels; or HKAS 26.18
b) projected salary levels. HKAS 26.18
3.04 The effect of any changes in actuarial assumptions that have had HKAS 26.18
a significant effect on the actuarial present value of promised
retirement benefits should also be disclosed.
3.05 In addition, sufficient explanation may need to be given so as to HKAS 26.26
indicate clearly the context in which the actuarial present value of
promised retirement benefits should be read. Such explanation
may be in the form of information about the adequacy of the
planned future funding and of the funding policy based on salary
projections. This may be included in the financial information or in
the actuary's report.

3.06 The report should also disclose: HKAS 26.19,

HKAS 26.22
a) an explanation the relationship between the actuarial present HKAS 26.19

value of promised retirement benefits and the net assets
available for benefits, and the policy for the funding of
promised benefits;
b) a description of significant activities for the period and the HKAS 26.22a
effect of any changes relating to the plan, and its
membership and terms and conditions;
c) statements reporting on the transactions and investment HKAS 26.22b
performance for the period and the financial position of the
plan at the end of the period;
d) actuarial information either as part of the statements or by HKAS 26.22c
way of a separate report; and
e) a description of the investment policies. HKAS 26.22d
3.07 For defined benefit plans, information is presented in one of the HKAS 26.28
following formats which reflect different practices in the disclosure
and presentation of actuarial information:
a) a statement is included in the report that shows the net HKAS 26.28a
assets available for benefits, the actuarial present value of
promised retirement benefits, and the resulting excess or
deficit. The report of the plan also contains statements of
changes in net assets available for benefits and changes in
the actuarial present value of promised retirement benefits.
The report may include a separate actuary's report
supporting the actuarial present value of promised retirement
benefits;
b) a report that includes a statement of net assets available for HKAS 26.28b
benefits and a statement of changes in net assets available
for benefits. The actuarial present value of promised
retirement benefits is disclosed in a note to the statements.
The report may also include a report from an actuary
supporting the actuarial present value of promised retirement
benefits; or
c) a report that includes a statement of net assets available for HKAS 26.28c
benefits and a statement of changes in net assets available
for benefits with the actuarial present value of promised
retirement benefits contained in a separate actuarial report.
d) the actuarial present value of promised retirement benefits HKAS 26.35d

(which may distinguish between vested benefits and non-
vested benefits) based on the benefits promised under the
terms of the plan, on service rendered to date and using
either current salary levels or projected salary levels; this
information may be included in an accompanying actuarial
report to be read in conjunction with the related financial
information; and
e) a description of the significant actuarial assumptions made HKAS 26.35e
and the method used to calculate the actuarial present value
of promised retirement benefits.
3.08 In each format a trustees' report in the nature of a management HKAS 26.28
or directors' report and an investment report may also accompany
the statements.

Hyperinflationary economies
APPENDIX 9 - HYPERINFLATIONARY ECONOMIES

Reference Yes No
N/A
1.01 In an economy deemed to be hyperinflationary such that HKAS HKAS 29.7
29 applies:
a) presentation of the information required by the standard as a HKAS 29.7
supplement to unrestated financial statements is not
permitted.
b) separate presentation of the financial statements before HKAS 29.7
restatement is discouraged.
1.02 The financial statements of an entity whose functional currency is HKAS 29.8
the currency of a hyperinflationary economy, whether they are
based on a historical cost approach or a current cost approach:
a) shall be stated in terms of the measuring unit current at the HKAS 29.8
balance sheet date;
b) the corresponding figures for the previous period required by HKAS 29.8
HKAS 1, Presentation of Financial Statements; and
c) any information in respect of earlier periods should also be HKAS 29.8
stated in terms of the measuring unit current at the balance
sheet date.
1.03 The gain or loss on the net monetary position as a result of the HKAS 29.9
restatement required by HKAS 29.8 should be included in net
income and separately disclosed.
1.04 Although separately disclosed, it may be helpful if items HKAS 29.28
associated with the net monetary position, such as interest
income and expense and foreign exchange differences related to
invested or borrowed funds, are presented together with the gain
or loss on net monetary position in the income statement.
1.05 Movements for the period in owners' equity are disclosed in HKAS 29.25
1.06 The financial statements of an entity whose functional currency is HKAS 29.39
the currency of a hyperinflationary economy should disclose:
a) the fact that the financial statements and the corresponding HKAS 29.39a
figures for previous periods have been restated for the
changes in the general purchasing power of the functional
currency and, as a result, are stated in terms of the
measuring unit current at the balance sheet date;
b) whether the financial statements are based on a historical HKAS 29.39b
cost approach or a current cost approach; and
c) the identity and level of the price index at the balance sheet HKAS 29.39c
date and the movement in the index during the current and
the previous reporting period.

Agriculture
APPENDIX 10 - AGRICULTURE
Reference Yes No
N/A
1.01 Disclose the aggregate gain or loss arising during the current HKAS 41.40
period:
a) on initial recognition of biological assets and agricultural HKAS 41.40
produce; and
b) from the change in fair value less estimated point-of-sale HKAS 41.40
costs of biological assets.
1.02 Give a description of each group of biological assets. HKAS 41.41
Note. This may take the form of a narrative or quantified
description, but disclosure is encouraged of a quantified
description of each group of biological assets, distinguishing
between consumable and bearer biological assets or between
mature and immature biological assets, as appropriate. These
may be further divided between mature and immature assets.
These distinctions provide information that may be helpful in
assessing the timing of future cash flows, and the basis for
making any such distinctions should also be disclosed. (HKAS
41.42)
1.03 If not disclosed elsewhere in information published with the HKAS 41.46
financial statements, disclose:
a) the nature of activities involving each group of biological HKAS 41.46a
assets; and
b) non-financial measures or estimates of the physical HKAS 41.46b
quantities of:
i) each group of biological assets at the end of the period; HKAS 41.46bi
and
ii) output of agricultural produce during the period. HKAS 41.46bii
1.04 Disclose the methods and significant assumptions applied in HKAS 41.47
determining the fair value of each group of agricultural produce at
the point of harvest and each group of biological assets.
1.05 Disclose the fair value less estimated point-of-sale costs of HKAS 41.48
agricultural produce harvested during the period, determined at
the point of harvest.
a) the existence and carrying amounts of biological assets HKAS 41.49a
whose title is restricted, and the carrying amounts of
biological assets pledged as security for liabilities;
b) the amount of commitments for the development or HKAS 41.49b
acquisition of biological assets; and
c) financial risk management strategies related to agricultural HKAS 41.49c
activity.
1.07 Disclose a reconciliation of changes in the carrying amount of HKAS 41.50
biological assets between the beginning and the end of the
current period, including:
a) the gain or loss arising from changes in fair value less HKAS 41.50a
estimated point-of-sale costs;
b) increases due to purchases; HKAS 41.50b

Agriculture
c) decreases attributable to sales and biological assets HKAS 41.50c

classified as held for sale (or included in a disposal group
that is classified as held for sale) in accordance with HKFRS
5;
d) decreases due to harvest; HKAS 41.50d
e) increases resulting from business combinations; HKAS 41.50e
f) net exchange differences arising on the translation of HKAS 41.50f
financial statements into a different presentation currency,
and on the translation of a foreign operation into the
presentation currency of the entity; and
g) other changes. HKAS 41.50g
1.08 If an event occurs that gives rise to a material item of income or HKAS 41.53
expense disclose the nature and amount of that item in
accordance with section HKAS 1.
1.09 Where biological assets are measured at cost less any HKAS 41.54
accumulated depreciation (and any accumulated impairment
losses) at the end of the period, disclose:
a) a description of the biological assets; HKAS 41.54a
b) an explanation of why fair value cannot be measured reliably; HKAS 41.54b
c) if possible, the range of estimates within which fair value is HKAS 41.54c
highly likely to lie;
d) the depreciation method used; HKAS 41.54d
e) the useful lives or the depreciation rates used; and HKAS 41.54e
f) the gross carrying amount and the accumulated depreciation HKAS 41.54f
beginning and end of the period.
1.10 Where biological assets are measured at cost less any HKAS 41.55
accumulated depreciation (and any accumulated impairment
losses) during the current period:
a) disclose any gain or loss recognised on disposal of such HKAS 41.55
assets; and
b) in the reconciliation required by HKAS 41.50 disclose HKAS 41.55
amounts related to such assets separately, and also disclose:
i) impairment losses; HKAS 41.55a

ii) reversals of impairment losses; and HKAS 41.55b
iii) depreciation. HKAS 41.55c
1.11 If the fair value of biological assets, previously measured at cost HKAS 41.56
less any accumulated depreciation and any accumulated
impairment losses, becomes reliably measurable during the
current period, disclose:
a) a description of the biological assets; HKAS 41.56a
b) an explanation of why fair value has become reliably HKAS 41.56b
measurable; and
c) the effect of the change. HKAS 41.56c
1.12 In relation to agricultural activity covered by HKAS 41, disclose: HKAS 41.57
a) the nature and extent of government grants recognised in the HKAS 41.57a
b) unfulfilled conditions and other contingencies attaching to HKAS 41.57b
government grants; and

Agriculture
c) significant decreases expected in the level of government HKAS 41.57c

grants.
1.14 Entities that adopt Amendment to HKAS 19 for periods prior to 1 HKAS 19.159B
January 2006 shall disclose that fact.

Mineral resources
APPENDIX 11 - EXPLORATION FOR MINERAL RESOURCES

Reference Yes No
N/A
1.01 When facts and circumstances suggest that the carrying amount HKFRS 6.18
of an exploration and evaluation asset exceeds the recoverable
amount, an entity shall measure, present and disclose any
resulting impairment loss in accordance with HKAS 36, except as
provided by HKFRS 6.21.
1.02 An entity shall disclose information that identifies and explains the HKFRS 6.23
amounts recognised in its financial statements arising from the
exploration for and evaluation of mineral resources.
1.03 Disclose the following concerning exploration and evaluation HKFRS 6.24
assets:
a) its accounting policies for exploration and evaluation HKFRS 6.24a
expenditures including the recognition of exploration and
evaluation assets.
b) the amounts of assets, liabilities, income and expense and HKFRS 6.24b
operating and investing cash flows arising from the
exploration for and evaluation of mineral resources.
1.04 An entity shall treat exploration and evaluation assets as a HKFRS 6.25
separate class of assets and make the disclosures required by
either HKAS 16 or HKAS 38 consistent with how the assets are
classified.
1.05 If it is impracticable to apply a particular requirement of HKFRS HKFRS 6.27
6.18 (see above) to comparative information that relates to
annual periods beginning before 1 January 2006, an entity shall
disclose that fact. HKAS 8 explains the term „impracticable‟.

First time adoption of HKFRS
APPENDIX 12 - FIRST TIME ADOPTION OF HKFRS

Reference Yes No
N/A
1.01 An entity shall use the same accounting policies in its opening HKFRS 1.7
HKFRS balance sheet and throughout all periods presented in its
first HKFRS financial statements. Those accounting policies shall
comply with each HKFRS effective at the reporting date for its
first HKFRS financial statements, except as specified in HKFRS 1.
1.02 An entity may elect to use one or more of the following HKFRS 1.13
exemptions from applying the requirements of other HKFRSs;
however, an entity shall not apply these exemptions by analogy to
other items:
a) business combinations; HKFRS 1.13a
b) fair value or revaluation as deemed cost; HKFRS 1.13b
c) employee benefits; HKFRS 1.13c
d) cumulative translation differences; HKFRS 1.13d
e) compound financial instruments; HKFRS 1.13e
f) assets and liabilities of subsidiaries, associates and joint HKFRS 1.13f
ventures;
g) designation of previously recognised financial instruments; HKFRS 1.13g
h) share-based payment transactions; HKFRS 1.13h
i) insurance contracts; HKFRS 1.13i
j) decommissioning liabilities included in the cost of property, HKFRS 1.13j
k) plant and
leases; and HKFRS 1.13k
l) fair value measurement of financial assets or financial HKFRS 1.13l
liabilities at initial recognition.
1.03 In its first HKFRS financial statements, an entity that adopts HKFRS 1.36A
HKFRSs before 1 January 2006 shall present at least one year of
comparative information, but this comparative information need
not comply with HKAS 32, HKAS 39 and HKFRS 4.
1.04 An entity that chooses to present comparative information that HKFRS 1.36A
does not comply with HKAS 32, HKAS 39 and HKFRS 4 in its first
year of transition shall:
a) disclose this fact, together with the basis used to prepare this HKFRS 1.36Ab
information; and
b) disclose the nature of the main adjustments that would make HKFRS 1.36Ac
the information comply with HKAS 32, HKAS 39 and HKFRS
4.
c) give the disclosures required by paragraph 28(a)-(e) and HKFRS 1.36Ac
(f)(i) of HKAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors.
Note. The entity need not quantify the adjustments in (b).
However, the entity should treat any adjustment between the
balance sheet at the comparative period's reporting date (ie the
balance sheet that includes comparative information under
previous GAAP) and the balance sheet at the start of the first
HKFRS reporting period (ie the first period that includes
information that complies with HKAS 32, HKAS 39 and HKFRS 4)
as arising from a change in accounting policy. (HKFRS 1.36Ac)

1.05 An entity that adopts HKFRSs before 1 January 2006 and HKFRS 1.36B
chooses to adopt HKFRS 6 Exploration for and Evaluation of
Mineral Resources before 1 January 2006 need not apply the
requirements of HKFRS 6 to comparative information presented
in its first HKFRS financial statements.
1.06 An entity that adopts HKFRSs before 1 January 2006 and HKFRS 1.36
chooses to adopt HKFRS 7 Financial Instruments: Disclosures in
its first HKFRS financial statements need not present the
comparative disclosures required by HKFRS 7 in those financial
statements.
1.07 In any financial statements containing historical summaries or HKFRS 1.37b
comparative information under previous GAAP, an entity shall
disclose the nature of the main adjustments that would make it
comply with HKFRSs. An entity need not quantify those
adjustments.
1.08 An entity shall explain how the transition from previous GAAP to HKFRS 1.38
HKFRSs affected its reported financial position, financial
performance and cash flows.
1.09 The explanation of the transition from previous GAAP to HKFRS HKFRS 1.39
shall include:
a) reconciliations of its equity reported under previous GAAP to HKFRS 1.39a
its equity under HKFRSs for both of the following dates:
(i) the date of transition to HKFRSs; and HKFRS 1.39a
(ii) the end of the latest period presented in the entity's most HKFRS 1.39a
recent annual financial statements under previous
GAAP;
b) a reconciliation of the profit or loss reported under previous HKFRS 1.39b
GAAP for the latest period in the entity's most recent annual
financial statements to its profit or loss under HKFRSs for the
same period; and
c) if the entity recognised or reversed any impairment losses for HKFRS 1.39c
the first time in preparing its opening HKFRS balance sheet,
the disclosures that HKAS 36 Impairment of Assets would
have required if the entity had recognised those impairment
losses or reversals in the period beginning with the date of
transition to HKFRSs.
1.10 The above reconciliations should give sufficient detail to enable HKFRS 1.40
users to understand the material adjustments to the balance
sheet and income statement.
1.11 If an entity presented a cash flow statement under its previous HKFRS 1.40
GAAP, it shall also explain the material adjustments to the cash
flow statement.
1.12 If an entity becomes aware of errors made under previous GAAP, HKFRS 1.41
the reconciliations required by paragraph 39(a) and (b) shall
distinguish the correction of those errors from changes in
accounting policies.
1.13 HKAS 8 does not deal with changes in accounting policies that HKFRS 1.42
occur when an entity first adopts HKFRSs. Therefore, HKAS 8's
requirements for disclosures about changes in accounting
policies do not apply in an entity's first HKFRS financial
statements.

1.14 If an entity did not present financial statements for previous HKFRS 1.43
periods, its first HKFRS financial statements shall disclose that
fact.
1.15 An entity is permitted to designate a previously recognised HKFRS 1.43A
financial asset or financial liability as a financial asset or financial
liability at fair value through profit or loss or a financial asset as
available for sale in accordance with HKFRS 1.25A. Where this
occurs the entity shall disclose:
a) the fair value of financial assets or financial liabilities HKFRS 1.43A
designated into each category at the date of designation; and
b) their classification and carrying amount in the previous HKFRS 1.43A

1.16 If an entity uses fair value in its opening HKFRS balance sheet as HKFRS 1.44
deemed cost for an item of property, plant and equipment, an
investment property or an intangible asset, the entity's first
HKFRS financial statements shall disclose, for each line item in
the opening HKFRS balance sheet:
a) the aggregate of those fair values; and HKFRS 1.44a
b) the aggregate adjustment to the carrying amounts reported HKFRS 1.44b
under previous GAAP.

Year end: II / 2
File no:
II AUDIT COMPLETION
1 Partner review
2 Audit standards review questionnaire
3 File completion questionnaires
4 Critical review of accounts questionnaire
5 Audit highlights
6 Justification of audit report
7 Summary of unadjusted errors
8 Queries for partner
9 Final analytical review
10 Points forward to next year
11 Commercial observations on client‟s business
12 Senior/manager review
13 Cleared audit queries
14 Notes of meetings with client
15

Year end: II / 2/ 1
File no:
PARTNER COMPLETION
Initial Initials
1 Have we obtained sufficient appropriate audit evidence to be able to draw Yes

reasonable conclusions on which to base the audit opinion?
2 Has the Auditing Standards Questionnaire been satisfactorily completed? Yes
3 Have the file completion questionnaires been satisfactorily completed? Yes
4 Has the critical review of accounts questionnaire been satisfactorily completed? Yes
5 Has sufficient work been undertaken to reduce audit risk to an acceptably low level Yes
that is consistent with the audit objectives?
6 Have any differences of opinion amongst the audit team been resolved in Yes/N/A*
accordance with the firm's procedures?
7 Has external consultation been undertaken where required by the firm's procedures Yes/N/A*
and has this been properly documented on file?
8 Has all original work been reviewed, other than that undertaken by the partner Yes
responsible for the audit?
9 Is there sufficient evidence of partner review? Yes
10 Has an engagement quality control review been undertaken where required by Yes/N/A*
HKICPA's Code of Ethics for Professional Accountants, HSQC1 or the firm‟s
procedures?
11 Have all partner review points been properly cleared? Yes/N/A*

12 Have all matters been documented that are important in providing audit evidence to: Yes/N/A*
- support the audit opinion; and
- confirm that the audit was carried out in accordance with HKSAs?
13 List below any other work that needs to be undertaken before the audit report is Yes/N/A*
signed:
I authorise the issue of the accounts for approval.

Signed Date
Second Partner (if applicable)
Signed Date

Year end: Reviewed by: Date: II / 2 / 2
File no:
AUDIT STANDARDS REVIEW QUESTIONNAIRE

This questionnaire should be completed, where considered necessary, to enable the reviewer to answer question 1 on the
Initial Partner Completion.
Yes/No
HKSA Comments Initials
N/A
200.4 In conducting the audit, has the firm complied with the HKICPA
Statements of Professional Ethics/Code of Ethics for
Professional Accountants?
210.2 Does the firm have an up to date letter of engagement?
210.5 Does the engagement letter for a corporate practice identify the
director appointed by the corporate practice to be responsible
for the performance of the audit engagement contemplated by
the audit report?
210.19.1 Where the firm has resigned from office or been removed; has
the firm complied with the requirements of sections 140A or
132 (6) respectively of the Companies Ordinance regarding
the statement in relation to the resignation or the exercise of
the right to attend and be heard at the general meeting?
220.2 Have the firm's quality control procedures been properly
applied to this audit client?
220.18 Has any information come to light that would have caused the
firm to decline the audit engagement if that information had
been available earlier?
220.21 Has the audit work been properly directed, supervised and
reviewed?
230 Has audit documentation been prepared that would enable an
experienced auditor, having no previous connection with the
audit, to understand:
230.9 (a) the nature, timing, and extent of the audit procedures
performed to comply with HKSAs and applicable legal and
regulatory requirements;
230.9 (b) the results of the audit procedures and the audit evidence
obtained; and
230.9 (c) significant matters arising during the audit and the
conclusions reached thereon;
230.12 (d) the identifying characteristics of the specific items or
matters being tested;
230.16 (e) the content of discussions with management and others
concerning any significant matters.
230.18 (f) how any contradictions or inconsistencies between the
information received and the audit conclusions reached on
significant matters have been addressed;
230.21 (g) how alternative audit procedures performed achieved the
objectives of the audit where it was considered necessary
to depart from a basic principle or an essential procedure;
230.23 (h) who performed the audit work and the date such work was
completed; and
230.23 (i) who reviewed the audit work performed and the date and
extent of such review.

File no:

240.3 In planning and performing the audit to reduce audit risk to an
acceptably low level, did we consider the risks of material
misstatements in the financial statements due to fraud?
240.85 Did analytical procedures undertaken when forming an overall

conclusion as to whether the accounts as a whole are
consistent with our knowledge of the business indicate a
previously unrecognised risk of material misstatement due to
fraud?
240.86 Have we considered the implications for the audit where one or
more of the potential adjustments listed on B7 gives an
indication of fraud?
240.110 Where we have concluded that the risk of material

misstatement due to fraud related to revenue recognition is not
applicable in the circumstances of the engagement, have we
documented the reasons for that conclusion?
250.2 Has the audit been planned and performed having considered
the risk of material misstatement arising from non-compliance
with relevant laws and regulations?
250.28 Have we considered the impact of any suspected or actual non-

compliance with laws and regulations on our reports to the
management, shareholders and any external regulators?
250.31 Have we considered the implications of any non-compliance
with laws and regulations in relation to other aspects of the
audit, particularly the reliability of management representations?
260.11 Have audit matters of governance interest that arose from the
audit of the financial statements been communicated to those
charged with governance (See B3.1 Q18)
260.11a Have those charged with governance been informed of those
uncorrected misstatements aggregated during the audit that
were determined by management to be immaterial, both
individually and in the aggregate, to the financial statements
taken as a whole.
Unadjusted errors:
300.16 Has the overall audit strategy and the audit plan been updated
and changed as necessary during the course of the audit?
315.2 Do our audit files contain information adequate to provide an

understanding of the company and its environment, including
its internal control, sufficient to identify and assess the risks of
material misstatement of the financial statements whether due
to fraud or error, and sufficient to design and perform further
audit procedures?
315.41 Where reliance has been placed on controls tested at an
interim date or in prior years have the requirements of HKSA
315 as set down in programme S2 been followed?
315.108 Does the file document whether any of the risks identified are,
in the auditor‟s judgment, risks that require special audit
consideration (“significant risks”)?

File no:

315.122 Does the file document:
(a) the discussion among the engagement team regarding the
susceptibility of the company‟s financial statements to
material misstatement due to error or fraud, and the
significant decisions reached;
(b) key elements of the understanding obtained of the

company's environment, including the components of
internal control, to assess the risks of material
misstatement of the financial statements; the sources of
information from which the understanding was obtained;
and the risk assessment procedures;
(c) the identified and assessed risks of material misstatement
at the financial statement level and at the assertion level;
and
(d) the risks identified and related controls evaluated.

320.11 Has materiality been reviewed during the course of the audit?
Preliminary materiality:
Final materiality:
330.66 Have the risk assessments been reviewed to determine
whether the assessments of the risks of material misstatement
at the assertion level remain appropriate?
330.73 The auditor should document:

(a) the overall responses to address the assessed risks of
material misstatement at the financial statement level and
the nature, timing, and extent of the further audit
procedures;
(b) the linkage of those procedures with the assessed risks at

the assertion level;
(c) the results of the audit procedures;
(d) the conclusions reached with regard to relying on internal
controls that were tested in a prior audit.
330.73a Does the documentation on file demonstrate that the financial
statements agree or reconcile with the underlying accounting
records?
402.2 Where the client uses a service organisation, has sufficient
appropriate audit evidence been obtained to determine whether
the accounts are free from material misstatement?
501.6 Where we were unable to attend the physical inventory count

on the date planned due to unforeseen circumstances, did we
take or observe some physical counts on an alternative date
and, when necessary, perform audit procedures on intervening
transactions.
501.42 Where applicable have we obtained sufficient appropriate audit
evidence regarding the presentation and disclosure of segment
information?

File no:

505.11 Did we confirm the specific terms of any complex or unusual
transactions undertaken by the company that were identified as
having a significant impact on risk in accordance with HKSA
315.108?
505.25 Were satisfactory alternative procedures applied in instances
where management had refused permission for the use of
external confirmations such as circularisation requests?
510.2 Is there sufficient, appropriate evidence that amounts derived

from the previous period are free from material misstatement
and are appropriately incorporated and presented in the current
period‟s accounts?
520.2 Does the file contain sufficient evidence of analytical review at

the planning and overall review stages of the audit?
520.13 Has an adequate overall review of the accounts been
performed?
530.2 Has audit sampling been applied in an appropriate manner?
540.8 Does the file contain sufficient, appropriate evidence
concerning the reasonableness of accounting estimates?
545.3 Have we obtained sufficient appropriate audit evidence that any
fair value measurements and disclosures are in accordance
with the company's applicable financial reporting framework?
550.2 Is there sufficient, appropriate evidence that there is adequate

disclosure of related party transactions and control of the entity
in the accounts?
560.2 Has an adequate post balance sheet events review been

performed?
570.2 Has the appropriateness of the going concern basis been
considered?
580.2 Has a letter of representation been drafted covering all
necessary representations?
580.9 Have any occasions where representations received were
contradicted by other evidence been fully investigated?
610.2 Where the client has internal auditors, has adequate
consideration been given to the effect this should have on the
audit?
620.2 When using the work of an expert, is there sufficient,

appropriate evidence that the work is adequate for the purpose?
710.18 Where the prior period's financial statements were not audited
does the auditor's report state that the corresponding figures
are unaudited?
720.2 Has other information to be issued with the financial statements

been read so as to identify material inconsistencies?

Year end: Reviewed by: Date: II / 2 / 3(1)
File no:
FILE COMPLETION QUESTIONNAIRE
Where work is outstanding prior to review, the outstanding (O/S) column should be ticked in pencil to highlight work
required. As and when work is completed, the final column should be initialled, and the tick rubbed out.
Yes/None
Pre-partner review O/S Comments Initials
N/A
1 Does the file contain programmes on all relevant sections and
have they been properly completed?
2 Has each audit objective on the summary sheets been
addressed and cross-referenced to the working papers?
3 Have all the queries and problems been properly cleared or
carried forward to schedule B8 (queries for partner) or B5
(audit highlights)?
4 Has an audit highlights report (B5) been prepared that

summarises the results of the testing in key audit areas?
5 Have the budget and actual time summaries been completed,
along with explanations of variances?
6 Has the Permanent audit file been updated?
7 Have all unadjusted errors been summarised on B7 and
adjusted where necessary?
8 Where the unadjusted misstatements recorded on B7 are
considered to be material and management refuses to adjust
has their effect on the audit opinion been documented on B6?
9 Have we agreed the financial statements to the underlying

accounting records?
10 Have we examined material journal entries and other
adjustments made during the course of preparing the financial
statements?
11 Has the B2 Audit Standards Review Questionnaire been

completed?
12 Has the B6 Justification of Audit Report been completed?
13 Has a review of post balance sheet events been completed?
14 Have any commercial observations on the client‟s business
been recorded on B11?
15 Has the partner responsible for PII (Professional Indemnity
Insurance) matters been advised of any complaints or
problems on the job that could give rise to a complaint?
16 Has a draft letter of representation been prepared that

addresses the following issues:
a) Management's responsibility for the design and
implementation of internal control to prevent and detect
fraud.
b) Disclosure to the firm the results of management's
assessment of the risk that the financial statements may
be materially misstated as a result of fraud.

Yes/None
N/A
c) Disclosure to the firm of any knowledge of fraud or
suspected fraud affecting the company involving:
management; employees who have significant roles in
internal control; or others where the fraud could have a
material effect on the financial statements.
d) Disclosure to the firm of knowledge of any allegations of
fraud, or suspected fraud, affecting the entity‟s financial
statements communicated by employees, former
employees, analysts, regulators or others.
e) Confirmation that management is not aware of any

possible or actual instance of non-compliance with those
laws and regulations which provide a legal framework
within which the business operates.
f) Confirmation that management has no plans or intentions
that may materially alter the carrying value and where
relevant the fair value measurements or classification of
assets and liabilities reflected in the financial statements.
g) Confirmation that management has disclosed all related

party transactions relevant to the business and that they
are not aware of further related party matters that require
disclosure other than those already disclosed in the
accounts.
h) Confirm from management that, having considered their
expectations and intentions for the next twelve months
and the availability of working capital, the business is a
going concern.
i) The reasons that management does not wish to adjust for
misstatements brought to their attention.
j) For companies incorporated under the Companies
Ordinance, acknowledgement by management that:
• The Companies Ordinance requires them to prepare
financial statements which give a true and fair view of
the state of affairs of the company and of the profit
(loss) [and cash flows] of the company for the year.
• They are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any
time the financial position of the company and enable
them to ensure that the financial statements comply
with the Companies Ordinance.
• All reasonable steps have been taken to ensure that
the financial statements comply with section 161B of
the Companies Ordinance.
17 Have the following matters of governance interest that arose
from the audit been communicated to those charged with
governance?
a) The general approach and overall scope of the audit,
including any expected limitations thereon, or any
additional requirements.
b) The selection of, or changes in, significant accounting
policies and practices that have, or could have, a material
effect on the entity‟s financial statements.

Yes/None
N/A
c) The potential effect on the financial statements of any
material risks and exposures, such as pending litigation,
that are required to be disclosed in the financial
statements.
d) Audit adjustments, whether or not recorded by the entity
that have, or could have, a material effect on the entity‟s
e) Material uncertainties related to events and conditions
that may cast significant doubt on the entity‟s ability to
continue as a going concern.
f) Disagreements with management about matters that,
individually or in aggregate, could be significant to the
entity‟s financial statements or the audit report. These
communications include consideration of whether the
matter has, or has not, been resolved and the significance
of the matter.
g) Expected modifications to the auditor‟s report.
h) Other matters warranting attention by those charged with
governance, such as material weaknesses in internal
control, questions regarding management integrity, and
fraud involving management.
(i) Any other matters agreed upon in the terms of the audit
engagement.

Year end: Reviewed by: Date: II / 2 / 3(2)
File no:
FILE COMPLETION QUESTIONNAIRE
Where work is outstanding prior to review, the outstanding (O/S) column should be ticked in pencil to highlight work
required. As and when work is completed, the final column should be initialled, and the tick rubbed out.
Yes/None
Final O/S Comments Initials
N/A
1 Have you confirmed that there have been no changes to the
firm‟s independence during the course of the audit, which
would prevent reappointment of the firm as auditors for the
next financial period?
2 Have you considered whether there is any other reason why
the practice would not wish to seek reappointment, for
example, recurrent under recoveries?
3 Has consultation been undertaken in all circumstances, where

it is required by the firm‟s procedures?
4 Where any fraud, error or breaches in laws and regulations
have been identified, have the implications for the accounts
been fully considered?
5 Review C1 to C8. Where there have been adjustments to the

level of materiality, risk or the extent of reliance on controls;
has the impact on the level of work already undertaken been
considered?
6 Has a draft letter to management or points for comment been

prepared that includes:
a) Material weaknesses identified in the design or
implementation of internal controls intended to prevent or
detect fraud?
b) Any other matters related to the risk of fraud that should

be discussed with those charged with governance?
7 Has the review of post balance sheet events been updated to
reflect the current position?
8 Have all necessary points forward to next year been recorded
on B10?
9 Has a budget for next year been prepared?

Year end: II / 4
File no:
CRITICAL REVIEW OF ACCOUNTS QUESTIONNAIRE

To evaluate whether the overall presentation of the financial statements, including the related disclosures, is in
accordance with the applicable financial reporting framework.
Results
satisfactory
Comments WP Ref
Y/N
1 Review accounting policies to determine whether they:
(a) comply with applicable accounting standards;
(b) are consistent with those of the previous period;
(c) are consistently applied to all like transactions;
(d) are appropriate to the nature of the client‟s business;
(e) are properly disclosed in accordance with the requirements of
HKAS 8.
2 Carry out an overall review of the information in the accounts and B9
compare it with other available data, including final analytical review.
Note significant variations and obtain explanations thereto.
3 Consider whether the accounts adequately reflect:

(a) the substance of underlying transactions and balances and not
merely their form;
(b) the information and explanations obtained and conclusions
reached on particular aspects of the audit.
Schedule points of interest on „audit highlights‟. B5
4 Did the substantive procedures undertaken include agreeing the
financial statements to the underlying records and a review of
material journal entries?
5 Consider whether the review reveals any new factors, which may
affect the presentation of information or disclosures in the accounts.
6 Review the accounts for proper preparation in accordance with the
Companies Ordinances, accounting standards and other disclosure
requirements.
State whether or not a disclosure checklist has been completed in
respect of the current year.
If not completed in the current year, state year in which it was last
completed.
7 Consider whether the information contained in the directors‟ report
and any other document issued with the accounts is consistent with
the accounting information in the accounts and has not been unduly
influenced by the directors‟ desire to present matters in a favourable
or unfavourable light.

Year end: II / 4
File no:
CRITICAL REVIEW OF ACCOUNTS QUESTIONNAIRE

Conclusion
1 I have compared the ratios of the final accounts with those of last year*/the budget*/the preliminary*/extensive*
analytical review*.
2 (a) I have obtained, recorded and corroborated explanations for significant fluctuations for principal areas of the
accounts.* Or
(b) There were no significant fluctuations requiring explanation.*
3 The directors‟ report and other published information is consistent with the accounts.
I am satisfied from this critical review that the accounts appear credible and have been properly prepared in accordance
with the Companies Ordinances and any other relevant statutory requirements.*
Prepared by Date
Reviewed by Date
* Delete as appropriate.

Year end: II / 6
File no:
JUSTIFICATION OF AUDIT REPORT

This form should be used to schedule any problems encountered during the audit, which could have an impact on the audit
report.
Yes/No
If yes give details
N/A*
1 Was the audit report qualified in the previous period?
2 Have there been any problems obtaining sufficient appropriate

evidence concerning the opening balances?
3 Have there been any problems with books and records?
4 Have you encountered problems obtaining from the directors all

information and explanations necessary for the audit?
5 Have the directors refused to confirm any representations in

writing?
6 Have you confirmed that, or were you unable to conclude

whether, the financial statements are materially misstated as a
result of fraud?
7 Have you had problems obtaining adequate information

concerning suspected non-compliance with relevant laws or
regulations?
8 Is there evidence of non-compliance with laws or regulations

that have a material effect on the accounts and have not been
properly reflected in the accounts?
9 Has management refused to give permission for direct

communication with the company's legal advisers?
10 Has management refused to give permission for the use of

external confirmation requests such as the circularisation of
debtor or creditor balances or third party stock confirmations?
11 Has management not amended the financial statements

(adjustment or disclosure) in circumstances where it is believed
that they need to be amended?
12 Where other auditors are involved in the audit of subsidiaries

are there any instances where there work cannot be relied
upon?
13 Are there any material inconsistencies between the financial

statements and other information to be issued with them?

Year end: II / 6
File no:
JUSTIFICATION OF AUDIT REPORT

14 Were there problems obtaining adequate returns from branches
not visited?
15 Are there any problems with going concern? (Ref T3)
16 Is there any problem with exemption from preparing group

accounts where claimed by the company?
17 Have any other problems occurred which could have an impact

on the audit report?
Conclusion
Where there are any „yes‟ answers, detail below what effect they will have on the audit report or our ability to continue the
engagement:
I am satisfied that any unqualified report is appropriate.* Or

In my opinion, the attached fundamental uncertainty/emphasis of matter and/or qualification is appropriate.*
Prepared by: Date:
Reviewed by: Date:

Year end: Reviewed by: Date: II / 7
File no:
SUMMARY OF UNADJUSTED ERRORS

Final Designated
materiality (C8) amount*
Below
Extrapolated errors Actual errors Profit and Balance designated
Narrative
loss sheet amount*
DR CR DR CR Y/N
Total of potential adjustments
Conclusion
1. The client has been asked to adjust for all misstatements noted above other than those less than HK$ ……………
2. None of the potential adjustments listed above are considered to be indicative of fraud.
3. The letter of representation includes a representation that uncorrected financial statement misstatements aggregated
during the audit are immaterial, both individually and in aggregate, to the financial statements taken as a whole. A
summary of these items has been included in/attached to** the letter of representation.
4. The effect of the unadjusted misstatements on our audit report is …
* Uncorrected misstatements communicated to those charged with governance need not include those misstatements below a
designated amount (HKSA 260.11b).
** Delete as appropriate

Year end: Reviewed by: Date: II / 9
File no:
FINAL ANALYTICAL REVIEW

The auditor should apply analytical procedures at or near the end of the audit when forming an overall conclusion as to
whether the financial statements as a whole are consistent with the auditor’s understanding of the company. (HKSA
520.13)
Y/N Comments Ref:
1 Consider comparison of the results for the

current period with:
(a) information for prior periods;
(b) those anticipated in budgets or forecasts;
(c) other companies of comparable size in the
same industry
(d) overall industry or sector statistics.
2 Consider relationships between:

(a) elements of financial information that
would be expected to conform to a
predictable pattern based on the
company's experience, such as gross
margin percentages.
(b) financial information and relevant non-

financial information, such as payroll costs
to number of employees.
3 Consider the reliability of the information used

to perform analytical review procedures and
whether this has been verified as part of the
audit process.
4 Where applicable make a final assessment of

the reasonableness of the company‟s
accounting estimates based on understanding
of the company and its environment.
5 Consider whether the accounting estimates are

consistent with other audit evidence obtained
during the audit.
Conclusion (truth and fairness of figures and consistency with understanding of the business)
Prepared by: Date:
Reviewed by: Date:

Year end: C
File no:
C AUDIT PLANNING
1 Audit planning summary
1.1 Acceptance procedures
2 Audit planning checklist
2.1 Points forward from previous year
3 Planning memorandum
4 Record of planning meeting
5 Systems and internal controls summary
5.1 Review of design & implementation of internal controls
6 Audit Risk Summary
6.1 Audit risk checklist
6.2 Risk response summary
6.3 Specific risk action plan
6.4 Detailed risk assessment
7 Preliminary analytical review
8 Materiality summary
9 Other planning schedules
9.1 Accountancy work planning
9.2 Sample size planning
9.3 Assignment planning – timetable
9.4 Budget and performance summary
9.5 Job progress report
10
Falcon CPAs - July 2010 Ci Audit Planning Index HKICPA Jun 07 Supp 00
Year end: C1
File no:
AUDIT PLANNING SUMMARY
Approval of planning
I confirm that:
1. An overall strategy has been established for the audit.
2. An audit plan has been developed in order to reduce risk to an acceptably low level.
3. In particular the risks of material misstatement in the financial statements due to fraud have been considered.
4. The overall strategy and audit plan have been properly documented in a planning memorandum.
5. The acceptance procedures set out on C1.1 have been followed.
6. The audit planning checklist at C2 has been properly completed.
7. The audit has been planned with an attitude of professional scepticism recognising that circumstances may exist
that cause the financial statements to be materially misstated!
Audit engagement partner Date
Audit team Initials Date
I confirm that I have read and understood the audit plan (Section C).
Partner
Manager
Senior
Review of planning at completion stage

I confirm that:
1. The overall strategy and audit plan were updated as necessary during the course of the audit.
2. All issues arising from the audit plan have been addressed on the file.
3. The audit plan has been cross-referenced to where the relevant work was performed.
Alpha Partners - July 2010 Cs Audit Planning Summary HKICPA Jun 07 Supp 00
Year end: C1.1

File no:
ACCEPTANCE PROCEDURES
This questionnaire assumes a knowledge of the HKICPA Code of Ethics for Professional Accountants. It must be
completed annually for all clients to ensure that the firm complies with its requirements.
In the case of a financial statements audit, where relevant, all questions should be treated as applying to all partners and
staff in the firm or a network firm and to their close family.
Yes No
1 Undue dependence on an audit client
a) Do the total fees for this client/group of clients represent a large proportion of a firm‟s
total fees?
b) Are any fees charged to this client/group of clients on a contingent basis?
2 Loans to or from a client; guarantees; overdue fees

a) Do you or any of your staff in the firm or a network firm have any loans or guarantees to
or from the client?
b) Are there any overdue fees for any services?
3 Goods and services: hospitality

Have you or any of your staff accepted any material goods or services on favourable terms
or received undue hospitality from the company?
4 Litigation
Is there any actual or threatened litigation between yourself and the client in relation to fees,
audit work, or other work?
5 Family or other personal relationships

Do you or any of your staff have any personal or family connections with the company and
its officers?
6 Ex-partners or senior employees

a) Has any officer of the company been a partner or senior employee in the practice?
b) Is the partner or any senior employee on the audit joining or involved in substantive
negotiations with the client?
7 Mutual business interest

Do you or any of your partners or staff have any mutual business interests with the client or
with an officer or employee of the client?
Alpha Partners - July 2010 C1 Audit Acceptance HKICPA Jun 07 Supp 00

Year end: C1.1

File no:
8 Beneficial interests and trusteeships

Do you or any of your staff have any financial involvement in the company in respect of the
following:
a) Any beneficial interest in shares or other investments?
b) Any beneficial interest in trusts?
c) Any trustee investments or nominee shareholdings?
d) Any trusteeships in a trust that holds shares in an audit client?
9 Associated firms
Are you or your staff associated with any other practice or organisation which has any
dealings with the company?
Provision of other services, specialist valuations and advocacy by the firm

10
or a network firm
a) Are any services in relation to the management of the company performed by the firm or
a network firm?
b) Are any accounting services performed for the company such as preparation of the
statutory accounts from trial balance, bookkeeping or payroll services?
c) Do the accounts include any specialist valuations carried out by the firm or a network
firm?
d) Are the firm or a network firm currently acting for the client as an advocate in any
adversarial proceeding or situation such as a hearing before the tax authorities?
e) Has the firm or a network firm been involved in the design, provision or implementation
of any IT systems?
f) Does the firm or a network firm provide advice on taxation matters or undertake tax
compliance work for the client?
g) Have any other services been provided to the client that may cause a threat to the firm's
objectivity or independence?
11 Rotation of senior assurance team personal

Has there been any long association of senior personnel in the firm with the assurance
client?

Year end: C1.1

File no:
12 Adequate resources
(a) Are there any indications that the engagement team is not competent or does not have
the necessary time and resources?
(b) Are there any indications that the firm or engagement team will not be able to
demonstrate compliance with ethical requirements?
13 Proper performance
(a) Are there any aspects of the client, or other factors, that will adversely affect the firm‟s
ability to perform the audit properly?
(b) Are there any issues concerning the integrity of the principal owners, key management
or those charged with governance of the entity?
Safeguards
Where any of the above questions have been answered „yes‟, specify what safeguards are proposed to maintain integrity
and independence, and to ensure the availability of resources and the ability to perform the audit properly.
Conclusion
Having regard to any safeguards identified above, I am satisfied that appropriate procedures regarding the acceptance
and continuance of this client relationship and audit engagement have been followed, and that the conclusions reached
in this regard are appropriate and have been properly documented. In arriving at this conclusion I confirm that I have:
a) obtained all relevant information from the firm (and where applicable network firms) to identify and evaluate
circumstances and relationships that may create a threat to independence;
b) evaluated information on identified breaches, if any, of the firm‟s independence policies and procedures to
determine whether they create a threat to independence for this audit engagement;
c) taken appropriate action to eliminate such threats or reduce them to an acceptable level by applying safeguards; and
d) documented the conclusion on independence and any relevant discussions within the firm that support this view.
Partner Date
Consultation (to be completed where appropriate)

In my opinion the steps proposed are sufficient to maintain independence and to ensure the availability of resources and
the ability to perform the audit properly.

Year end: C1.1

File no:
Second Partner Date

Year end: Reviewed by: Date: C2
File no: Reviewed by: Date:
AUDIT PLANNING CHECKLIST

The auditor should plan and perform an audit with an attitude of professional scepticism recognising that circumstances
may exist that cause the financial statements to be materially misstated!
Comments WP Ref
Preliminary Engagement Activities

1. Acceptance procedures
1.1 Confirm that the Acceptance Procedures questionnaire has been C1.1
satisfactorily completed.
1.2 Where appropriate, confirm that the firm has communicated with the
previous auditor.
2. Engagement terms
2.1 Confirm that there is an engagement letter on the permanent file.
2.2 Consider whether there is a need to revise the existing terms and issue a
new letter.
2.3 Consider whether there is a need to remind the client of the existing
terms.
Planning Activities
3. Strategic considerations
Qua
3.1 Confirm that key characteristics which determine the scope of the
engagement are identified such as:
a) the financial reporting framework used;
b) any industry specific requirements;
c) geographical location;
d) group reporting requirements;
e) the use of service organisations.
3.2 Confirm that the reporting requirements are understood, including third
parties, in terms of the timing and format of reports and to whom they
should be sent.
3.3 Are there any other factors that may have a significant effect on the
overall focus of the audit?
4. Client background
4.1 Confirm that there is a completed copy of the 'Know your client checklist'
on the permanent file (PAF04).
4.2 Where the checklist was completed in an earlier year review its
completion with the client and update the information on the permanent
file as necessary.
4.3 Ensure that the review of significant accounting policies on the

permanent file (PAF07) has been updated.
Alpha Partners July 2010 C2 - Audit Planning Checklist HKICPA Jun 07 Supp 00

5. Laws and regulations
5.1 Ensure that in determining our overall audit approach that we consider
the effects of non-compliance with relevant laws and regulations.
5.2 Obtain a general understanding of:

a) the legal and regulatory framework applicable to the entity and the
industry;
b) how the entity is complying with that framework; and
c) the procedures followed by the entity to ensure compliance with
that framework.
5.3 Ensure that the register of significant laws and regulations contained on
the permanent file (PAF05) is up-to-date.
6. Internal Controls
6.1 Complete the systems and internal controls summary (C5).
7. Audit risk
7.1 Complete the audit risk summary (C6).
7.2 Ensure that in determining our overall audit approach that we consider
the risks of material misstatements in the financial statements due to
fraud or error.
7.3 Make inquiries of those charged with governance, management and

others as appropriate to:
a) obtain the results of its assessment of the risk that the financial
statements may be materially misstated as a result of fraud; and
b) determine whether they have knowledge of any actual, suspected
or alleged fraud affecting the company or its financial statements.
7.4 Ensure that members of the audit team discuss the susceptibility of the C4
entity‟s financial statements to material misstatement and in particular
misstatement due to fraud.
7.5 Ensure that that key issues arising from the above discussion are
communicated to other members of the team who did not attend the
meeting.
7.6 Ensure that we have documented our evaluation of the entity's controls in
all areas where the risk of misstatement due to fraud is assessed as
significant.
7.7 Ensure that where appropriate an element on unpredictability is

incorporated into the testing.

7.8 Where there is a risk of management override of controls plan audit
procedures to:
a) Test the appropriateness of journal entries recorded in the general
ledger and other adjustments made in the preparation of accounts.
b) Review accounting estimates for bias that could result in material

misstatement due to fraud.
c) Obtain an understanding of the business rationale of significant
transactions that are outside of the normal course of business for
the entity, or that otherwise appear to be unusual given our
understanding of the entity and its environment.
7.9 Have we planned substantive procedures for each material class of

transactions, account balance, and disclosure irrespective of the
assessed risk of material misstatement?
8. General
8.1 Has an acceptable materiality level been determined for the audit? C8
8.2 Review points forward from last year's schedule (B10 on previous file). C2.1
File on current year's working paper file.
8.3 Review correspondence file and note relevant points arising during the
year.
8.4 Where inventory is material to the financial statements has attendance I4
been planned at the physical inventory count?
8.5 Determine whether the use of external confirmations, in addition to those
for the bank balances, is necessary to obtain sufficient appropriate audit
evidence at the assertion level?
8.6 For initial engagements or where an audit was not undertaken in the
previous year complete the 'Opening balance and comparatives
checklist' (Cop01).
8.7 Where the previous period's audit report was qualified or there was a
fundamental uncertainty, consider what impact, if any, it will have on the
current period's report.
8.8 Have sample sizes been planned so as to ensure sufficient appropriate

audit evidence will be obtained?
8.9 Have we planned to obtain sufficient appropriate audit evidence
concerning the reasonableness of accounting estimates?
8.10 Consider whether any activities undertaken by service organisations are
relevant to the audit: where appropriate complete the optional
programme 'Use of service organisations' (Cop04).
8.11 Consider whether there is a risk that the non-disclosure of related party
transactions will have a material impact on the audit: where appropriate
complete the optional programme 'Related party transactions' (Rop02).
8.12 Where it will be necessary to place reliance on the work of another

auditor complete the optional programme 'Reliance on the work of
another auditor' (Cop05).

8.13 Where the work of an expert is to be relied upon concerning: the
valuation of assets; the determination of quantities; the application of
specialised techniques to determine amounts; or the measurement of
work completed the complete the optional program 'Using the work of an
expert' (Cop06).
8.14 Where other information is expected to be issued with the financial

statements review of this information should be planned so as to allow
sufficient time for resolution of an inconsistencies.
8.15 Consider and schedule impact of changes in legislation and accounting

standards on the accounts.
8.16 Meet/discuss with client current year's accounts and timetable. C10
8.17 Consider whether there are any indications that the going concern basis
of accounting may not be appropriate.
8.18 Where there may be a requirement to report to an external regulator
have we considered the scope of the client‟s authorisation and the
effectiveness of its control environment?
8.19 If appropriate, prepare a brief file note of matters arising from the review C9
of the correspondence file and the meetings/discussions with the client.
8.20 Obtain print-out of the firm's WIP (time costs) and prepare fee budget. C11/C12
Agree fee estimate with client where necessary.
8.21 Carry out analytical procedures based on the preliminary figures or other C3
information available and conclude upon the impact on the audit
approach.
8.22 Consider whether extensive analytical review can be used to improve the
efficiency and effectiveness of the audit.
8.23 Review/tailor the summary sheets for all relevant sections to ensure
adequate tests planned for all objectives.
8.24 Review/tailor/prepare audit programme as directed by C6.2 and C6.3.
8.25 Prepare a formal planning memorandum documenting the overall audit C3
strategy and the detailed audit plan.
8.26 Where substantive procedures were performed at an interim date have
we planned further substantive procedures (and tests of controls) to
cover the remaining period from the interim date to the period end?
8.27 Having regard to the risks identified and the specialist knowledge
required: allocate and brief staff as appropriate.

9. Quality control
9.1 Consider whether there is a need under the firm's procedures or ethical
requirements for an engagement quality control review.
9.2 Agree the timing and scope of the review with the partner (or other
external consultants) who will be undertaking it.
9.3 Confirm that the time budget and completion timetable have been
updated accordingly.
9.4 Where applicable, have points raised in a cold review of the previous
year been incorporated into this period's planning?
Conclusion
I am satisfied that:
(a) the planned audit procedures have been determined having regard to the requirements of HKSAs, relevant
professional bodies, legislation, regulations and, where appropriate, the terms of the audit engagement and
reporting requirements;
(b) the engagement team collectively has the appropriate capabilities, competence and time to perform the audit
engagement in accordance with professional standards and regulatory and legal requirements, and to enable an
auditor‟s report that is appropriate in the circumstances to be issued;
(c) the staff assigned have been adequately briefed;

(d) the audit has been planned effectively, and that it is adequate to meet the financial statement assertions: existence;
rights and obligations; occurrence; completeness; valuation; measurement and presentation; and disclosure.
(e) the file does/does not* require second partner external* review;
(f) the audit plan details fully the responses to the various matters identified at the strategic level.
Senior/Manager: Date:
In approving the planning I acknowledge my responsibility for the direction, supervision and performance of the audit
engagement in compliance with professional standards and regulatory and legal requirements, and for the auditor‟s report
that is issued to be appropriate in the circumstances.
Engagement Partner Date:

Year end: C3
File no:
EXAMPLE ONLY - DO NOT PHOTOCOPY

PLANNING MEMORANDUM THIS FORM!
A planning memorandum should be used to draw together the planning work performed. The headings and content are
suggestions only. These should be tailored to the requirements of the client.
Background information
For example:
A summary of the nature of the company
A summary of the industry, regulatory and other external factors affecting the company.
What locations does the company trade from?
What are the client's office hours?
Directions to client
Any other useful information
Scope of engagement
Engagement terms
Reporting requirements
Key personnel
Give the names, roles and contact details for key personnel
Timetable
Key risks and responses at financial statement level

For example
Weak control environment
Going concern worries
Particular factors in determining composition of audit team
Key risks and responses at assertion level

For example:
Inventory cut-off
Completeness of income
Identifying all related party transactions
Outline the audit approach to these areas: how will the risk or problem be addressed?
Describe how the problems will be tackled. Specify the tests and procedures

File no:
If this form is not used then the appropriate information

NOTES OF PLANNING MEETING should be incorporated into the planning memorandum
Present at Meeting:
Date of meeting:
Susceptibility of the entity's financial statements to material misstatement
Reference to risk
Risks Financial statement assertion
action plan (C6.3)
Susceptibility of the entity to fraud
Reference to risk
Risks Financial statement assertion
action plan (C6.3)
Other matters

Year end: C5
File no:
Systems and Internal Controls Summary
Objectives
To obtain an understanding of the design and implementation of internal controls relevant to the audit.
Yes/No/
Procedures undertaken Comments
NA
1. Complete the basic controls questionnaire (S4) or otherwise identify the
company's system of internal control relevant to the audit.
2. Document relevant systems and controls on C5.1 sufficient to

demonstrate our understanding of the design of the system.
3. Perform the procedures set out on C5.1 to evidence review of the
implementation of controls.
4. The design and implementation of the entity‟s controls, including
relevant control activities, has been evaluated in all areas where the risk
is assessed as being high.
5. The design and implementation of the entity‟s controls, including

relevant control activities, has been evaluated in all areas where it is
expected that the risk at the assertion level cannot be reduced to an
acceptably low level through substantive testing alone.
6. Ensure that all weaknesses noted in in the review of the design and
implementation of controls are noted in the draft management letter.
7. Where the assessment of the design and implementation of internal

controls identifies significant weaknesses, have these been taken
account of in the specific risk action plan on C6.3?
8. Where further testing of Internal controls will be undertaken prepare the
necessary internal control evaluation schedules (S3).
9. Ensure that Internal Control Evaluation forms (S3) are prepared where
specific testing of the operational effectiveness of controls is expected
to be necessary due to:
(a) substantive tests alone are not expected to provide sufficient

evidence of operation; or
(b) our risk assessment at the assertion level includes an expectation

that controls will be operating effectively.
Conclusion at Planning Stage

I am satisfied that:
(a) the design and implementation of all controls relevant to the audit has been considered;
(b) tests of the effectiveness of controls have been planned where necessary.

Review of Reliance on Internal Controls at the Completion stage
I confirm that:
(a) tests of the effectiveness of controls were completed satisfactorily/and further work undertaken where necessary.*
(b) all weaknesses in controls identified have been recorded in a draft letter of comment for the client.


Client: Aero North Prepared by:
Year end: Reviewed by:
File no:
REVIEW OF DESIGN AND IMPLEMENTATION OF

INTERNAL CONTROLS
HKSA 315 requires the auditor to obtain an understanding of the client's system of internal control relevant to the audit. It is compulsory to review
controls relevant to the audit for all audits irrespective of any decision to place reliance on the effective operation of those controls. Completion of
tests on the effective operation of controls.
Inquiry alone is not sufficient to evaluate the design of a control relevant to the audit and to determine whether it has been
implemented. Further work such as inspecting documents or tracing transactions through the system is required.
Outline of information system and Comment on design and Comment on implementation of

Business area
controls effectiveness of controls controls
Fixed assets
Investments
Inventories
Trade & other

receivables
Bank & cash

Business area
Trade & other payables
Provisions
Taxation
Capital and reserves
Directors' loan accounts

and transactions
Income

Business area
Purchases and other

expenses
Payroll
General ledger
Accounting system
Other relevant IT
systems
Production of
management accounts

Business area
Production of forecasts
and business plans

Date: Ref:
Date: C5.1
ntrol relevant to the audit. It is compulsory to review the design and implementation of all
effective operation of those controls. Completion of this schedule does not constitute
Only complete where it is decided to

to determine whether it has been
carry out compliance testing or where
system is required.
it is required.
Is this a Further
Comment on implementation of key testing Ref to ICE
controls control? required? (S3)
Y/N Y/N

Is this a Further
Y/N Y/N

Is this a Further
Y/N Y/N

Is this a Further
Y/N Y/N

Client: Aero North Prepared by:
Year end: Reviewed by:
File no:
REVIEW OF DESIGN AND IMPLEMENTATION OF

INTERNAL CONTROLS
HKSA 315 requires the auditor to obtain an understanding of the client's system of internal control relevant to the audit. It is compulsory to review
controls relevant to the audit for all audits irrespective of any decision to place reliance on the effective operation of those controls. Completion of
tests on the effective operation of controls.
Inquiry alone is not sufficient to evaluate the design of a control relevant to the audit and to determine whether it has been
implemented. Further work such as inspecting documents or tracing transactions through the system is required.

Business area

Date: Ref:
Date: C5.1
trol relevant to the audit. It is compulsory to review the design and implementation of all
effective operation of those controls. Completion of this schedule does not constitute
Only complete where it is decided to

to determine whether it has been
carry out compliance testing or where
ystem is required.
it is required.
Is this a Further
Y/N Y/N

Year end: C6
File no:
AUDIT RISK SUMMARY

Objectives
To assess the risk of material misstatement of the financial statements whether due to fraud or error in sufficient depth to
design and perform further audit procedures.
To determine the overall responses to assessed risks at the financial statement level and to design and perform further
audit procedures is response to risks at the assertion level to reduce audit risk to an acceptably low level.
Procedures undertaken Yes/No Comments

/NA
1. The Audit risk checklist (C6.1) has been properly completed.
2. Where appropriate the checklist and related information on the
permanent file have been reviewed to ensure they remain up-
to-date.
3. All risks that may result in a material misstatement at the

assertion level have been recorded on the risk action plan
(C6.3) with the overall approach summarised on C6.2.
4. Financial statement level risks (that are not addressed at the

assertion level) are summarised below together with the
response to that risk.
Financial Statement Level Risks

The overall risk assessment at the financial statement level (see C6.4) is: Low* Medium* High*
Risk at finacial statement level Response
Conclusion at Planning Stage

For all relevant risk factors have been identified, procedures have been planned that should reduce those risks to an
acceptably low level.
Review of Audit Risk at Completion Stage

I confirm that:
1. The overall strategy and audit plan were updated as necessary during the course of the audit.
2. All risk factors identified have been addressed on the file and the risk reduced to an acceptably low level.
3. The outcome column on C6.3 has been completed and any additional work as a result of reassessing risk properly
documented.


Year end: Reviewed by: Date: C6.1
File no:
AUDIT RISK CHECKLIST
The purpose of this checklist is to act as an aide memoire in considering the various matters required by HKSAs and
also as a guide to the completion of relevant forms within this manual.
Yes/No
Comments
/NA
1 Was a detailed risk assessment (C6.4) performed in previous
years?
2 If not then complete the detailed risk assessment (C6.4) and
place a copy on the permanent file.
3 If a checklist was completed in previous years then review the
checklist with the client to ensure it remains up-to-date.
4 Have all specific risks assessed as medium or high been

recorded on the risk action plan (C6.3)?
5 Have all other specific risks not addressed on C6.4 that may
result in a material misstatement been recorded on the risk
action plan (C6.3)?
6 Has the design and implementation of the entity‟s controls,

including relevant control activities, been evaluated for all
risks set out on the risk action plan (C6.3)?
7 Has the overall response to risk been summarised at the

financial statement level (C6)?
8 Have additional compliance tests on the operational
effectiveness of controls been planned where:
(a) the risk assessment at the assertion level included an
expectation that controls were operating effectively, or
(b) substantive procedures are not expected provide

sufficient appropriate evidence to reduce risk to an
acceptably low level.
9 Where we plan to rely on the operating effectiveness of

controls to mitigate significant risks at the assertion level;
have we planned to obtain evidence about the operating
effectiveness of those controls from tests of controls to be
performed in the current period?
10 Where we have determined that an assessed risk of material

misstatement at the assertion level is significant have we
planned substantive procedures that are specifically
responsive to that risk?
11 Have we specifically considered the possibility of fraud in

relation to revenue recognition and documented the approach
in this area (C6.3)?
12 Has the audit approach to each area been tailored on the

basis of the risk assessment in that area (C6.2)?

Year end: C6.2

File no:
RISK RESPONSE SUMMARY
To ensure that the nature and extent of testing undertaken is responsive to the risks assessed.
Assertions other than issues and risks identified

(See HKSA 500.17)
Issues & risks identified (H, M)
Audit approach & reference to programme
(See C6.3 & S4) Risks
Justification of risks
(H, M, L)
E Intangible assets
F Tangible fixed assets
G Investments in group and

associated undertakings
H Other investments
I Inventories
Alpha Partners - May 2010 HKICPA Jun 07 Supp 00

(See HKSA 500.17)
(H, M, L)
J Trade & other receivables
K Bank and cash
L Trade & other payables
M Long-term loans and deferred

income
N Provisions and contingencies
O Capital and reserves
P Taxation

(See HKSA 500.17)
(H, M, L)
R Income Income
statement
Expenditure
Wages
Related
party
transactions
Other
T Post balance sheet events
V Consolidation

(See HKSA 500.17)
(H, M, L)
Opening balances and

comparatives – checklist
Other
Note
Where the risk assessment at the assertion level is low for a major transaction cycle you should consider whether this includes an expectation that controls in that area will be operating effectively . Where this is
the case HKSA 330.23 requires that tests on the effectiveness of those controls be performed.
Planning conclusion
I am satisfied that the planned audit will produce sufficient appropriate audit evidence.
Prepared by: Date:
Reviewed by: Date:
TABLE OF INHERENT RISK

Final conclusion ASSESSMENT FACTORS
I have reconsidered specific risks and: no changes are needed*/the following
Test of detail only
changes have been implemented* (specify):
Assertion level risk
Prepared by: Date: (see above)
L M H
Reviewed by: Date: L 1.2 1.4 1.6
Financial statement risk (See C6) M 1.4 1.8 2.1
* Delete as appropriate H 1.6 2.1 2.5


File no:
SPECIFIC RISK ACTION PLAN

Ref
Financial reporting
C6.2 Management Audit approach
Specific risk affecting client H, M or L areas and assertions Outcome
C6.4 response & reference to programme
affected
S4
1. A risk should only be categorised as high (significant risk) if it is so significant as to require special audit consideration. (HKSA 315.108)
2. A general risk that relates to all financial areas and assertions such as the possible sale of the business should show 'All' in the financial areas and assertions column.

File no:
DETAILED RISK ASSESSMENT

When completing this checklist it is important that an attitude of professional scepticism be maintained throughout,
recognising the possibility that a material misstatement due to fraud could exist, notwithstanding our past experience with
the entity about the honesty and integrity of management and those charged with governance.
Any risks that have an impact at the assertion level and that are assessed as 'medium' or 'high' should normally be
carried forward to C6.3. Where this is not the case a full explanation should be given as to how the risk will be managed.
Similarly, responses to financial statement level risks should be addressed on C6 to the extent that they are not already
addressed on C6.3.
A risk should be categorised as high where it is considered so significant (significant risk) as to require special audit
consideration. (HKSA 315.108)
Risk
How will the audit
General risk area Specific risk affecting client H, M or L
risk be managed?
or N/A
1. General
1.1 Do we have any concerns as to the

integrity of the directors /
management?
1.2 Are there any untrained or

inexperienced staff in key accounting
roles?
1.3 Does the entity have a weak control

environment?
1.4 Is the appropriateness of the going
concern basis an issue?
1.5 Would you describe the relationship
with the client as either „abrasive‟ or
„deteriorating‟?
1.6 Is there any significant external

interest in the company's financial
statements?
1.7 Are there any other risk factors that

may affect the client at the financial
statement level?
2. Industry Conditions
2.1 Is there a risk of technological

obsolescence of products or
services?
2.2 Is the company in a highly

competitive or volatile sector of the
economy?
2.3 Is the company's business affected

by fashion, demographic trends or
public opinion?
2.4 Is the company affected by cyclical or

seasonal factors?

Risk
How will the audit
risk be managed?
or N/A
3. Regulatory Environment
3.1 Is the client authorised by an external

regulator?
3.2 Does the regulator require any
special reports?
3.3 Are year-end returns or a copy of the
accounts required to be filed with a
trade association or regulator?
3.4 Does the client rely on membership of

an association or similar body for a
substantial part of its business?
3.5 Does the client operate in a business

sector where there is likely to be
additional regulations?
3.6 Are there any issues concerning

eligibility for government grants or
other aid programmes?
4. Other External Factors
4.1 Will the accounts be sent to a third

party?
4.2 Are there any individually material
third-party creditors?
4.3 Is there any expectation that the
business (or part of it) may be sold in
the near future?
4.4 Are there any external factors (e.g. a

potential listing or bank financing)
which could influence expected
results?
5. Business Operations
5.1 Is the company reliant on only a few

customers or suppliers?
5.2 Is the company heavily reliant on
particular products or services?
5.3 Are there any significant related
parties to the business?
5.4 Are there a large number of business
locations and/or a wide geographical
spread of its activities?
5.5 Are there any complex situations

which might require the use of the
work of an expert?
5.6 Is the company involved in electronic

commerce including internet sales?

Risk
How will the audit
risk be managed?
or N/A
5.7 Does the company carry out any
research or development activities?
6. Investments
6.1 Were there any acquisitions, mergers

or disposals of business activities in
the period or after the year-end?
6.2 Does the company have any

investments in securities or loans?
6.3 Does the company have any
investments in non-consolidated
entities, including partnerships, joint
ventures and special-purpose
entities?
7. Financing
7.1 Does the company have a complex

capital structure?
7.2 Are there any issues arising from the
company's debt structure, including
covenants, restrictions, guarantees,
or off-balance-sheet financing
arrangements?
7.3 Does the company use derivative

financial instruments?
7.4 Are there any risks of material
misstatement at the assertion level
related to the fair value
measurements and disclosures in the
financial statements?
8. Financial Reporting
8.1 Have generally accepted accounting

principles been complied with in the
past years?
8.2 Are the accounting policies for

significant matters appropriate to the
circumstances of the entity? Consider:
* Valuation of fixed assets

* Income recognition
* Depreciation
* Long term contracts
8.3 Could the treatment of any areas in
the accounts be disputed by the tax
authorities?
8.4 Are there usually a large number of

related party transactions?
8.5 In terms of related party transactions:

Risk
How will the audit
risk be managed?
or N/A
a) Is the company a member of a
group that does not prepare
group accounts?
b) Are any payment made to the

directors/shareholders other
than remuneration or dividends?
c) Were there balances due to or

from the directors at any time
during the year?
8.6 Is there any indication of risk of

misstatement at the assertion level
for classes of transactions, account
balances or disclosures?
9. Objectives, Strategies and Related Business Risks
9.1 Have we reviewed a copy of the

company's long term strategy or
business plan?
9.2 Are there any risks arising from the

company attempting to achieve the
objectives set out in the plan?
9.3 Is there a risk of failure to meet stock

market (or other shareholder)
expectations (which management
may have encouraged) whether or
not the expectations were
reasonable?
9.4 Are the directors‟ and/ or

managements‟ incomes highly
geared to results either directly,
through share options, or through
other possibilities for large capital
gains?
9.5 Is there pressure to meet targets to

ensure protection of the jobs of
directors, management or other
employees?
9.6 Is there a desire to understate profits

to reduce tax liabilities?
9.7 Are there legal or regulatory
requirements to meet specific
financial thresholds or ratios?
9.8 Is there a need to ensure compliance

with loan covenants or to pacify
bankers?
9.9 Are future plans for selling the

company dependant upon achieving
specified results?

Risk
How will the audit
risk be managed?
or N/A
9.10 Are the amounts for provisions set by
management at the time of finalising
the profit and loss account rather
than being determined by others as
part of the routine accounting system?
9.11 Is there a pattern whereby accounting

judgements and estimates made
when finalising the accounts are all
biased in the direction management
desires?
9.12 Are the final figures for the company

subject to significant change as a
result of journal adjustments
generated at head office?
9.13 Were there any contracts or

transactions undertaken, particularly
where this was close to the year end,
where the commercial rationale is
unclear?
9.14 Do the accounting policies applied by

the company fallen comfortably within
GAAP or do they push the
boundaries of acceptability in some
areas?
9.15 Have the directors brought forward

the reporting date without good
reason making it difficult to obtain the
quantity and quality of audit evidence
required?
9.16 Are the results of the company out of

step with industry trends with no
discernable explanation available?
9.17 Is management keen to manipulate

profits (e.g. to reduce tax or increase
bonuses)?
10. Measurement and Review of the Entities Financial Performance
10.1 Have accounting records been

reliable in the past?
10.2 Are meaningful management
accounts prepared during the year?
10.3 Has the audit report contained a
qualification in either of the last two
years?
10.4 Have there been problems with

making adjustments in the past?
10.5 Is the engagement „stable‟ i.e. long
standing?
11. Control environment

Risk
How will the audit
risk be managed?
or N/A
11.1 Is the extent of management
knowledge and experience sufficient
for operating the business?
11.2 Do management and administrative

controls appear strong?
11.3 Are good management information
systems in existence and used?
11.4 Is management in a position to

override any controls in existence?
11.5 Do management promote an
operating style where competence
and integrity are valued?
12. The Entity's Risk Assessment Process
12.1 Will the company's risk assessment

process be use in identifying relevant
risks and the actions taken in
response to them?
13. Information Systems
13.1 Are the accounting records kept up to

date?
13.2 Has there been any change to the
accounting system?
13.3 Are there any particular issues arising
from the use of IT that give cause for
concern?
14. Control Activities and Monitoring Controls
14.1 Are there any indications that control

activities such as performance
reviews or segregation of duties have
broken down or otherwise failed to
operate?
14.2 Is there an effective system of

monitoring controls in place?
14.3 Are there any indications that the
monitoring controls have broken
down or otherwise failed to operate?
15. Fraud and Error
15.1 Have there been any previous

experiences or incidents which call
into question the integrity or
competence of management?
15.2 Are there any unusual financial or
reporting pressures within the
business?

Risk
How will the audit
risk be managed?
or N/A
15.3 Are there any significant weaknesses
in the design or implementation of
internal controls?
15.4 Is there a history of unusual and/or

complex transactions?
15.5 Is there a history of problems in
obtaining sufficient appropriate audit
evidence?
15.6 Are there inadequate controls over

data in the information system?
15.7 Is there a high degree of judgement
involved in determining account
balances?
15.8 Are there a large number of assets

which may be susceptible to loss or
misappropriation?
15.9 Do the results of analytical

procedures undertaken to obtain an
understanding of the entity and its
environment show unusual or
unexpected relationships that may
indicate risks of material
misstatement due to fraud?
15.10 Are there usually a large number of

transactions not subjected to ordinary
processing?
15.11 Are the accounting staff well trained

and capable of performing the tasks
allocated to them?
15.12 Are there any attitude or morale

problems in the accounting
department?
15.13 Is there a high level of turnover of

accounting staff?
15.14 Does any other information obtained
indicate any risk of material
misstatement due to fraud?
15.15 Is there a business rational for any

transactions that appear out of the
ordinary?
Conclusion
(Identify any major risks and mitigating factors to arrive at an overall assessment of financial statement level risk. Note,
assertion level risks that will be addressed on C6.3 should not affect the assessment of risk at the financial statement
level.)

Risk
How will the audit
risk be managed?
or N/A
The assessment of risk at the financial statement level is: Low* Medium* High*


File no:
PRELIMINARY ANALYTICAL PROCEDURES
The auditor should apply analytical procedures as risk assessment procedures to obtain an understanding of the company
and its environment. (HKSA 520.8)
Y/N Comments Ref:
1 Consider comparison of the draft results for the

current period with:
(a) information for prior periods;
(b) those anticipated in budgets or forecasts;
(c) other companies of comparable size in the
same industry;
(d) overall industry of sector statistics.
2 Consider relationships between:
(a) elements of financial information that
would be expected to conform to a
predictable pattern based on the
company's experience, such as gross
margin percentages.
(b) financial information and relevant non-

financial information, such as payroll costs
to number of employees.
3 Consider the reliability of the information used

to perform analytical review procedures and
whether this will be verified as part of the audit
process.
4 Ensure that any areas of increased risk

identified are recorded on C6.3.
Conclusion (identifying any transactions or balances meriting further enquiry or areas of increased risk)
Prepared by: Date:
Reviewed by: Date:

Year end: C8
File no:
Materiality Summary
The determination of what is material is a matter of professional judgement. The percentage benchmarks set out below
are intended to provide guidance in exercising that judgement. They should not be used as a formula to 'calculate'
materiality.
Materiality ranges
Percentage of turnover or gross
Range of turnover or gross assets Suggested materiality ranges
assets
HK$0 to HK$7.5 m 3.00% HK$1 - HK$225k
HK$7.5 m to HK$ 15 m 2.50% HK$225k - HK$375k
HK$15 m to HK$ 30 m 2.00% HK$375k - HK$600k
HK$30 m to HK$ 50 m 1.50% HK$600K - HK$750k
Over HK$ 50 m 1.00% over HK$750k
Application of materiality ranges to business
Initial assessment Final assessment
Anticipated
Percentage Materiality level Percentage Final results Materiality level
results
% HK$ % HK$ HK$
HK$
Turnover 2% 95,333,066 1,906,661 2.5% 12,285,187 307,130
Gross assets 3% 80,253,726 2,407,612 3% 7,157 215
Profit/(loss)
before tax 2,157,885 2,157,885
Adjustments for
unusual items
Adjusted
profit/(loss) 3% 2,157,885 64,737 3% 2,157,885 64,737
This Last
Overall initial audit materiality set at: year: 300,000 year (final): HK$N/A
Comments
Conclusion
Based on the anticipated results, I am satisfied that the above figure represents an appropriate initial audit materiality.
Prepared by: Date:
Reviewed by: Date:
Final audit materiality: This year: HK$

Comments
Conclusion
Based on the final results, I am satisfied that the above figure represents an appropriate final audit materiality.
Prepared by: Date:
Reviewed by: Date:
Page 208 of 356

File no:
ACCOUNTANCY WORK PLANNING

Before planning to undertake an accountancy work it is essential that the ethical position and the
impact on the audit is considered.
1 Level of acceptable accounting differences
If the accounts are to be prepared by us, specify below the level of accounting differences which do not require
further investigation:
This year Last year
Overall level of acceptable differences: HK$ HK$
If different levels are to be set for the different areas of the accounts preparation, specify these below:
Area Level of acceptable differences
This year Last year

HK$ HK$
HK$ HK$
HK$ HK$
HK$ HK$
HK$ HK$
2 Analysis work required
Analysis will be required at the following levels:

Income:
1 Revenue NCNU/By category*
2 Dividends and interest received/receivable NCNU/all items*
3 Rents received/receivable NCNU/all items*
4 Management charges NCNU/all items*
5
6
Expenditure:
7 Directors‟ emoluments NCNU/in full*
8 Interest payable NCNU/all items over HK$___________*
9 Subscriptions and donations NCNU/all items over HK$___________*
10 Insurance (cover and premiums) NCNU/in full, ensuring all areas covered*
11 Repairs and renewals NCNU/all items over HK$___________*
12 Legal, professional and audit NCNU/all items over HK$___________*
13 Entertaining NCNU/all items over HK$___________*
14 Sundry expenses NCNU/all items over HK$___________*
15
16
17
18
U NCN = not considered necessary.

File no:
SAMPLE SIZES: SUMMARY
Tests of
Effective-
Extensive effective-
ness of Substantive Substantive
Objective analytical ness of
internal procedures procedures Comments
number review to be internal
controls to be used? sample size
used? controls to
sample size
be used?
E Intangible assets
F Property, plant &

equipment
G Investments to group and

H Other investments
I Inventories
Construction contracts
J Trade & other receivables
K Bank and cash
L Trade & other payables
M Long-term loans and

deferred income
R Income statement
- income
- expenditure
- wages
- other
Other

File no:
ASSIGNMENT PLANNING – TIMETABLE
Objective: To plan and control the timing of the assignment.
Planned dates Actual dates
1 Availability of accounting records

2 Staff bookings:
(a) to
(b) to
(c) to
(d) to
(e) to
Inventory count attendance:
(f) to
(g) to
3 Revised letter of engagement sent
4 Information requests:
(a) Bank letter
(b) Solicitor‟s letter
(c) Trade receivables circularisation
(d) Trade payables circularisation
(e) Paid cheques
(f)
(g)
5 Manager review
6 Partner review
7 Discussion of accounts with client
8 Availability of final signed accounts
9 Other details
10 Comments

File no:
BUDGET AND PERFORMANCE SUMMARY

Budget (units) Actual (units)
Staff initials or grade Total Total
Completion
Planning
Extensive analytical review
Intangible assets
Property, plant & equipment
Investments in group and associated
undertakings
Other investments and derivatives
Inventories
Trade & other receivables
Bank balances and cash
Long-term loans & deferred income
Provisions and contingencies
Capital
Income taxes
Income statement
Post balance sheet events
Consolidation
Accounts working papers
Letter of comment/meetings
Typing/production of accounts
Other*
Total units
Charge out rate
Cost of units
Partner(s) units at units at
Expenses
TOTAL COST HK$ HK$
Budget approved (Partner) Date

Discussed with client Date Fee agreed at HK$
Total costs last year HK$ HK$ Fee last year HK$
* Analyse in more detail if required

File no:
JOB PROGRESS REPORT
Staff name: Grade:
This document should be used to maintain an accurate analysis of the time charged to each client. The time charged to
date, together with the ‘estimate to completion’, should provide the best estimate of the total to be incurred. Any significant
deviation from budget should be explained in the comments column.
Bud- b/fwd Date c/fwd Estimate TOTAL Comments

get s to
complete
Completion
Planning
Extensive analytical review
Intangible assets
Investments in group and
Other investments
Inventories
Trade & other receivables
Bank balances and cash
Long-term loans & deferred
income
Provisions and contingencies
Capital
Taxation
Income statement
Post balance sheet events
Consolidation
Accounts working papers
Letter of comment/ meetings
Typing/production of accounts
Other*
TOTAL
* Analyse in more detail if required

File no:
OPENING BALANCE AND COMPARATIVES CHECKLIST
This checklist should be used in circumstances where an audit is being undertaken for the first time. This could either
be because the client has been taken over from another firm or because the previous period’s accounts were unaudited.
1 Planning Y/N Comments Ref:

1.1 Was there an audit in the previous period?
1.2 Confirm that the prior period‟s closing balances
have been correctly brought forward to the current
period.
1.3 Summarise the main balance sheet opening

balances and the main accounting policies.
1.4 Consider the risk of material misstatement in the
current period's accounts due to errors in the
brought forward figures.
1.5 Detail what steps will be take to mitigate those risks.
1.6 Detail the steps to be taken to confirm that the

comparative figures are reasonable.
1.7 Have the current period's accounting policies been
correctly applied in respect of the opening
balances?
2 Completion
2.1 Have the accounting policies been consistently
applied?
2.2 Are the results and ratios consistent and in
accordance with the audit evidence obtained?
2.3 Were the results of the audit work undertaken on
opening balances and comparatives satisfactory?
2.4 Has management been informed where there is a
misstatement of the opening balances that could
materially affect the current period's figures?
2.5 Where corresponding amounts have been adjusted
as required by relevant legislation or accounting
standards have the appropriate disclosures have
been made?
3 Conclusion
I am / am not satisfied that the opening balances and comparatives are reasonably stated*
Where a “no” answer has been given detail below the impact this will have on the current period‟s audit report, and cross-
reference to schedule B6 Justification of Audit Report.*
Prepared by: Date
Prepared by: Date

*Delete as appropriate

Ref:
Client: Aero North
Year end:
File no:
DETERMINATION OF SME STATUS

(Company incorporated in Hong Kong)
A company incorporated under the Hong Kong Companies Ordinance qualifies for reporting under the SME-FRF if it
satisfies the criteria set out in Section 141D i.e. where all the shareholders agree in writing that this Section shall apply
with respect to a financial year of that company.
Ineligibility This year Last year

YES NO YES NO
Have any of the shareholders not agreed in writing to prepare
financial statements in accordance with SME-FRS?
Has the company at any time during the current or preceding

reporting period been an issuer of securities, that is, its equity or
debt securities that are publicly traded or it is in the process of
issuing publicly traded equity or debt securities?
Is the company an institution authorised under the Banking

Ordinance?
Is the company is an insurer authorised under the Insurance

Companies Ordinance?
Is the company is a corporation which is granted a licence under

the Securities and Futures Ordinance to carry on business in a
regulated activity in Hong Kong?
Does the company in any other respect fail to comply with the
requirements of s141D*?
Conclusion
The company does / does not* qualify as an SME.
Where the company qualifies as an SME is it to: N/A YES NO
Take advantage of the SME-FRS?
Prepared by Date
Prepared by Date
† The turnover limit should be adjusted proportionately for periods other than a year.
* Further guidance is contained in SME-FRS and PN 900.
Alpha Partners - July 2010 HKICPA Jun 07 Supp 00

Year end:
File no:
DETERMINATION OF SME STATUS

(Entity other than a company incorporated in Hong Kong)
This year Last year
SME Amounts Less than or Amounts Less than or
limits equal to limits? equal to limits?
Criteria limits YES NO YES NO

Turnover HK$50 m†
Total assets HK$50 m
Number of employees 50
N/A YES NO
If the entity failed two or more of the criteria limits this year or last, does it
still qualify as an SME as a result of the previous years' results?
N.B. When it is the entity’s first year, it need only satisfy the conditions for that year.
Ineligibility This year Last year

YES NO YES NO
Have any of the shareholders/members not agreed in writing
to prepare financial statements in accordance with SME-FRS?
Are there any specific requirements imposed by the law of the

entity‟s place of incorporation or in its constitution that prevent
it applying the SME-FRS?
Does the entity have public accountability?
Conclusion
The entity does / does not* qualify as an SME.
Where the entity qualifies as an SME is it to: N/A YES NO
Take advantage of the SME-FRS?
Prepared by Date
Prepared by Date
† The turnover limit should be adjusted proportionately for periods other than a year.
* Further guidance is contained in SME-FRS and PN 900.

Client: Aero North Tailored by: Date: Ref:
Year end: Tailoring reviewed by: Date:
File no: Completion reviewed by: Date:
AUDIT PROGRAMME – ELECTRONIC PUBLICATION OF ACCOUNTS

This programme should be used where financial statements are published on a website or otherwise made available in
an electronic format that is derived from the hard copy audited financial statements.
Test Results Initials

required satisfactory Sch ref Comments and
Y/N Y/N date
Engagement letter
1 Review the engagement letter and ensure that
it addresses the following issues:
a) That the company may wish to publish its
financial statements in an electronic form.
b) That it is the responsibility of the

directors to ensure that such publication
properly presents the financial
information and any auditor's report.
c) That the company will notify the auditors

of any intended publication before it
occurs.
d) That the auditors reserve the right to
withhold consent to the electronic
publication of their report if the financial
statements and report are to be
published in an inappropriate manner.
e) That the directors are responsible for

controls and security over the website.
f) That the examination of controls over the
maintenance and integrity of the entity‟s
website is beyond the scope of the audit
of the financial statements.
g) That the directors are responsible for

establishing and controlling the process
for electronically distributing annual
reports to the shareholders.
Accounts
2 Confirm that the firm has given consent for the
publication of the audit opinion in an electron
form
3 Review the process by which the financial
statements to be published electronically are
derived from the financial information
contained in the manually signed accounts.
4 Check that the proposed electronic version is
identical in content with the manually signed
accounts.
5 Review the electronic accounts to check that
the conversion from a manual format has not
distorted the overall presentation of financial
information.

Y/N Y/N date
6 Obtain a copy of the electronic version to be
published.
Audit report
7 Check that the audit report wording is suitable
for electronic distribution. Does it:
a) Identify the financial statements that
have been audited and the information
that has been reviewed or read by the
auditors?
b) Identify the nationality of the accounting
standards being applied?
c) Limit the auditor‟s association with any
other information distributed with the
annual report?
8 Review the use of hyperlinks between the

audited financial statements and other
information. Do they contain warnings that the
link is to unaudited information?
9 Confirm that the electronic version of the audit

report is dated using the same date as the
auditors report on the manually signed
accounts.
Conclusion
10 Consider whether there are any matters that
need to be included in a letter of
representation or letter of comment and record
on A5 or A6 as appropriate.

AUDIT PROGRAMME - SERVICE ORGANISATIONS

The purpose of this programme is to assist in considering how a company’s use of a service organisation affects the
company’s internal controls so as to enable identification and assessment of any risk of material misstatement and the
design of further audit procedures.

Y/N Y/N date
General
1 Confirm the significance of the activities of the
service organisation to the company and that
further audit consideration is required.
2 Obtain and document an understanding of:

(a) the contractual terms which apply to
relevant activities undertaken by the
service organisation;
(b) the way that the company monitors those

activities so as to ensure that it meets its
fiduciary and other legal responsibilities.
3 Consider whether third-party reports from a

service organisation's auditors, internal
auditors, or regulatory agencies may be relied
upon as a means of obtaining information
about the internal control of the service
organisation and about its operation and
effectiveness.
4 Consider whether the activities undertaken by

the service organisation are in an area in
which the company is required to comply with
requirements of law and regulations (such as
the Companies Ordinance) and how
compliance with those laws and regulations is
controlled.
5 If a service organisation maintains all or part

of an company‟s accounting records, assess
whether the arrangements affect reporting
responsibilities in relation to accounting
records arising from law or regulation.
6 Assess whether sufficient appropriate audit

evidence concerning the relevant financial
statement assertions is available from records
held at the company.
7 Where this is not the case determine effective
procedures to obtain evidence necessary for
the audit, either by direct access to records
kept by service organisations or through
information obtained from the service
organisations or their auditor.

Y/N Y/N date
8 Where required confirm access arrangements
with the company and service organisation.
9 Access to the records of the service

organisation should have been established as
part of the contractual arrangements between
the company and the service organisation.
Where this is not the case make appropriate
recommendations to management concerning
revision of the contract terms.
Reliance on service organisation auditor

10 Where reliance is to be placed on the report of
a service organisation auditor; consider
making inquiries concerning that auditor‟s
professional competence in the context of the
specific assignment undertaken by the service
organisation auditor.
11 Consider the scope of work performed by the

service organisation auditor and evaluate the
usefulness and appropriateness of reports
issued by the service organisation auditor. In
particular are the reports issued by the service
organisation auditor is sufficient for the
intended use?
12 Where reports are insufficient for their

intended use consider whether it is necessary
to request that the service organisation's
auditor perform additional specified
procedures in order to provide the necessary
evidence.
Direct access to service organisation

13 Consider whether it is necessary to visit the
service organisation in order to obtain the
required audit evidence.
14 Where necessary arrange for the appropriate

authority to be sent from the company to the
service organisation to provide access to the
necessary information.
Indemnities
15 Review the financial standing of the service
organisation and the resources available to it
insofar as it is considered necessary to rely on
the operation of an indemnity from the service
organisation in assessing the company‟s
status as a going concern.
Conclusion
16 Consider whether sufficient understanding of
the company and its environment, including its
internal control has been obtained, to identify
and assess the risks of material misstatement
and design further audit procedures in
response to the assessed risk .

AUDIT PROGRAMME - USING THE WORK OF ANOTHER AUDITOR

Y/N Y/N date
General
1 Where other auditors are involved in the audit

of subsidiaries determine how their work will
affect the audit.
2 Consider whether the level of participation in

the audit of the group is sufficient for this firm
to be able to act as the principal auditor. In
particular consider:
(a) The materiality of the portion of the

financial statements which this firm audits.
(b) This firm's degree of knowledge regarding

the business of the components.
(c) The risk of material misstatements in the

financial statements of the components
audited by other auditors.
3 When planning to use the work of another

auditor consider the professional competence
of the other auditor including their professional
qualifications, experience and resources in the
context of the specific assignment.
4 Perform procedures to obtain sufficient

appropriate audit evidence concerning the
adequacy of the work performed by other
auditors. Consider the following:
(a) Review of a written summary of the other

auditor‟s procedures such as a Group
Accounts Questionnaire.
(b) Review the working papers of the other
auditor either on site or as a copy file.
(c) Knowledge concerning the quality of work
gained from the review of previous audit
work of the other auditor.
5 Consider any significant findings of the other

auditor and their impact on the audit of the
group as a whole.
6 Ensure that the other auditor is advised of any

matters that may have an important bearing on
their work.

Y/N Y/N date
Conclusion
7 Consider whether the work of the other

auditors can be used and whether it has been
possible to perform sufficient additional
procedures regarding the financial information
of the components they audited.

AUDIT PROGRAMME - USING THE WORK OF AN EXPERT

Y/N Y/N date
General
1 Determine whether, in obtaining an
understanding of the company and performing
further procedures in response to assessed
risks, it may be necessary to obtain audit
evidence in the form of reports, opinions,
valuations or statements of an expert.
2 When planning to use the work of an expert,

evaluate his or her professional competence
including the professional qualifications,
experience and resources.
3 Evaluate the objectivity of the expert. For

example consider whether they are employed
by the company or are related in some other
manner such as being financially dependent
upon or having being an investor.
4 Obtain sufficient appropriate audit evidence

that the scope of the expert‟s work is adequate
for the purposes of the audit by reviewing the
terms of reference or other written instructions
from the company to the expert.
5 Evaluate the appropriateness of the expert‟s

work as audit evidence regarding the assertion
being considered. Consider:
(a) The source data used.

(b) Assumptions and methods used and their
consistency with prior periods.
(c) The timing of the work undertaken.
(d) The results of the expert‟s work in the
light of the firm's overall knowledge of the
business and of the results of other audit
procedures.
Conclusion
6 Consider whether sufficient appropriate audit
evidence concerning the work of experts has
been obtained that is adequate for the
purposes of the audit.

Year end:
File no:
SUMMARY SHEET
Planning Final
Analytical Tests of Substantive Are you Comments
review control tests satisfied
that the
procedures
objectives
Audit objectives have been
met?
Yes/No
Yes/No
Yes/No
Yes/No
Planning conclusion
I am satisfied that from the tests planned sufficient appropriate evidence can be gained to satisfy the objectives.
Prepared by: Date:
Reviewed by: Date:
Final conclusion
From the audit work carried out I confirm that:
- the work has been performed in accordance with the audit programme;
- the work performed and the results obtained have been adequately documented;
- all necessary information has been collected for the presentation and disclosure in the financial statements.
- sufficient and appropriate evidence has been obtained to support the audit conclusion reached.
- in my opinion (subject to matters highlighted on B5 or B8)* ............. are fairly stated/ *not fairly stated as
described below:
Prepared by: Date:

Reviewed by: Date:
* Delete if not applicable.
Alternative conclusion (ANY alternative conclusion MUST be referred to on B5 or B8)
Prepared by: Date:

Reviewed by: Date:

Client: Aero North Completed by: Date: Ref:
File no:
AUDIT PROGRAMME -
Nature of test:
Y/N Y/N date
1
10
Conclusion
11

Year end: D
File no:
D ANALYTICAL PROCEDURES
1 Lead schedule
2 Audit programme
Alpha Partners - July 2010 Di Analytical Procedures Index HKICPA Jun 07 Supp 00
Year end: D
File no:
SUMMARY SHEET– ANALYTICAL PROCEDURES

Planning Final
Number of Reference Are you Comments Initials
key tests to bespoke satisfied
which tests to be that the
satisfy carried out objectives
objective* have been
met?
Audit objectives
1 To provide additional assurances on the 2, 3, 4, 5, 6 Yes/No
completeness, accuracy and validity of
the information contained in the
accounting records and accounts.
2 To provide assurance on the validity of 4 Yes/No

any preliminary analytical review
procedures carried out at the planning
stage.
3 To assist in carrying out final analytical 7 Yes/No

review procedures.
4 To seek to reduce the extent of tests of 8 Yes/No
detail, if the results of our analytical
review are consistent with expectations
/explanations.
Planning conclusion
Prepared by: Date:
Reviewed by: Date:
Final conclusion
From the analytical procedures carried out I confirm that *(subject to the matters described below and highlighted on B5 or
B8) in my opinion such procedures provide additional appropriate audit evidence as to the completeness, accuracy and
validity of information in the accounts.
Prepared by: Date:
Reviewed by: Date:
Alpha Partners - May 2010 Ds Analytical Procedures Summary Sheet HKICPA Jun 07 Supp 00
Year end: Reviewed by: Date: D2

File no:
AUDIT PROGRAMME - ANALYTICAL PROCEDURES

Test Results
Initials and
required satisfactory Sch Ref Comments
date
Y/N Y/N
General
1 Carry out extensive analytical review
procedures if:
(a) efficient in audit time;
(b) this may, where appropriate, reduce the
extent of detailed testing;
(c) necessary to provide additional audit
evidence, where the audit trail is
otherwise incomplete.
2 Identify, using the working paper attached, for

which of the business cycles (and which
objectives/assertions) extensive analytical
review can be utilised to reduce or eliminate
additional audit tests in the area:
- sales
- purchases
- wages and salaries
- other overheads
3 Compare current year‟s figures, at intervals
consistent with availability of management
information, against estimates derived from a
sample of the following:
(a) previous year‟s figures;

(b) budgeted figures (if available);
(c) industry and other external statistics;
(d) non financial information (specify);
(e) any other relevant information (specify).
4 Compare results of extensive analytical review
with those of preliminary analytical review.
5 Investigate normal and abnormal fluctuations,

and record explanations.
6 Record details of the evidence obtained to
substantiate and corroborate the explanations
received.
7 Note points on B9 where relevant to final

analytical review procedures.
Alpha Partners - May 2010 D2 Analytical Procedures Audit Programme HKICPA Jun 07 Supp 00
Test Results
Initials and
required satisfactory Sch Ref Comments
date
Y/N Y/N
Conclusion
8 Determine whether or not the results of the
analytical procedures are such as to justify
reducing the nature or extent of detailed
testing, in each of the business cycles.
9 Tailor the audit programmes accordingly, and

cross-reference to relevant sample selection
planning schedules.
10 Consider whether there are any points which

Alpha Partners - May 2010 D2 Analytical Procedures Audit Programme HKICPA Jun 07 Supp 00
Year end: E
File no:
EA INTANGIBLE ASSETS
1 Lead schedule
2 Audit programme
EB BUSINESS COMBINATIONS
1 Lead schedule
2 Audit programme

Year end: EA
File no:
SUMMARY SHEET– INTANGIBLE ASSETS

Planning Final
met?
Audit objectives
1 To ensure that all intangible assets exist 10, 11 Yes/No
and the register/listing is complete.
2 To ensure that intangible assets have 12, 13, 14, Yes/No

been valued properly. 15, 16, 17,
18, 19, 23
3 To ensure amortisation and impairment 20, 21, 22 Yes/No

are adequate if applicable.
4 To confirm that all necessary disclosures 24, 25 Yes/No
concerning intangible fixed assets have
been made and that the information is
appropriately presented and described.
Planning conclusion
Prepared by: Date:
Reviewed by: Date:
Final conclusion

- in my opinion (subject to matters highlighted on B5 or B8)* intangible assets are fairly stated/ *not fairly stated as
described below:
Prepared by: Date:

Reviewed by: Date:

Year end: Reviewed by: Date: EA2
File no: Date:
AUDIT PROGRAMME - INTANGIBLE ASSETS

Y/N Y/N date
General
1 Agree the opening balances to last year‟s
accounts.
2 Obtain and check, or prepare, a lead schedule
for the current year‟s figures and reconcile this
to the general ledger.
3 Examine any material journal entries or other
adjustments made during the course of
preparing the financial statements.
4 Carry out analytical procedures such as:
(a) comparison of the current figures with
those of prior periods;
(b) review and comparison of key ratios or
other performance indicators.
5 Review the planned extent of reliance on
internal controls in this area and consider
whether this remains appropriate.
6 Assess whether the initial materiality and/or
risk assessment should be revised in view of
the audit evidence obtained. Record details of
any necessary adjustments on B5 or B8.
Consider the impact on the remainder of the
audit work and on any work undertaken to
date.
7 Review for large and/or unusual items and

verify.
8 Review of appropriateness and consistency of
accounting policies used by the entity. (Ref:
PAF04)
9 Review capitalisation policy to ensure that it is
in accordance with (HKAS 38.8 - 17, 21 - 23
and 57)
Existence
10 Ensure the existence of intangible assets by :
(a) inspecting documents of title e.g. patent,
licence, etc.
(b) examining evidence of expenditure
incurred e.g. purchase details for
intangible asset separately acquired,
acquired in a business combination,
internally generated, etc.
Completeness
11 Ensure the completeness of intangible assets
by :

Y/N Y/N date
(a) assessing whether there was any
expenditure that should have been
capitalised as intangible assets but
expensed in the income statement.
(b) reviewing board minutes (Ref. Section O).
(c) performing search for unrecorded

liabilities (Ref. Section T).
Cost/valuation
12 Ensure intangible assets are properly
classified under:
(a) Intangible assets with finite useful lives.
(b) Intangible assets with indefinite useful
lives. (Refer to HKAS 38.88 - 96)
13 Ensure sufficient and appropriate reasons are
obtained to support indefinite useful life
assessments.
14 Ensure the entity has accounted for its
intangible assets by adopting the cost model
or the revaluation model (HKAS 38.72 - 84).
15 Vouch additions to supporting documentation.

Ensure that:
(a) cost has been correctly recorded;
(b) they have been added to the intangible
asset register/listing;
(c) they have been appropriately capitalised
in the current financial year/period;
(d) they have been properly authorised.

16 Has the cost been correctly determined as
follows:
(a) For assets separately acquired: purchase
price plus any directly attributable costs
under HKAS 38.24 - 32, 44.
(b) For assets acquired as part of a business

combination: fair value at the acquisition
date under HKAS 38.33 - 41.
(c) For assets exchanged: value under

HKAS 38.45 - 47.
(d) For assets internally generated:
expenditure incurred and any directly
attributable costs. (Refer to HKAS 38.51 -
67 for guidance).
17 Ensure that expenditure on an intangible item
that was initially recognised as an expense
shall not be recognised as part of the cost of
an intangible asset at a later date. (HKAS
38.71).

Y/N Y/N date
18 Vouch disposals to supporting documentation.
Ensure that:
(a) any sales proceeds have been correctly
accounted for;
(b) any profit or loss on disposal has been
correctly calculated;
(c) they have been removed from the
intangible asset register/listing;
(d) they should be derecognised in the
current financial year/period;
(e) they have been properly authorised.
19 Where the revaluation model is being applied
for a class of assets ensure that:
(a) the policy is applied consistently to all
assets in that class (HKAS 38.72, 73);
(b) revaluation increases and decreases are
properly recorded (HKAS 38.85, 86);
(c) where a revalued asset was disposed of,

any revaluation surplus was transferred
to equity and not recycled through the
income statement. (HKAS 38.87)
Amortisation
20 For intangible assets with finite useful lives:
(a) Compare bases and rates of amortisation
with accounting policy note and ensure
consistency.
(b) Review the methods applied and
consider whether they are appropriate to
the pattern of future economic benefits
embodied in the assets.
(c) Confirm that all assets are being
amortised in accordance with the
company‟s accounting policy.
(d) Test check calculations or check

reasonableness of amortisation charge
for the year/period.
(e) Ensure that no assets have been
amortised by more than the lower of cost
or residual value.
21 For intangible assets with indefinite useful

lives:
(a) Reviewed each year/period to determine
whether events and circumstances
continue to support an indefinite useful
life assessment for such asset.
(b) If not, amortisation shall be tested in step
17.

Y/N Y/N date
Impairment
22 Consider whether there are any indicators of
impairment, which might adversely affect the
value of the assets, and ensure that these
have been dealt with in accordance with
applicable accounting standards (Refer to
HKAS 36) In addition, intangible assets with
indefinite useful lives and intangible asset not
yet available for use must be assessed for
impairment annually. (HKAS 36.10)
(a) If the recoverable amount of an asset

(i.e. the higher of an asset‟s fair value
less cost to sell and its value in use) is
less than the carrying amount, ensure an
impairment loss has been recognised
immediately in profit or loss, unless the
asset is carried at revalued amount;
(b) Where an increase in carrying value is

attributable to a reversal of previous
impairment loss; confirm that the carrying
value (net of amortisation) does not
exceed the value at which the asset
would have been stated had no previous
impairment loss been recognised.
Foreign Currencies
23 Ensure the entity accounted for foreign
currency transactions in accordance with
HKAS 21.
Presentation and disclosure

24 Confirm that a disclosure checklist will be
completed for this year. Where that is not the
case explain how the objectives relating to
disclosure will be achieved.
25 Ensure that there is evidence on the file to
support the disclosures made.
Bespoke tests
26 Perform any necessary additional tests such
as those required by C6.3 and cross reference
with the objectives on the summary sheet.
Conclusion

Year end: EB
File no:
SUMMARY SHEET– BUSINESS COMBINATIONS

Planning Final
met?
Audit objectives
1 To ensure that all business combinations Yes/No
are accounted for in accordance with
applicable regulations and financial
reporting standards.
2 To ensure that goodwill and excess of the Yes/No
acquirer's interest in the fair values of
identifiable net assets acquired in a
business combination over cost ('negative
goodwill') have been correctly accounted
for.
3 To ensure impairment is adequate if Yes/No

applicable.
4 To confirm that all necessary disclosures Yes/No
concerning business combinations,
goodwill and negative goodwill have been
made and that the information is
Planning conclusion
I am satisfied that from the tests planned sufficient and appropriate evidence can be gained to satisfy the objectives.
Prepared by: Date:
Reviewed by: Date:
Final conclusion

- in my opinion (subject to matters highlighted on B5 or B8)* business combinations (including goodwill and negative
goodwill) are fairly stated/ *not fairly stated as described below:
Prepared by: Date:

Reviewed by: Date:

Year end: Reviewed by: Date: EB2
File no:
AUDIT PROGRAMME - BUSINESS COMBINATIONS

Y/N Y/N date
General
1 Agree the opening balances to last year‟s
accounts.
1 Assess whether the initial materiality and/or risk
assessment should be revised in view of the
audit evidence obtained. Record details of any
necessary adjustments on B5 or B8. Consider
the impact on the remainder of the audit work
and on any work undertaken to date.
1 Review for large and/or unusual items and verify.

PAF04)
1 Review company policy to ensure all business
combinations as defined in HKFRS 3.2-13 have
been identified.
Transitional provisions
1 Ensure that the following items have been
accounted for in accordance with HKFRS 3. 80-
85:
(a) Previously recognised goodwill.
(b) Previously recognised negative goodwill.
(c) Previously recognised intangible assets.
(d) Equity accounted investments.

Y/N Y/N date
Existence
1 Ensure existence for business combinations
listed on the lead schedule by inspecting
documents of title e.g. sale and purchase
agreement, bought and sold notes, stamped
instrument of transfer, etc.
Completeness
1 Ensure the completeness of business
combinations by :
(a) inspecting documents of title e.g. sale and
purchase agreement, bought and sold
notes, stamped instrument of transfer, etc
for business combinations not listed on the
lead schedule
(b) reviewing board minutes (Ref. Section O).
(c) performing search for unrecorded liabilities

(Ref. Section T)
Cost/Valuation/Accuracy
1 For all business combinations, ensure that the
purchase method has been correctly applied
from the acquisition date in accordance with
HKFRS 3.14-65:
(a) Ensure that an acquirer has been properly
identified (HKFRS 3.17-23A).
(b) Ensure that the cost of a business
combination is measured in accordance
with HKFRS 3.24-35.
(c) Allocation of the cost of a business

combination.
(d) Review the allocation made by the entity to
ensure that the acquirer's interest in the
acquiree's identifiable assets, liabilities and
contingent liabilities have been recognised
separately and correctly (HKFRS 3.36-51).

Y/N Y/N date
(e) Ensure that any difference between the
cost of a business combination and the
acquirer's interest in the net fair value of
the identifiable assets, liabilities and
contingent liabilities ('goodwill') has been
accounted for in accordance with HKFRS
3.51-53.
(f) Ensure that goodwill is allocated, from the
acquisition date, to each of the acquirer's
cash generating units or groups of units in
accordance with HKAS 36.80-85.
(g) Ensure that any excess of acquirer's
interest in the net fair value of acquiree's
identifiable assets, liabilities and contingent
liabilities over cost ('negative goodwill') has
been accounted for in accordance with
HKFRS 3.56, 57.
Impairment of goodwill
1 Irrespective of whether there is any indication of
impairment, ensure goodwill is tested for
impairment annually. (HKAS 36.10)
(a) If the recoverable amount of an asset (i.e.
the higher of an asset‟s fair value less cost
to sell and its value in use) of a cash-
generating unit (group of units) to which
goodwill has been allocated is less than
the carrying amount of such unit, ensure
an impairment loss has been recognised
immediately income statement in
accordance with HKAS 36.91-95, 104-108;
(b) Confirm that impairment loss previously

recognised for goodwill is not reversed
(HKAS 36.124).
Equity accounted investments
1 Ensure that goodwill and negative goodwill
which correspond to equity accounted
investments have been measured correctly in
accordance with HKFRS 3.83, 84.
Disposal of an operation
1 Ensure that goodwill associated with disposed
operation within a cash-generating unit (group of
units) has been correctly accounted for in
accordance with HKAS 36.86.
Foreign Currencies
1 Ensure the entity has accounted for its foreign
currency transactions in accordance with HKAS
21.

Y/N Y/N date
1 Confirm that a disclosure checklist will be/is
1 Ensure that there is sufficient and appropriate
evidence on the file to support the disclosures
made.
Bespoke tests
1 Perform any necessary additional tests such as
those required by C6.3 and cross reference with
the objectives on the summary sheet.
Conclusion
need to be included in a letter of representation
or letter of comment and record on A5 or A6 as
appropriate.

Year end: F
File no:
FA PROPERTY, PLANT, EQUIPMENT AND LEASED ASSETS
1 Lead schedule
2 Audit programme
3 Additions and disposals
4 Depreciation basis/calculation
5 Grants received/receivable
FB INVESTMENT PROPERTY
1 Lead schedule
2 Audit programme
3 Additions and disposals
Alpha Partners - July 2010 FAi PPE Index HKICPA Jun 07 Supp 00
Year end: FA
File no:
SUMMARY SHEET– PROPERTY, PLANT, EQUIPMENT AND LEASED ASSETS

Planning Final
key tests to bespoke satisfied that
which tests to be the objectives
satisfy carried out have been
objective* met?
Audit objectives
1 To establish that property, plant & 10, 11 Yes/No
equipment and leased assets exist and its
register/ listing is complete.
2 To establish that property, plant & 12 Yes/No
equipment and leased assets are
beneficially owned.
3 To verify that all property, plant & 13, 14, 15, Yes/No
equipment and leased assets are 16, 17, 18,
recorded at cost or valuation and that the 19, 20, 23
basis is acceptable.
4 To confirm that impairment and 21, 22 Yes/No
depreciation are adequately provided for
the property, plant, equipment and leased
assets.
5 To confirm that all necessary disclosures 24, 25, 26, Yes/No
concerning fixed assets have been made 27
and that the information is appropriately
presented and described.
Planning conclusion
Prepared by: Date:
Reviewed by: Date:
Final conclusion

- the work has been performed in accordance with the audit programme.
- the work performed and the results obtained have been adequately documented.
- sufficient appropriate evidence has been obtained to support the audit conclusion reached.
- in my opinion (subject to matters highlighted on B5 or B8)* property, plant & equipment and leases assets are fairly stated/
* not fairly stated as described below.
Prepared by: Date:
Reviewed by: Date:

*Delete as appropriate
Alpha Partners - July 2010 FAs PPE Summary Sheet HKICPA Jun 07 Supp 00
Year end: Reviewed by: Date: FA2

File no:
AUDIT PROGRAMME - PROPERTY, PLANT, EQUIPMENT AND LEASED ASSETS
Test Results
Initials and
required satisfactory Sch ref Comments
date
Y/N Y/N
General
1 Agree opening balances to last year‟s accounts.



PAF04)
9 Review capitalisation policy which is in
accordance with the definition of relevant
accounting standards (such as HKAS 16.6 and
HKAS 17.4) and satisfy recognition criteria
(HKAS 16.7-10) and lease classification (HKAS
17.7-14) where applicable.
Existence/Completeness
10 Carry out physical inspection of assets including
both current year additions and assets
purchased in previous years.
(a) Test for existence by selecting items from
the asset register and checking back to the
physical assets.
(b) Test for completeness by selecting

physical assets and checking the quantity
counted with the asset register.
Alpha Partners -July 2010 F2 PPE Audit Programme HKICPA Jun 07 Supp 00
Test Results
Initials and
date
Y/N Y/N
(c) Where physical verification has not been
undertaken, detail the steps carried out to
establish that all assets exist.
11 Ensure the completeness of PPE and leased

assets by :
(a) examining board minutes (Ref. Section O)
(b) identifying unrecorded liabilities (Ref.

Section T)
Ownership
12 (a) Confirm or inspect title deeds to all
properties.
(b) Perform land search for properties situated
both locally or overseas.
(c) Inspect lease agreement or obtain direct
confirmation from bank or other custodian
of PPE.
(d) Inspect the motor vehicle registration

documents for motor vehicles owned by
the Company.
(e) if an asset is acquired under a finance

lease, ensure that substantially all the risks
and rewards of that asset are incidental to
its ownership.
Cost and valuation

13 Ensure the entity has accounted for its PPE by
adopting the cost model (HKAS 16.30) or the
revaluation model (HKAS 16.30).

Ensure that:
(a) the cost is correctly recorded;
(b) they have been properly authorised;
(c) they are correctly classified;
(d) they are of a capital, not revenue, nature;
(e) the value has been correctly computed
where they represent the capitalisation of
items made internally;
(f) assets acquired were delivered prior to the

balance sheet date;
(g) assets acquired under finance leases are
treated correctly in accordance with
provision of HKAS 17.
15 Ensure cost has been correctly determined
under HKAS 16.16-22 & HKAS 17.38.
16 For leases concerning land and buildings
consider whether:
(a) it is necessary to measure the land and
buildings elements separately in
accordance with the requirements of HKAS
17.15;
(b) any of the exceptions from the need to
follow this treatment as set out in HKAS
17.16 - 18 apply.
Test Results
Initials and
date
Y/N Y/N
(c) proper distinction has been drawn as
follows:
˙land in Hong Kong and held on long,

medium-term and long leases
˙land outside Hong Kong, freehold and
held on long, medium-term and long leases
17 Vouch disposals to available evidence. Ensure

that:
(a) sales proceeds have been correctly
accounted for;
(b) profit /loss on disposal has been correctly
calculated;
(c) they have been properly authorised;
(d) they have been removed from the fixed
asset register/listing.
18 Where there is a policy of revaluation for a class
of assets is that policy applied consistently to all
assets in that class?
19 Where property, plant and equipment is
acquired in exchange for a non-monetary asset
or assets, or a combination of monetary and non-
monetary asset, ensure that the cost of property,
plant and equipment is measured at fair value
unless:
(a) the exchange transaction lacks commercial
substance; or
(b) the fair value of neither the asset received
nor the asset given up is reliably
measurable.
(c) If the acquired item is not measured at fair
value, its cost is measured at the carrying
amount of the asset given up.
20 Where the valuation model is being applied
confirm that:
(a) supporting documentations exists for the
valuations such as an appraisal report or
an estimate of fair value using an income
or depreciated replacement cost approach;
(b) any revaluation increase is credited to

equity;
(c) any revaluation decrease is debited first
against any previous revaluation surplus
and secondly to in the income statement.
(d) where a revalued asset was disposed of;

any revaluation surplus was transferred to
equity and not recycled through the income
statement.
Impairment
Test Results
Initials and
date
Y/N Y/N
value of the assets, and ensure that these have
been dealt with in accordance with applicable
accounting standards (such as HKAS 36).
(a) Where any such indication exists, enquire if

the entity has estimated the recoverable
amount of assets (i.e. the higher of an
asset‟s fair value less cost to sell and its
value in use).
attributable to a reversal of previous
value (net of depreciation and amortisation)
does not exceed the value at which the
asset would have been stated had no
previous impairment loss been recognised.
Depreciation
22 In respect of the charge to depreciation:
(a) Compare bases and rates of depreciation
consistency.
(b) Have rates been considered for each
significant part of PPE based on different
useful life, rate of consumption and
separability etc.
(c) Review the methods applied and consider
whether they are appropriate to the pattern
of consumption of the assets.
(d) Confirm that all assets are being
depreciated in accordance with the
(e) Test check calculations or check
reasonableness of depreciation charge for
the year/period.
(f) Ensure that no assets have been
depreciated by more than the lower of cost
or residual value.
(g) Where leasehold land is treated as a
finance lease because lease payments
cannot be allocated reliably between land
and buildings: ensure that it is amortised /
depreciated over its useful life or a lease
term that is determined in accordance with
HK-INT4.
Foreign Currencies
23 Ensure the entity accounted for foreign currency
transactions in accordance with
HKAS 21.

Test Results
Initials and
date
Y/N Y/N
25 Ensure that there is sufficient appropriate
made such as property valuations, the book
value of leased assets and assets pledged as
security for liabilities.
26 Ensure that where assets have been revalued

during the year:
(a) the revaluation is accounted for correctly
through the income statement or statement
of changes in equity as appropriate; and
(b) any necessary historical cost information is

available for disclosure purposes.
27 Accumulate information regarding long-term

lease commitments including finance leases (as
lessees) and operating leases (as lessors), such
as lease term, monthly rental, expiry date,
outstanding principal balances and finance
charges etc. for disclosure requirements under
HKAS 17.20, 17.27, 17.31, 17.56.
Bespoke tests
those required by C6.3 and cross reference with
the objectives on the summary sheet.
Conclusion
appropriate.
Year end:
File no:
SAMPLE SELECTION PLANNING – BALANCE SHEET

Objective : To record the sources from which audit assurance has been obtained, and to assist in calculating sample
sizes for tests of detail.
Audit area: Property, plant, equipment and leased assets

Approximate number of items in year/at year-end
Sampling risk factor

Test of detail only = Inherent risk factor (table figure) 1.8
OR
Test of detail and (analytical review*U or compliance*U) = Inherent risk factor (table figure) x 2/3 1.2
OR
Test of detail and analytical reviewU and complianceU = Inherent risk factor (table figure) x 1/2 0.9
Tolerable error = Materiality = 1,120,000.00 = 622,222.22

Inherent risk factor (table figure) 1.8
Monetary value of population ( 100% %) HK$ 4,872,127.00
Value of items above the tolerable error ( 16% %) HK$( 800,000.00 )
Value of scheduled other “key” items ( 0% %) HK$( - )
Value of residual population ( %) HK$ 4,072,127.00
Sample size =
Residual population x Sampling risk factor HK$ 4,072,127.00 x 1.8 = (See maximum
7
below)
Materiality HK$ 1,120,000.00
Plus: Number of items above the tolerable error = 1
Number of other “key” items =
Actual sample size 6
Conclusion
I am satisfied that the actual sample size will fairly test the population.
Prepared by Date
Reviewed by Date
U Refer to working papers in D section and C7-1.
Tables of maximum sample sizes
Specific risk Specific risk Specific risk
L M H L M H L M H
L 20 25 30 L 13 17 20 L 10 13 15
General General
risk
M 25 30 35 risk
M 17 20 23 General risk M 13 15 18
H 30 35 40 H 20 23 26 H 15 18 20
Table 1 – for tests of Table 2 – for tests of Table 3 – for tests of detail
detail only detail and (analytical and analytical review and
review* or tests of control*) tests of control
Falcon CPA - May 2010 HKICPA Jun 07 Supp 00

Year end: FB
File no:
SUMMARY SHEET– INVESTMENT PROPERTY

Planning Final
met?
Audit objectives
1 To establish that investment properties 10, 11, 12 Yes/No
exist and the register/ listing is complete.
2 To establish that investment property are 13 Yes/No

beneficially owned.
3 To verify that all investment properties are 14, 15, 16, Yes/No
recorded at cost or valuation and that the 17, 18, 19,
basis is acceptable. 22
4 To confirm that impairment and 20, 21 Yes/No
depreciation is adequately provided for
properties where applicable.
concerning investment property have
Planning conclusion
Prepared by: Date:
Reviewed by: Date:
Final conclusion

- in my opinion (subject to matters highlighted on B5 or B8)* investment property are fairly stated/ * not fairly stated as
described below.
Prepared by: Date:
Reviewed by: Date:

Alpha Partners - July 2010 FBs Investment Property Summary Sheet HKICPA Jun 07 Supp 00
Year end: Reviewed by: Date: FB2

File no:
AUDIT PROGRAMME - INVESTMENT PROPERTY
Test Results
Initials and
date
Y/N Y/N
General
1 Agree opening balances to last year‟s
accounts.

date.

verify.
PAF04)
9 Review capitalisation policy which is in

accordance with the definition (HKAS 40.6-7)
and satisfy recognition criteria (HKAS 40.16).
Existence/Completeness
10 Carry out physical inspection of investment
property including both current year additions
and property purchased in previous years.
11 Where physical verification has not been

undertaken, detail the steps carried out to
establish that all investment properties exist.
12 Ensure the completeness of investment

property by :
Alpha Partners - July 2010 FB2 Investment Property Audit Programme HKICPA Jun 07 Supp 00

File no:
Test Results
Initials and
date
Y/N Y/N
(b) identifying unrecorded liabilities (Ref.
Section T)
Ownership
13 (a) Confirm or inspect title deeds to all
properties.
(b) Perform land search for properties
situated both locally or overseas.
(c) Inspect lease agreement or obtain direct
confirmation from bank or other
custodian of investment properties.
Cost and Valuation

14 Ensure the entity has accounted for its
investment property by adopting the cost
model (HKAS 40.56) or the fair value model
(HKAS 40.33-52).
15 Vouch additions to supporting documentation .
Ensure that:
(a) the cost (or deemed cost*) is correctly
recorded;
* See HKAS 40.83A
(b) they have been properly authorised;
(c) they are correctly classified;
(d) they are of a capital, not revenue, nature;
(e) the value has been correctly computed
where they represent the capitalisation of
items made internally;
(f) assets acquired were delivered prior to

the balance sheet date;
16 Ensure cost been correctly determined under
HKAS 40.20-29.
17 Ensure the transfers to and from investment
property have been properly accounted for
under applicable accounting standards such
as HKAS 16, HKAS 2 and HKFRS 5, etc.
18 Vouch disposals to available evidence.

Ensure that:
accounted for;
(b) profit /loss on disposal has been correctly
calculated;
(c) they have been properly authorised;
(d) they have been removed from the asset
register/listing.

File no:
Test Results
Initials and
date
Y/N Y/N
19 Where the fair value model is being applied
confirm that:
(a) the entity measures all of investment
property at fair value;
(b) supporting documentation exists for the
valuation such as an appraisal report or
an estimate of fair value using an income
or depreciated replacement cost
approach;
(c) any gain or loss arising from a change in
fair value of investment property is
recognised in profit & loss in the period in
which it arises.
Impairment (Cost model)

value of the assets, and ensure that these
have been dealt with in accordance with
applicable accounting standards (such as
HKAS 36).
(a) Where any such indication exists,
enquire if the entity has estimated the
recoverable amount of assets (i.e. the
higher of an asset‟s fair value less cost to
sell and its value in use).
attributable to the reversal of a previous
value (net of depreciation and
amortisation) does not exceed the value
at which the asset would have been
stated had no previous impairment loss
been recognised.
Depreciation (Cost model)

21 In respect of the charge to depreciation (refer
to HKAS 16):
(a) Compare bases and rates of depreciation
consistency.
(b) Have rates been considered for each
significant part of asset based on
different useful life, rate of consumption
and separability etc.
(c) Review the methods applied and
consider whether they are appropriate to
the pattern of consumption of the assets.

File no:
Test Results
Initials and
date
Y/N Y/N
(d) Confirm that all assets are being
depreciated in accordance with the
(e) Test check calculations or check
reasonableness of depreciation charge
for the year/period.
(f) Ensure that no assets have been

depreciated by more than the lower of
cost or residual value.
Foreign Currencies
HKAS 21.
case, explain how the objectives relating to

made .
Bespoke tests
Conclusion
Year end:
File no:

Audit area: Investment properties


Test of detail only = Inherent risk factor (table figure)
OR
Test of detail and (analytical review*U or compliance*U) = Inherent risk factor (table figure) x 2/3
OR
Test of detail and analytical reviewU and complianceU = Inherent risk factor (table figure) x 1/2
Tolerable error = Materiality =

Inherent risk factor (table figure)
Monetary value of population ( 100 %) HK$
Value of items above the tolerable error ( %) HK$( )
Value of scheduled other “key” items ( %) HK$( )
Value of residual population ( %) HK$
Sample size =
(See maximum
Residual population x Sampling risk factor HK$ x = below)
Materiality HK$
Plus: Number of items above the tolerable error =
Actual sample size
Conclusion
Prepared by Date
Reviewed by Date
L M H L M H L M H
L 20 25 30 L 13 17 20 L 10 13 15
General General General
risk
M 25 30 35 risk
M 17 20 23 risk
M 13 15 18
H 30 35 40 H 20 23 26 H 15 18 20
Table 1 – for tests of Table 2 – for tests of
Table 3 – for tests of detail
detail only detail and (analytical
and analytical review and
review* or tests of
tests of control
control*)

Year end: G
File no:
G INVESTMENTS IN GROUP COMPANIES AND ASSOCIATED UNDERTAKINGS

(INCLUDING ASSOCIATES AND JOINT VENTURES)
1 Lead schedule
2 Audit programme
3 Current/loan accounts
4 Copy of financial statements

Year end: G
File no:
SUMMARY SHEET – INVESTMENTS IN GROUP COMPANIES AND ASSOCIATED

UNDERTAKINGS (INCLUDING ASSOCIATES AND JOINT VENTURES)
Planning Final
met?
Audit objectives
1 To ensure that the company has good title 9 Yes/No
to all investments in group companies and
associated undertakings.
2 To ensure that investments in group and 10, 11, 12 Yes/No

associated undertakings are valued
correctly, with provision being made for
any permanent diminution in value.
3 To ensure that inter-company balances 13 Yes/No

are correctly recorded and adequate
allowance for impairment and or
uncollectibility has been made for any
irrecoverable balances.
4 To ensure that investments in group 14, 15, 16 Yes/No
companies and associated undertakings
are accounted for correctly.

concerning investments in group
companies and associated undertakings
have been made and that the information
is appropriately presented and described.
Planning conclusion
Prepared by: Date:
Reviewed by: Date:
Final conclusion
- in my opinion (subject to matters highlighted on B5 or B8)* investments in group companies and associated
undertakings are fairly stated/ * not fairly stated as described below.
Prepared by: Date:

Reviewed by: Date:

Year end: Reviewed by: Date: G2
File no:
AUDIT PROGRAMME - INVESTMENTS IN GROUP COMPANIES AND ASSOCIATED

UNDERTAKINGS (INCLUDING ASSOCIATES AND JOINT VENTURES)
Test Results
Initials
and date
Y/N Y/N
General



verify.
PAF04)
Ownership/existence
9 Inspect share certificates, or obtain
confirmation of ownership from third party.
Cost/valuation
10 Vouch all current period/ year additions to
supporting documentation.
11 (a) Obtain a copy of the latest management/
audited accounts and assess the value of
the investment in their light.
(b) Obtain the market value at the reporting

date where the investee companies are
listed.

Test Results
Initials
and date
Y/N Y/N
12 Where an investment in a subsidiary is held for
resale have the provisions of HKFRS 5 been
applied?
Inter-company balances
13 (a) Ensure that all inter-company balances
agree to the respective accounts of those
companies at the year end.
(b) Obtain confirmation where there any

group companies or associated
undertakings are not audited by the Firm.
(c) Consider the recoverability of amounts

owed by group companies and associated
undertakings at the reporting date, and
assess if adequate allowance for
impairment and/ or uncollectibility has
been made.
Accounting treatment
14 Review the accounting treatment of all
subsidiaries, associates and joint ventures and
ensure that this is in accordance with HKASs
27, 28, 31, 39 and HKFRS 5.
Foreign currencies
21.
16 Confirm that all monetary assets/ liabilities have

been translated at the closing rate.


made in respect of investments in group
companies and associated undertakings.
Bespoke tests
those required by C6.3 and cross reference
Conclusion
appropriate.

Year end: H
File no:
H OTHER INVESTMENTS
1 Lead schedule
2 Audit programme
3 Valuation and verification

Year end: HA
File no:
SUMMARY SHEET – OTHER INVESTMENTS

Planning Final
met?
Audit objectives
1 To ensure that the company has good title
to all investments. 8, 9 Yes/No
2 To ensure that investments are valued

correctly, with provision being made for 10, 11, 12,
Yes/No
any permanent diminution in value. 13, 14
3 To ensure that all income from

investments has been accounted for. 15 Yes/No
4 To ensure that investments and other

instruments are properly classified as
either fixed or current assets and 16 Yes/No
treatment is consistent.
5 To confirm that all necessary disclosures

concerning investments have been made
and that the information is appropriately 17, 18 Yes/No
Planning conclusion
I am satisfied that from the tests planned sufficient evidence can be gained to satisfy the objectives.
Prepared by: Date:
Reviewed by: Date:
Final conclusion
- in my opinion (subject to matters highlighted on B5 or B8)* other investments are fairly stated/ * not fairly stated as
described below.
Prepared by: Date:

Reviewed by: Date:

Year end: Reviewed by: Date: HA2
File no:
AUDIT PROGRAMME - OTHER INVESTMENTS
Test Results
Initials
and date
Y/N Y/N
General
accounts.

date.

verify.
Ownership
8 Inspect documents of title such as share
certificates. Ensure that:
(a) details are correctly recorded including
name, number of shares, type of shares
(or equivalent information if not share
based);
(b) the instrument is in the company name;
(c) where the company is not the registered
owner such as where employees of the
company hold a nominee interest confirm:
- the company has a signed declaration

from the said person stating that he/she
does not beneficially own the interest;
- a blank signed share transfer form or

equivalent exists;

Test Results
Initials
and date
Y/N Y/N
(d) all documents of title are held in a secure
place;
(e) examine stamped bought and sold notes,
stamped instruments of transfer or other
data supporting transactions such as
brokers advices;
9 Consider obtaining written confirmation where
documents of title are held by a third party.
Cost/valuation
Ensure that the:
(a) cost;
(b) company name; and
(c) number of shares, have been correctly
accounted for.
11 Vouch disposals to supporting documentation:
Ensure that:
accounted for;
(b) profit/loss on disposal has been correctly
computed;
(c) transactions have been properly
authorised.
12 For listed investments:
(a) check the market values;
(b) consider whether any provision for
diminution in value is necessary.
13 For unlisted investments:
(a) obtain a copy of the latest accounts or
other means of considering valuation;
(b) consider whether any provision for
diminution in value is necessary.
14 Check that we have sufficient evidence
regarding the valuation of any long term
investments.
Income
15 Refer to the available evidence (e.g., dividend
slips) and check that income and approved
income have been correctly accounted for
(NB dates of disposal and acquisition) .

16 Consider the nature of investments held and
whether they have been correctly classified
and their treatment consistent.

Test Results
Initials
and date
Y/N Y/N
18 Check that we have sufficient evidence

regarding the disclosure of any complex
financial instruments
Bespoke tests
19 Draft any necessary additional tests such as
Conclusion

Year end: I
File no:
IA INVENTORIES
1 Lead schedule
2 Audit programme – inventories
3 Inventories held by third parties
4 Audit programme – physical inventory counting and attendance report
IB CONSTRUCTION CONTRACTS
1 Lead schedule
2 Audit programme – construction contracts

Year end: IA
File no:
SUMMARY SHEET - INVENTORIES

Planning Final
Number of Reference Have the Comments Initials
key tests to bespoke objectives
which tests to be have
satisfy carried out been
objective* met?
Audit objectives
1 To ensure that the company has good 8, 9, 10 Yes/No
title to inventories.
2 To ensure that all inventories exist. 11, 12, 13 Yes/No
3 To ensure that inventories have been 14, 15, 22 Yes/No
valued correctly, consistently and in
accordance with applicable legislation
and accounting standards.
4 To ensure that full provision has been 16, 17, 18, Yes/No
made for all damaged, obsolete or slow 19, 20
moving inventories.
5 To ensure that cut-off has been strictly 21 Yes/No
applied.
concerning inventories have been made
and that the information is appropriately
Planning conclusion
Prepared by: Date:
Reviewed by: Date:
Conclusion
- in my opinion (subject to matters highlighted on B5 or B8)* inventories are fairly stated/ * not fairly stated as described
below.
Prepared by: Date:
Reviewed by: Date:


Year end: Reviewed by: Date: IA2

File no:
AUDIT PROGRAMME - INVENTORIES

Test Results
Initials
and date
Y/N Y/N
General





verify.
Ownership
8 Enquire if any of the inventories are held on
behalf of third parties and ensure that such
items are excluded from the accounts. Where
material, obtain confirmation from the third party.
9 Where inventories are held by third parties on

behalf of the company:
(a) obtain certificates where amounts are
material; and
(b) consider matters as required by HKSA
501.18
10 Consider whether any inventories held on
consignment have been accounted for.
Alpha Partners - MAY 2010 HKICPA Jun 07 Supp 00

Test Results
Initials
and date
Y/N Y/N
Existence
11 Complete the physical inventory counting
programme, I4. Trace all items selected at the
count to the final inventory listings, and, where
appropriate, internal inventory records. Obtain
explanations for any differences.
12 Select a sample of items from the final

inventory listings and trace to the copies of the
rough inventory listings taken during the
physical inventory counting.
13 Where there are material inventories that have
not been physically verified at the year-end
physical inventory counting:
(a) take or observe some physical counts on

an alternative date and, where necessary,
perform audit procedures on intervening
transactions.
(b) specify below any other audit work
required to verify existence:
-
Valuation
14 Test the additions and extensions of the final
inventory listings.
15 Ascertain the method used for valuing
inventories and consider whether:
(a) It has been correctly applied.
(b) It is an acceptable basis of valuation under
applicable legislation and accounting
standards.
(c) It is consistent with previous years and
with the company‟s accounting policy.
Provisions
16 Obtain details of the basis for making
provisions and determine if it is both adequate
and consistent.
17 Where the client determines the provision on

the basis of a formula consider whether:
(a) it is appropriate for the nature of business;
(b) it is consistent;
(c) it has been accurately applied;
(d) where the formula relies on the age of the
inventories, check to ensure that the
ageing is accurate.
18 Review the inventory listings and ensure that
any items identified as damaged, slow moving
or obsolete have been correctly written down.
19 Review all inventories and consider whether

any further provision is necessary.
(a) whether production levels are falling;

Test Results
Initials
and date
Y/N Y/N
(b) whether inventory levels are high in
comparison to orders received and
anticipated demand;
(c) any fluctuations in cost or selling price;

(d) any likely change in technology or market
demands.
20 Select a sample of inventories and compare
costs to the selling price less expenditure
necessary for realisation.
(a) Lines need to be examined individually.

Losses on one line cannot be set off
against profits on another.
(b) Where a provision is made on a finished
product consider whether any provision
should be made against unfinished units
and materials used in the process.
Nb Expenditure necessary for realising inventories

should include a proportion of marketing,
selling and distribution expenses as well as an
allowance for scrap and reworking costs.
Cut-off
21 Review the results of the tests on cut-off carried
out on trade receivables and payables (see
Section R) and ensure they provide adequate
assurance as to the accuracy of the year end
cut-off.
Foreign currencies
22 Ensure that the entity accounted for foreign
21.
made such as replacement value or payments
on account.
Bespoke tests
Conclusion
appropriate.

Year end:
File no:

Audit area: Inventories


OR
OR

Sample size =
(See maximum
Materiality HK$
Actual sample size
Conclusion
Prepared by Date
Reviewed by Date
L M H L M H L M H
L 20 25 30 L 13 17 20 L 10 13 15
risk
M 25 30 35 risk
M 17 20 23 risk
M 13 15 18
H 30 35 40 H 20 23 26 H 15 18 20
Table 3 – for tests of detail
and analytical review and
review* or tests of
tests of control
control*)

Year end: Reviewed by: Date: I4

File no:
AUDIT PROGRAMME - PHYSICAL INVENTORY COUNTING

Nature of test:
Test Results
Initials
and date
Y/N Y/N
General
1 Record the following details for each location
visited:
(a) location(s) being counted;
(b) date(s) of count and attendance;
(c) types of inventories held at location;
(d) approximate value of inventories by
category at location;
(e) details of any inventories at locations not
covered by the count and any alternative
method used to verify their existence;
(f) brief description of the procedures adopted;
(g) names of client staff counting;

(h) names of audit staff taking part.
2 Ascertain and note whether:
(a) the teams were properly briefed prior to
commencing the count;
(b) the teams only include people who are not
responsible for the storing and recording of
inventories;
(c) inventories were counted by teams of two

(one counting and one checking and
recording);
(d) the teams were asked to identify damaged,

slow moving or obsolete inventories;
(e) the teams were made aware of any

inventories held on behalf of third parties
and these were excluded from the count.

Nature of test:
Test Results
Initials
and date
Y/N Y/N
Inventory Counting
3 Determine whether:
(a) the teams were counting and recording
accurately;
(b) the counts were being controlled to ensure
that all inventories were counted and only
once;
(c) there was adequate control over inventory

listings to ensure that they are all
accounted for (e.g., pre-numbered).
4 Where serially numbered sheets are used,

record the numbers of all sheets used at the end
of the count.
5 Select a sample of items from completed

inventories sheets and check to ensure that the
number has been recorded properly. (These
should be followed through to final inventory
listings at the final audit - see I2, test 8).
6 Count a sample of inventories and ensure that

they have been recorded properly on the final
inventory listings.
7 Where possible, copy or extract details of a

sample of rough inventory listings for checking
at the final audit.
8 Where inventories are valued at selling price

less mark-up, record the shelf price of a number
of inventories.
9 Ascertain whether any inventories are held on

behalf of a third party. Where applicable ensure
that they have been separately identified and
excluded from the count.
10 Ascertain whether any inventories are held on

consignment. Ensure, where appropriate, a full
record is made.
11 Note any old or damaged inventories during the

count. Ensure that they are marked as such on
the final inventory listings.
Cut-off
12 Ensure that no movements in or out took place
during the physical inventory counting.
13 Record details of the last goods despatch
number and the last goods received note
number to follow up at the final audit.

Nature of test:
Test Results
Initials
and date
Y/N Y/N
Other work
14 Note any instances of the client's procedures
not being satisfactorily carried out or any other
weaknesses that should be brought to the
attention of management.
15 Perform any other procedures that would

normally be carried out at the physical inventory
counting;
(a) Select a sample of assets for verification

from the fixed asset register.
(b) Undertake a cash count.
(c) Other (specify):
-
-
Conclusion
16 Write a report on the physical inventory counting
concluding on its accuracy and our ability to rely
on it.

Year end: J
File no:
J TRADE & OTHER RECEIVABLES
1 Lead schedule
2 Audit programme
3 List of trade & other receivables
4 Allowance for impairment / uncollectibility
5 Other receivables
6 Summary of circularisation results
7 Certificate/confirmation replies
10

Year end: J
File no:
SUMMARY SHEET – TRADE & OTHER RECEIVABLES

Planning Final
met?
Audit objectives
1 To ensure that trade receivables are due 9, 10, 11,
at the value recorded. 12, 13, 14,
Yes/No
15, 16, 17,
28, 29
2 To ensure that adequate allowance for
impairment and /or uncollectibility has 18, 19 Yes/No
been made for all receivables.
3 To ensure that proper cut-offs has been

made. 20 Yes/No
4 To ensure that prepayments and loan

receivables (including staff and directors) 21, 22, 23,
are properly valued, classified, and 24, 25, 26, Yes/No
verified. 27

concerning receivables have been made
30, 31, 32,
and that the information is appropriately Yes/No
33
Planning conclusion
Prepared by: Date:
Reviewed by: Date:
Final conclusion
- in my opinion (subject to matters highlighted on B5 or B8)* trade and other receivables are fairly stated/ * not fairly stated
as described below.
Prepared by: Date:
Reviewed by: Date:

Year end: Reviewed by: Date: J2
File no:
AUDIT PROGRAMME – TRADE & OTHER RECEIVABLES
Test Results
Initials and
date
Y/N Y/N
General
accounts.

date.

verify.
PAF04)
Cost/existence
9 Obtain or prepare an aged list of balances and
test the casts.
10 Agree the aged list of balances to the control
account. Obtain explanations for all material
adjustments to the control account.
11 Perform a circularisation of trade receivables.
(a) Select a sample of accounts for

confirmation from a complete list of
balances (include nil and credit balances
where applicable). Record the details on
the standard working paper.
(b) Confirm with client the receivables you

wish to circularise.

Test Results
Initials and
date
Y/N Y/N
(c) Obtain explanations where the client
does not want you to circularise particular
balances and consider alternative
procedures that can be applied.
(d) Consider whether the refusal to allow

circularisation of particular balances will
impose a limitation of scope on the audit?
(e) Send the confirmation requests. Enclose

a prepaid envelope for return to the firm.
Ensure the reply part of the letter is
properly referenced.
(f) Record replies on the control sheet.

(g) Where replies are not received within a
reasonable period send a follow-up letter.
(h) Follow the alternative procedures for any

unfavourable responses or where no
response obtained.
(i) Summarise the results and consider
whether adequate audit comfort has
been obtained for trade debtors.
12 Where circularisation has not been carried out
select a sample of trade receivables or where
unsatisfactory results are obtained carry out
alternative procedures.
(a) Examine the ledger for cash after date.

(b) For unpaid items inspect proof of delivery
or despatch. If no such documentation is
available, inspect the sales invoice
supporting them.
(c) Review correspondence files for items in
(b) to determine whether any disputes
exist.
13 List all credit balances over HK$_________

and obtain explanations.
14 If the entity has retained substantially all the
risks and rewards of ownership of any
transferred assets (e.g. discounted bills,
factored trade receivables), ensure the entity
continues recognising such assets as
receivables and that a financial liability is
recognised for the consideration received.
(HKAS 39.20)
Valuation
15 Trade receivables are normally treated as
'loans and receivables' under HKAS 39 and
carried at amortised cost using the effective
interest rate method. Where this is not the
case ensure that the presentation is in
16 If trade receivable are classified as "loans and
receivables":

Test Results
Initials and
date
Y/N Y/N
(a) Ensure that they are carried at amortised
cost in the balance sheet.
(b) Identify if there is objective evidence that
a trade receivable or group of trade
receivables is impaired after individual
assessment of trade receivables that are
individually significant and collective
assessment of trade receivables that are
not individually significant.
(c) Consider the estimates of "Present value

of estimated future cash flow" in
determining the amortised cost by
reference to HKSA 540 "Audit of
Accounting Estimates" and HKSA 545
"Auditing Fair Value Measurements and
Disclosures".
17 Check whether any gain or loss arising from a

change in fair value is recognised in the
income statements for the period in which it
arises.
18 Review ledger accounts and obtain a list of

any debts with balances:
(a) not paid within ………… months of the
period end;
(b) in excess of their credit limit;
(c) in the hands of liquidators or receivers;
(d) in the hands of lawyers for collection.
19 Compare the client‟s allowance for
uncollectibility for trade receivables with the
list completed under 10 above and consider its
adequacy. Obtain explanations for and justify
any material accounts omitted from the client‟s
list.
Cut-off
20 Cut-off testing is covered in Section R.
Prepayments
21 Obtain a list of items included as prepayments:
(a) Test mathematical accuracy.

(b) Vouch all items over HK$ by
reference to the cash book and invoices.
(c) Compare the list in detail to last year‟s

and enquire into any major differences.
(d) Review the cash book, general ledger

and profit and loss account and ensure
that all likely prepayments are included.
(e) Review for reasonableness and

verify significant/unusual items,
comparing with last year and
expectations.

Test Results
Initials and
date
Y/N Y/N
Deposits
22 Obtain a list of deposits and perform the
following procedures:
(a) Ascertain the nature of the deposits and
sight deposits receipts ensure that they
are:
˙current;
˙originals;
˙in the name of the entity; and
˙in the correct amount.
(b) Consider the outstanding amount of
contract sum in relation to the deposits
paid for assets as capital commitments.
(c) Consider whether any allowance for

impairment and / or uncollectibility is
necessary (see question 19).
Bills receivables
23 Obtain or prepare a list of bills receivables and
perform the following procedures:
(a) Obtain banking facilities letter to see if
such facilities have been granted by bank.
(b) Obtain a list of bills receivable balances.
(c) Check details of bills receivable balances

to bills statements.
(d) Check the bills receivable balances to
bank confirmation.
(e) Check subsequent settlement of bills
receivable balances to bank statements.
(f) Consider whether any allowance for

Other receivables
24 Obtain or prepare a list of other receivables.
(a) Vouch material items to supporting

documentation.
(b) Compare with previous year and enquire
into major differences.
(c) Ensure that other receivables are carried
at amortised cost if they are classified as
"loans and receivable" under HKAS 39.
(d) Consider whether any allowance for

(e) Obtain confirmation from independent

third party.

Test Results
Initials and
date
Y/N Y/N
Loan receivable
25 Ensure that no loans have been made to
directors unless within the provisions of
applicable legislation.
26 For loans made in the year:

(a) Obtain confirmations of loans receivable;
(b) Verify for loans in existence at the year

end that:
- security exists and is in the hands of the
company;
- the value of security is adequate;
- any provision against loans is
adequate; and
- confirmations relating to the loans
agree with the balances.
(c) Check that loans granted during the year

are properly authorised;
(d) Check that loan repayments are received
on the due date and correctly recorded;
and
(e) Check that interest on loans receivable

is:
- correctly recorded;
- received on the due dates; and
- correctly accrued at the year end
(f) Consider whether any allowance for
necessary (see part 14).
Long-term receivables/retentions
27 Where a receivable, or portion thereof is
recoverable after more than one year,
consider:
(a) whether any allowance for impairment

and / or uncollectibility is necessary;
(b) whether adequate disclosure has been
made.
(c ) whether the receivable is properly
accounted for under HKAS 39 unless the
fair value effect is immaterial.
(d) whether a gain or loss arising from a

change in the fair value is recognised in
the income statements for the period in
which it arise.
Foreign Currencies
HKAS 21.
29 Confirm that all monetary assets have been

translated at the closing rate.

Test Results
Initials and
date
Y/N Y/N

made.
32 Review transactions and balances with

directors and ensure they are properly
presented as relate party transactions.
33 Ensure that any factored debts have been
accounted for in accordance with the
substance of the agreement.
Bespoke tests
Conclusion
on A5 or A6, as appropriate.

Year end: Reviewed by: Date: J6

File no:
SUMMARY OF RECEIVABLES’ CIRCULARISATION RESULTS
As at
No. Value % Value

HK$/
Total trade receivables RMB
HK$/
Total balances circularised (A) RMB
Results of test:
Balances confirmed by
circularisation (B)
Balances confirmed by cash after

date (D)
Balances confirmed by alternative

procedures (F)
Total (G)
Unconfirmed balances i.e., audit

error (A-G)
Conclusion

Year end: Reviewed by: Date: J
File no:
Receivables’ circularisation sheet

A B C D E F
Alternative
procedures Balances
Balance Remaining
Balance Disputed undertaken on confirmed by Unconfirmed
Balance confirmed by unaudited
Customer accepted balance (A-B) column E items alternative balances
HK$ cash after date balance (C-D)
HK$ HK$ e.g. sample procedures HK$
HK$ HK$
check on proof HK$
of sale

Year end: J
File no:

Objective : To record the sources from which audit assurance has been obtained, and to assist in calculating sample sizes
for tests of detail.
Audit area: Trade receivables


OR
OR IR = 1.8
Tolerable error = Materiality = 200,000 = 111,111

Monetary value of population ( 100 %) HK$ 11,779,876.76
Value of residual population ( %) HK$ -
Sample size =
(See maximum
Residual population x Sampling risk factor HK$ - x 1.2 = - below)
Materiality HK$ 200,000.00
Plus: Number of items above the tolerable error = 1
Number of other “key” items = -
Conclusion
Prepared by Date
Reviewed by Date
L M H L M H L M
L 20 25 30 L 13 17 20 L 10 13
risk
M 25 30 35 risk
M 17 20 23 risk
M 13 15
H 30 35 40 H 20 23 26 H 15 18
Table 1 – for tests of Table 2 – for tests of detail
detail only Table 3 – for tests of detail and
and (analytical review* or
analytical review and tests of control
tests of control*)

Ref:
assist in calculating sample sizes
1.2
(See maximum
below)
H
15
18
20
Table 3 – for tests of detail and

analytical review and tests of control

Year end: K
File no:
K BANK BALANCES AND CASH
1 Lead schedule
2 Audit programme
3 Bank reconciliations
4 Bank confirmations
5 Cash counts
Alpha Partners - July 2010 Ki Bank Balances and Cash Index HKICPA Jun 07 Supp 00
Year end: K
File no:
SUMMARY SHEET – BANK BALANCES AND CASH

Planning Final
met?
Audit objectives
1 To establish that all bank balances and 9, 10, 17, 18 Yes/No
overdrafts have been included at the
correct amount.
2 To ensure that bank balances and 11, 12, 13 Yes/No

overdrafts are correctly disclosed.
3 To ensure that cash balances are genuine 14, 15, 16, Yes/No
and have been included at the correct 17, 18
amount.
4 To confirm that all necessary disclosures 19, 20, 21 Yes/No

concerning bank and cash balances have
Planning conclusion
Prepared by: Date:
Reviewed by: Date:
Final conclusion
- in my opinion (subject to matters highlighted on B5 or B8)* bank and cash are fairly stated/ * not fairly stated as described
below.
Prepared by: Date:
Reviewed by: Date:
Alpha Partners - July 2010 Ks Bank Balances and Cash Summary Sheet HKICPA Jun 07 Supp 00
Year end: Reviewed by: Date: K2
File no:
AUDIT PROGRAMME - BANK BALANCES AND CASH
Test Results
Initials
and date
Y/N Y/N
General
2 Obtain and check, or prepare, a lead schedule for

the current year‟s figures and reconcile this to the
general ledger.
adjustments made during the course of preparing
(a) comparison of the current figures with those of
prior periods;
(b) review and comparison of key ratios or other
performance indicators.
5 Review the planned extent of reliance on internal
controls in this area and consider whether this
remains appropriate.
assessment should be revised in view of the audit
evidence obtained. Record details of any
necessary adjustments on B5 or B8. Consider the
impact on the remainder of the audit work and on
any work undertaken to date.

accounting policies used by the entity. (Ref: PAF04)
Valuation and existence

9 Obtain bank confirmations for all bank accounts
open at any time during the year in accordance with
the guidance contained in HKSA 505.39 to 505.49.
10 Obtain or prepare bank reconciliations for all

accounts and verify.
(a) Check bank balances to bank statement and
bank confirmation.
(b) Check cash book balance to general ledger.
(c) Check casting of the reconciliations.

(d) Check a sample of uncleared items through to
the new period (noting dates). Obtain reason
where any item has taken longer than
expected to clear.
Alpha Partners - July 2010 K2 Bank Balances and Cash Audit Programme HKICPA Jun 07 Supp 00
Test Results
Initials
and date
Y/N Y/N
(e) Obtain explanations and substantiate all
adjustments on the bank reconciliations.
11 Ensure that all matters dealt with in the bank

confirmations have been referenced to the relevant
schedule/sections.
12 Ensure that bank balances and overdrafts are only
netted off where a formal right of set-off exists.
13 Ensure that the company has not exceeded any

restrictions on borrowing powers imposed in the
Articles of Association or any loan agreement.
Cash
14 For businesses receiving cash income, ensure
unbanked takings before and after the year end
have been accounted for in the correct period.
15 For businesses receiving cash income, ensure that

all unbanked takings at the year end have been
timeously banked in the new period.
16 Obtain certificates for all cash balances not counted.
Foreign Currencies
HKAS 21.
18 Confirm that all monetary assets have been


19 Confirm that a disclosure checklist will be completed
for this year. Where that is not the case explain how
the objectives relating to disclosure will be achieved.
20 Ensure that there is evidence on the file to support

all disclosures made.
21 Review the bank confirmations and correspondence
and ensure that all necessary disclosures have
been made.
Bespoke tests
those required by C6.3 and cross reference with the
objectives on the summary sheet.
Conclusion
23 Consider whether there are any points which need
to be included in a letter of representation or letter
of comment and record on A5 or A6 as appropriate.
Alpha Partners - July 2010 K2 Bank Balances and Cash Audit Programme HKICPA Jun 07 Supp 00
Year end: L
File no:
L TRADE & OTHER PAYABLES
1 Lead schedule
2 Audit programme
3 List of payable balances
4 Accruals and provisions
5 Directors' accounts: summary
6 Hire purchase/finance leases
7 Summary of payables' circularisation results
8 Certificates/confirmation replies
10
11

Year end: L
File no:
SUMMARY SHEET – TRADE & OTHER PAYABLES

Planning Final
met?
Audit objectives
1 To ensure that liabilities exist and are
supported by satisfactory independent 9, 10 Yes/No
evidence.
2 To ensure that trade payables have been 11, 12, 13,
fully and accurately recorded. 14, 15, 16, Yes/No
28, 29
3 To ensure that proper cut-off has been
applied. 17 Yes/No
4 To ensure that all hire purchase and

finance leases have been accounted for 18, 19, 20,
in accordance with applicable accounting 21, 22, 28, Yes/No
standards. 29
5 To ensure that all material accruals, loans 23, 24, 25,

and other payables have been properly 26, 27, 28, Yes/No
accounted for. 29
concerning payables have been made
and that the information is appropriately 30, 31 Yes/No
Planning conclusion
I am satisfied that from the tests planned sufficient evidence can be gained to satisfy the objectives.
Prepared by: Date:
Reviewed by: Date:
Final conclusion
- in my opinion (subject to matters highlighted on B5 or B8)* trade and other payables are fairly stated/ * not fairly stated as
described below.
Prepared by: Date:
Reviewed by: Date:

Year end: Reviewed by: Date: L2

File no:
AUDIT PROGRAMME – TRADE & OTHER PAYABLES
Test Results
Initials and
date
Y/N Y/N
General

general ledger.
prior periods;


Existence
9 Obtain or prepare a list of trade payables. Agree
the list to the control account. Obtain explanations
for all material adjustments to the control account.
10 Test the casts of the list.

Completeness
11 List all debit balances over HK$_______ and obtain
explanations. Ensure they are correctly treated in
the accounts.
12 Perform a trade payables' circularisation.

(a) Select a sample of accounts from a complete
list of balances for example an activity report
(include nil and debit balances where
applicable). Record the details on the
standard working paper.

Test Results
Initials and
date
Y/N Y/N
(b) Confirm with client the trade payables you
wish to circularise.
(c) Obtain explanations where the client does
want you to circularise particular balances and
consider alternative procedures that can be
applied.
(d) Consider whether the refusal to allow

circularisation of particular balances will
impose a limitation of scope on the audit?
(e) Send the confirmation requests. Enclose a

prepaid envelope for return to the firm. Ensure
the reply part of the letter is properly
referenced.
(f) Record replies on the control sheet.

(g) Where replies are not received within a
reasonable period send a follow-up letter.
(h) Follow the alternative procedures for any

unfavourable responses or where no response
is obtained.
(i) Summarise the results and consider whether

adequate audit comfort has been obtained for
trade payables.
13 Where a circularisation is not carried out, or the

results are unsatisfactory, test trade payables for
completeness as follows:
(a) obtain the year end trade payables listing;
(b) compare to prior year to identify obvious

omissions;
(c) review purchase day book during the year and
payments after the end to identify main
suppliers;
(d) review purchase YTD information where

available to identify major suppliers;
(e) enquire to major suppliers not on the list.

Ensure the list is in fact complete;
(f) enquire into low balances with major suppliers
to ensure they are complete;
(g) obtain the file for year end supplier statements.
Check a sample and agree/reconcile to the
list of balances;
(h) for major suppliers (regardless of recorded

balance outstanding) and for all material
recorded balances, identify the related
statement and agree/reconcile to the creditors‟
listing;

Test Results
Initials and
date
Y/N Y/N
(i) where a statement is not available for any
major supplier(s) consider faxing a request for
a copy statement;
(j) review after-date payments. Ensure those

paying off pre-year end items are included in
creditors;
(k) extend the scope of (i) above if statements are

not retained for all suppliers.
14 Review invoices in the new period to ensure all

material amounts have been provided for.
Valuation
15 Where trade payables are valued on a basis other
than amortised cost using the effective interest
method, ensure that the treatment complies with the
requirements of HKAS 39.
16 Where trade payables are carried at amortised cost,

consider the present value of estimated future cash
flow in determining the amortised cost by reference
to HKSA 540 Audit of Accounting Estimates and
HKSA 545 Auditing Fair Value Measurement.
Cut-off
17 Cut-off test is covered in Section R.
Leasing
18 Review the treatment of all operating and finance
leases.
(a) Confirm that the distinction between operating
and finance leases has been properly applied.
(b) Consider any new agreements and ensure that

the accounting treatment is in accordance with
HKAS 17.
(c) Confirm that any assets, liabilities or finance

charges are in accordance with HKAS 17.
19 Confirm that any operating lease incentives have

been accounted for in accordance with HKAS-Int 15.
20 Have any sale and lease back transactions in the

period been identified and accounted for under
HKAS 17 as an operating or finance lease as
appropriate?
21 Obtain direct confirmation of relevant details of

loans payable.
22 Physically inspect the asset, if possible, or
determine that the asset exists and is in use by the
client;
Bills payable
23 Perform the following procedures:

Test Results
Initials and
date
Y/N Y/N
(a) Obtain banking facilities letter to see if such
facilities have been granted by bank.
(b) Obtain a list of bills payable balances.

(c) Check details of bills payable balances to bills
statements.
(d) Check the bills payable balances to bank
confirmation.
Accruals
24 Review accruals for completeness comparing to:
(a) last year‟s list;

(b) expectations.
Income Taxes
25 Agree the current tax liability to Section P.
Provisions
26 Carry out audit tests as detailed in Section N.
Other payables
27 Vouch any material other payables to supporting
documentation and ensure that other payables are
carried at amortised cost.
Foreign Currencies
HKAS 21.
29 Confirm that all monetary liabilities have been


completed for this year. Where that is not the case
explain how the objectives relating to disclosure will
be achieved.
31 Ensure that there is sufficient appropriate evidence

on the file to support all disclosures made.
Bespoke tests
Conclusion

Year end: Reviewed by: Date: L7

File no:
SUMMARY OF TRADE PAYABLES’ CIRCULARISATION RESULTS
As at
No. Value % Value

HK$/
Total trade payable balances RMB
HK$/
Total balances circularised (A) RMB
Results of test:
Balances confirmed by
circularisation (B)
Balances confirmed by supplier

statement reconciliations (D)
Balances confirmed by alternative

procedures (F)
Total (G)
Unconfirmed balances i.e., audit

error (A-G)
Conclusion

Year end: Reviewed by: Date: L
File no:
Trade Payables’ circularisation sheet

A B C D E F
Balance
Balances
confirmed by Remaining Alternative
Balance Disputed confirmed by Unconfirmed
Balance supplier unaudited procedures
Supplier accepted balance (A-B) alternative balances
HK$ statement balance (C-D) undertaken on
HK$ HK$ procedures HK$
reconciliation HK$ column E items
HK$
HK$

Year end: L
File no:

Audit area: Trade & other payables


OR
OR

Sample size =
(See maximum
Materiality HK$
Actual sample size
Conclusion
Prepared by Date
Reviewed by Date
L M H L M H L M H
L 20 25 30 L 13 17 20 L 10 13 15
risk
M 25 30 35 risk
M 17 20 23 risk
M 13 15 18
H 30 35 40 H 20 23 26 H 15 18 20
analytical review and tests of
review* or tests of
control
control*)

Year end: M
File no:
M LONG-TERM LOANS AND DEFERRED INCOME
1 Lead schedule
2 Audit programme
3 Confirmation certificates

Year end: M
File no:
SUMMARY SHEET - LONG-TERM LOANS AND DEFERRED INCOME

Planning Final
met?
Audit objectives
1 To ensure that all material loans have 9, 10, 11 Yes/No
been correctly accounted for. 12, 13, 14,
15, 16, 17,
19, 20
2 To ensure that deferred income has been 18, 19, 20 Yes/No

correctly accounted for and is complete.

concerning long term loans and deferred
income have been made and that the
information is appropriately presented and
described.
Planning conclusion
Prepared by: Date:
Reviewed by: Date:
Final conclusion
- in my opinion (subject to matters highlighted on B5 or B8)* long term loans and deferred income are fairly stated/ * not
fairly stated as described below.
Prepared by: Date:
Reviewed by: Date:
Alpha Partners - may 2010 HKICPA Jun 07 Supp 00

Year end: Reviewed by: Date: M2
File no:
AUDIT PROGRAMME – LONG-TERM LOANS AND DEFERRED INCOME
Test Results
Initials and
date
Y/N Y/N
General

general ledger.
prior periods;


Loans
9 Obtain direct confirmation from lenders and confirm
that other matters such as security have been dealt
with.
10 Review loan agreements and consider the

implications of any breach of covenants.
11 Check supporting evidence for loan advance and
repayment during the year.
12 Check memorandum of satisfaction for loan relating
to charges previously filed with Company Registry.
13 Calculate the apportionment of loan between non-

current and current portion.
14 Determine split of loans between
secured/unsecured and interest bearing/non-
interest bearing.

Test Results
Initials and
date
Y/N Y/N
15 Verify interest charged for the period and the
adequacy of accrued interest.
16 Confirm that loans payable more than one year are
from the balance sheet date are measured in
17 Ensure the completeness of loans by :

(b) reviewing bank confirmation and other

correspondences (Ref. Section K)
(c) identifying unrecorded liabilities (Ref. Section
T)
Deferred income
18 Review the basis for deferring income
(a) vouch to supporting documents; and
(b) ensure that it is valid, complete and has been
correctly and consistently applied with the prior
year and GAAP.
Foreign Currencies
HKAS 21.
20 Confirm that all monetary liabilities have been


completed for this year. Where that is not the case
explain how the objectives relating to disclosure will
be achieved.
22 Ensure that there is sufficient appropriate evidence

on the file to support all disclosures made.
Bespoke tests
Conclusion

Year end: N
File no:
N PROVISIONS FOR LIABILITIES AND CHARGES, CONTINGENT LIABILITIES

AND FINANCIAL COMMITMENTS
1 Lead schedule
2 Audit programme
3 Details of contingent liabilities
4 Capital expenditure authorised/contracts placed
5 Operating lease commitments
Alpha Partners - HKICPA Jun 07 Supp 00

Year end: N
File no:
SUMMARY SHEET - PROVISIONS FOR LIABILITIES AND CHARGES,

CONTINGENT LIABILITIES AND FINANCIAL COMMITMENTS
Planning Final
Reference Reference Are you Comments Initials
of key tests to bespoke satisfied
met?
Audit objectives
1 To ensure that full provision has been 9, 10, 11, Yes/No
made for all liabilities or losses which are 12, 13, 14,
likely to be incurred, or certain to be 15, 22, 23
incurred, but uncertain as to the amount
or date on which they will arise.
2 To ensure that all contingent liabilities 16, 17, 18, Yes/No

have been identified and adequate 19
provision made.
3 To ensure that capital and other 20, 21 Yes/No

commitments have been properly
accounted for.
4 To confirm that all necessary disclosures 24, 25, 26 Yes/No
concerning provisions, contingent
liabilities and commitments have been
made and that the information is
Planning conclusion
Prepared by: Date:
Reviewed by: Date:
Final conclusion
- in my opinion (subject to matters highlighted on B5 or B8)* provisions for liabilities and charges, contingent liabilities and
financial commitments are fairly stated/ * not fairly stated as described below.
Prepared by: Date:
Reviewed by: Date:

Year end: Reviewed by: Date: N2
File no:
AUDIT PROGRAMME – PROVISIONS FOR LIABILITIES AND CHARGES,

CONTINGENT LIABILITIES AND FINANCIAL COMMITMENTS
Test Results Sch ref Comments Initials

required satisfactory and date
Y/N Y/N
Provisions for liabilities and charges

General
accounts.
2 Obtain and check, or prepare, a lead
schedule for the current year‟s figures and
reconcile this to the general ledger.
3 Examine any material journal entries or

other adjustments made during the course
of preparing the financial statements.

or
(a) comparison of the current figures
with those of prior periods;
(b) review and comparison of key ratios
or other performance indicators.

6 Assess whether the initial materiality

and/or risk assessment should be revised
in view of the audit evidence obtained.
Record details of any necessary
adjustments on B5 or B8. Consider the
impact on the remainder of the audit work

verify.
8 Review of appropriateness and
consistency of accounting policies used
by the entity. (Ref: PAF04)
Liabilities and contingent liabilities

9 (a) Review obligations under pension
and similar post-retirement schemes,
obtain a copy of the scheme rules or
policies and ensure that adequate
provision has been made.

Y/N Y/N
(b) Where the company operates a

pension scheme discuss the
administration under relevant
regulatory bodies, reporting and
whistle-blowing obligations with the
directors/ trustees to ensure its
affairs are being properly
administered.
10 Obtain or prepare a list of other

obligations of uncertain timing and
amount existing at the balance sheet
date. Ensure its completeness by
reviewing:
(a) the previous year‟s provisions and
contingent liabilities;
(b) items recorded on the bank
confirmations and/or banking
facilities letter;
(c) minutes of meetings;

(d) major contracts;
(e) client's correspondence; and
(f) documents regarding legal cases;
(g) and
other (specify)
11 Discuss the list with the client and ensure
that it is complete and that adequate
provision has been made for likely losses.
12 Perform search for unrecorded liabilities

(Ref. Section T)
13 Review the list in 9 above for contingent
liabilities and discuss with the entity and
ensure that it is complete and that
adequate disclosure has been made for
all contingent liabilities.
Recognition
14 Review the treatment of all provisions and
contingent liabilities and ensure that:
a) A provision is recognised when and

only when there is a present
obligation in respect of a past event,
it is probable that there will be an
outflow of resources, and this can be
estimated reliably.
b) Contingent liabilities do not satisfy

the criteria in (a) above and are
properly disclosed unless the
possibility of an outflow of resources
is remote.
15 Consider reasonableness of assumptions
and bases used to estimate the amount of
provisions and obligations.
Law and regulations

Y/N Y/N
16 (a) Enquire of the directors whether they

are on notice of any possible
instances fraud or of other non-
compliance with such law or
regulations.
(b) Update the permanent audit file for
any changes identified since the
planning stage.
(c) Review correspondence files of any

relevant licensing or regulatory
authorities for any indications of
breaches of laws and regulations.
(d) Confirm compliance with those laws

and regulations that could have a
material impact on the accounts by
completing the tests set out in the
audit approach column of the
register of laws and regulations.
(PAF05)
(e) Draft specific representations for

inclusion in the letter of
representation.
Litigation and claims

17 To identify any possible claims or litigation
against the entity and consider whether
the matters have been adequately and
properly accounted for in the financial
statements:
(a) Make appropriate inquiries of

management including obtaining
representations.
(b) Review minutes of those charged

with governance and
correspondence with the entity's
legal advisers.
(c) Examine legal expense accounts.

(d) Write to company's legal advisers
enquiring about the status and
possible outcome of any legal cases
(e) Use any information obtained

regarding the entity's business such
as other third party evidence (for
example, newspaper) and discussion
with in house legal counsel (where
appointed) for any possible claims
and litigations (HKSA 501.32)
18 Where actual or potential litigation or

claims against the entity have been
identified consider whether direct
communication with the entity‟s legal
advisers is required.

Y/N Y/N
19 If permission is refused by management

to contact the entity's legal advisers
directly: consider the impact on the audit
opinion (B6).
Capital and other commitments

20 Review the management's minutes,
invoices (capital expenditure committed
before and after year end), contracts,
agreements or other documents and
ensure that all material capital
commitments have been identified as
follows:
a) Contracted but not provided for.

b) Authorised but not contracted for.
21 Obtain details of future commitments
under operating leases and ensure they
are correctly disclosed.
Foreign Currencies
HKAS 21.
23 Confirm that all monetary liabilities have

been translated at the closing rate.

completed for this year. Where that is not
the case explain how the objectives
relating to disclosure will be achieved.

evidence on the file to support all
disclosures made.
26 Where disclosures about provisions or
contingent liabilities include
management's opinion on an issue ensure
that these opinions are confirmed in the
letter of representation.
Bespoke tests
27 Perform any necessary additional tests
such as those required by C6.3 and cross
reference with the objectives on the
summary sheet.
Conclusion
28 Consider whether there are any points (in
addition to laws and regulations) which
representation or letter of comment and
record on A5 or A6 as appropriate.

Year end: O
File no:
O SHARE CAPITAL, RESERVES AND STATUTORY RECORDS
1 Lead schedule
2 Audit programme
3 Audit work summary
4 Extracts of registers and returns
5 Extracts of current year minutes
6 Prior period adjustments
Alpha Partners - May 2010 Si Capital and Reserves Index HKICPA Jun 07 Supp 00
Year end: Reviewed by: Date: O2
File no:
AUDIT PROGRAMME – SHARE CAPITAL, RESERVES AND STATUTORY RECORDS
Test Results
Ref/ Initials and
required satisfactory Sch ref
comments date
Y/N Y/N
General
accounts.

date.

verify.
PAF04)
Statutory records
9 Perform company search and obtain copies of
statutory records for this period.
10 Obtain a copy of the Memorandum and
Articles of Association ("M&A").
11 Inspect original statutory records for this
period and up to the date of auditor's report.
12 Ensure that all changes in directors and
secretaries and their interests in shares or
debentures have been properly authorised
and entered into the relevant register.
13 Ensure that all charges have been entered

into the relevant register.
14 Agree details in the share/director/charges
register to:
(a) the financial statements;
(b) the annual return; and
Alpha Partners - July 2010 O2 Capital and Reserves Audit Programme HKICPA Jun 07 Supp 00
Test Results
Ref/ Initials and
comments date
Y/N Y/N
(c) the directors‟ report.
15 Review minutes for:
a) proper approval and authorisation for
additions, disposals, impairment loss
provided and reversal of impairment loss
on assets during the year;
b) major contracts or capital commitments;
c) changes in share capital;
d) dividend proposed and distribution;
e) changes in directorship, secretary,
shareholding;
f) proper approval and authorisation for
loan advance from / to;
g) other matters that may affect the audit.
Dividends
16 Where a dividend is proposed or has been
paid in the period, consider whether the
distribution is properly authorised and paid out
of profits.
(a) Check calculation and the payment for
cash dividend
(b) Ensure proper amount has been
transferred from retained profits to the
share capital accounts for stock dividend
17 Where a dividend is illegal consider whether:

(a) this is adequately disclosed in the
accounts;
(b) a debtor or contingent asset should be
shown.
18 Have interest, dividends, losses or gains
relating to a financial instrument or a
component that is a financial liability been
recognised as income or an expense in the
income statement?
19 Have distributions to holders of equity
instruments been debited directly to equity?
Share capital
20 Check authorised share capital with M & A or
resolution for subsequent increase.
21 Record details of any changes in share capital
in this period and ensure that these have been
properly authorised and reflected in the
22 Check evidence for receipt of consideration

for shares issued in the period.
Test Results
Ref/ Initials and
comments date
Y/N Y/N
23 For capital instruments issued in the period,
have these (or their components) been
classified on initial recognition as a financial
liability, a financial asset or an equity
instrument in accordance with the substance
of the contractual arrangement and the
definitions of a financial liability, a financial
asset and an equity instrument?
Share-based payments
24 Ensure share-based payment are verified and
properly accounted for in accordance with
HKFRS 2. (Refer to Section R for details of
audit procedures)
Other financial instruments

25 Have the different components of compound
financial instruments been classified
separately as financial liabilities, financial
assets or equity instruments in accordance
with paragraph HKAS 32.15?
26 When a derivative financial instrument gives
one party a choice over how it is settled has it
been treated as a financial asset or a financial
liability except where all of the settlement
alternatives would result in it being an equity
instrument?
Reserves
27 Review schedule of all movements in reserves.
(a) Ensure that transfers between reserves

are correctly treated and authorised.
(b) Ensure that the treatment in the financial

statements is correct.
(c) Ensure prior-year adjustment are
properly reflected in the reserve
Foreign Currencies
HKAS 21.
Control
29 Ascertain details of the ultimate controlling
party as required by HKAS 24 and ensure that
correct disclosure is made in the financial
statements.
Test Results
Ref/ Initials and
comments date
Y/N Y/N
Bespoke tests
Conclusion
Year end: O
File no:
SUMMARY SHEET - SHARE CAPITAL, RESERVES AND STATUTORY RECORDS

Planning Final
met?
Audit objectives
1 To ensure that the statutory records 9, 10, 11, Yes/No
have been properly maintained and are 12, 13, 14,
up to date. 15
2 To ensure that any changes in share 20, 21, 22, Yes/No
capital are supported by appropriate 23, 29
resolutions and are properly reflected in
3 To ensure that capital instruments and 16, 17, 18, Yes/No
the related interest or dividends are 19, 24, 25,
properly presented in accordance with 26, 27, 28,
the substance of the arrangements. 29

concerning reserves and other statutory
information have been made and that
they are appropriately presented and
described.
Planning conclusion
Prepared by: Date:
Reviewed by: Date:
Final conclusion
- in my opinion (subject to matters highlighted on B5 or B8)* share capital and reserves are fairly stated/ * not fairly stated
as described below.
Prepared by: Date:
Reviewed by: Date:
Alpha Partners - May 2010 Os Capital and Reserves Summary Sheet HKICPA Jun 07 Supp 00
Year end: Pi
File no:
P INCOME TAXES
1 Lead schedule
2 Audit programme
4 Tax computations (current year & prior year)
5 Reconciliation of tax charges
6 Computations for deferred taxation
7 Prior year assessments from tax authorities
8 Correspondence with tax authorities
10
Page 315 of 356

Year end: Reviewed by: Date: P2
File no:
AUDIT PROGRAMME - INCOME TAXES
Test Results Sch Ref Comments Initials and

required satisfactory date
Y/N Y/N
General
accounts.

date.

verify.
PAF04)
Current tax
9 Obtain and check, or prepare the following:
(a) draft tax computations;
(b) an analysis of movement on the current
tax account (including local tax and
overseas tax);
(c) a proof of tax/tax reconciliation in the

form required by HKAS 12.85.
10 For the movement of the current tax account
(both local tax and overseas tax):
(a) test for mathematical accuracy;
(b) check the amounts paid during the
current period to bank statements and
copies of assessments and compare
refunds received to correspondence;
Page 316 of 356

Y/N Y/N
(c) review the current position on agreement
of tax computations with relevant tax
authorities;
(d) obtain details of any significant matters

currently outstanding with the tax
authorities.
11 Verify the computation of the tax charges

(both local tax and overseas tax):
(a) Obtain or prepare analyses of expense
accounts which may contain items that
are disallowable, restricted, or result in
temporary differences, e.g.:
- travel / entertainment
- subscriptions
- sundries
- legal / professional fees
- repairs / maintenance (for capital items)
- hire charges (for expensive motor
vehicles);
- paymentsand
under finance leases
(b) Check calculation of capital allowances;
(c) Verify the mathematical accuracy of the

computations; and
(d) Review the allocation of the tax charge to
income tax and other taxes.
12 Ensure profit before tax used in the
computation agrees to draft profit and loss
account.
13 Have current tax liabilities (assets) for the

current and prior periods been measured at
the amount expected to be paid to (recovered
from) the taxation authorities, using the tax
rates (and tax laws) that have been enacted or
substantively enacted by the balance sheet
date?
Deferred taxation
14 Except where permitted has a deferred tax
liability been recognised for all taxable
temporary differences?
15 Has a deferred tax asset been recognised for

all deductible temporary differences only to the
extent that it is probable that taxable profit will
be available against which the deductible
temporary difference can be utilised?
16 Has a deferred tax asset been recognised for

the carry forward of unused tax losses and
unused tax credits only to the extent that it is
probable that future taxable profits will be
available against which the unused tax losses
and unused tax credits can be utilised.
Page 317 of 356

Y/N Y/N
17 Have deferred tax assets and liabilities been
measured at the tax rates that are expected to
apply to the period when the asset is realised
or the liability is settled, based on tax rates
(and tax laws) that have been enacted or
substantively enacted by the balance sheet
date?

18 Are there tax assets and tax liabilities that
were offset and presented on a net basis? If
yes, ensure these tax assets and liabilities
meet the right to offset in accordance with
HKAS 12.71-76.


evidence on the file to support all disclosures
made.
21 Have current tax and deferred tax been

charged or credited directly to equity (e.g.
surplus from revaluation of assets) where the
tax relates to items that are credited or
charged, in the same or a different period,
directly to equity?
Bespoke tests
Conclusion
23 Consider whether there are any items which
this on A5 or A6 as appropriate.
Page 318 of 356

Year end: P3
File no:
SUMMARY SHEET - INCOME TAXES

Planning Final
Reference Reference Are you Comments Initials
of key tests to bespoke satisfied
met?
Audit objectives
1 To ensure that the current tax is 9, 10, 11, Yes/No
computed and accounted for in 12, 13
accordance with applicable regulations
and financial reporting standards
respectively.
2 To ensure that deferred taxation has 14, 15, 16, Yes/No
been correctly accounted for. 17
3 To confirm that all necessary disclosures 18, 19, 20, Yes/No

concerning current and deferred tax 21
Planning conclusion
Prepared by: Date:
Reviewed by: Date:
Final conclusion
- in my opinion (subject to matters highlighted on B5 or B8)* income taxes are fairly stated/ * not fairly stated as described
below.
Prepared by: Date:
Reviewed by: Date:
Page 319 of 356

Year end: Qi
File no:
Q INCOME STATEMENT: RECEIPT ITEMS
1 Lead schedule
2 Audit programme – profit and loss
4 Turnover
5 Dividend and interest income
6 Rental income
7 Management fee income
8 Royalty income
9 Fair value gains on:

- investment property
- financial assets / liabilities at fair value through profit or loss
- trading securities
- biological assets
10 Foreign exchange gains
11 Gains on provisions or liabilities written back
12 Gains on disposal of assets
13 Sundry income
14
15
Page 320 of 356

Year end: Reviewed by: Date: Q2
File no:
AUDIT PROGRAMME – INCOME STATEMENT: RECEIPT ITEMS

Test Results Sch ref Comments Initials and
Y/N Y/N
General
accounts.
those of budgets and prior periods (e.g.
monthly analysis), obtain explanations in
respect of material variations from those
of expectation or last period.
(b) review and comparison of key ratios (e.g.

G.P.ratio) or other performance
indicators and obtain reasons for
fluctuation.
(c) scrutinize the general ledger on those
accounts with material variances to see
whether there are any unusual and
abnormal items.

date.

verify.
PAF04)
Income
9 Identify all material sources of income:
(a) specify how each source has been
audited; and
(b) ensure recognition of income in
compliance with HKAS 18.
Page 321 of 356

10 Where pre-numbered invoices, goods
despatched notes and credit notes are used,
check the sequence and investigate missing
items and determine the full population.
11 Where available, select a sample of copy

sales invoices, and vouch to supporting
documentation.
(a) Compare data on the sales invoice to the
sales day book, customer orders,
despatch and other supporting
documents;
(b) Review the sales invoices for evidence
of approval, clerical accuracy, terms and
prices in relation to pricing policies and
credit limits.
12 Where available, select a sample of goods
despatched notes, including a number of
items around the year end (where required)
and vouch to supporting documentation.
(a) Ensure details are correctly reflected on

the sales invoice.
(b) Agree invoices through to the sales
ledger and general ledger.
(c) Ensure item are properly approved and
accounted for in the correct period.
(d) Investigate any unusual delays between

date of despatch and the date of
invoicing.
13 Where goods despatched notes are not

used/retained, specify the audit work (e.g. the
verification of contract and delivery to the
customer) to ensure that all sales made are
invoiced.
-
14 Test the sales day book/ledger as follows:

(a) Test the casts and crosscasts
(b) Test posting of the totals to the general
ledger
(c) Test vouch entries in the sales day book
with copies of invoices
(d) Trace entries from the cash book to the
sales ledger
(e) Scrutinise unusual entries.
Cut-off on sales
15 Test sales cut-off as follows:
(a) Review credit notes after the year end
and consider whether these have been
accounted for in the correct period.
Page 322 of 356

(b) If the company has despatch records,
examine sales and despatch records
before and after the year end and ensure
that:
- all goods despatched before the year

end are excluded from inventories and
included in sales and trade receivables
where appropriate.
- all goods despatched after the year

end are included in inventories and
excluded from sales and trade
receivables where appropriate.
(Refer to notes from physical inventory
counting.)
(c) If the company does not have despatch
records, specify the audit work to ensure
that cut-off has been correctly applied.
Cash sales
16 Check to ensure that cash sales are banked
regularly.
17 Select a sample of till rolls or sales dockets,
and vouch to supporting documentation.
(a) Check the additions.

(b) Check the numerical sequence and
investigate any missing items.
(c) Check the pricing.
(d) For till rolls, ensure that the level of “no
sales” is acceptable.
(e) Check total cash sales to the cash book.
Sales returns
18 Review sales returns and, where material,
select a sample.
(a) Check the quantity and description on
the credit note to a goods returned note
or other documentary proof of receipt of
goods.
(b) Ensure the details agree to the original
invoice.
(c) Review the credit notes and supporting
data for evidence of approval, clerical
accuracy and nominal coding.
(d) Compare the credit note to entries in the

sales ledger.
(e) Examine paid cheques if a refund was
issued to the customer.
(f) Consider the effect that any normal delay
between receipt of returned goods or
customers' request for credit and the
recording of the credit note may have on
cut-off.
Government grants
19 In respect of government grants:
Page 323 of 356

(a) Check that, prima facie, all grants to
which the client is entitled have been
claimed and recognised.
(b) Confirm that there is reasonable
assurance that the entity will comply with
the conditions attaching to all grants
recognised.
(c) Have grants been recognised in the
income statement in accordance with
HKAS 20?
Other income
20 Vouch any material other income (e.g. fair
value changes, written back of provision and
gain on disposal of assets) to supporting
documentation and ensure that it is correctly
described.
21 Test the receipts side of the cash book as

follows:
(a) Test casts and crosscasts.
(b) Test postings to the general ledger.
22 Check rental income to tenancy agreement.
23 Check reasonableness of interest income.

made.
Bespoke tests
Conclusion
Page 324 of 356

Year end: Q3
File no:
SUMMARY SHEET - INCOME STATEMENT: RECEIPT ITEMS

Planning Final
met?
Audit objectives
1 To ensure that income is fairly stated and 9, 10, 11,
correctly classified. 12, 13, 14,
15, 16, 17, Yes/No
18, 19, 20,
21, 22, 23
2 To ensure that items requiring specific 21, 22, 23
disclosure are correctly reported. Yes/No
3 To confirm that all necessary disclosures 21, 22, 23,

concerning the profit and loss account 31, 32
have been made and that the information Yes/No
Planning conclusion
Prepared by: Date:
Reviewed by: Date:
Final conclusion
- in my opinion (subject to matters highlighted on B5 or B8)* the income statement is fairly stated/ * is not fairly stated as
described below.
Prepared by: Date:
Reviewed by: Date:

Year end: Ri
File no:
R INCOME STATEMENT: EXPENDITURE ITEMS
1 Lead schedule
2 Audit programme – profit and loss
4 Detailed profit and loss schedule
5 Salaries and wages
6 Directors‟ emoluments
7 Interest expenses
8 Subscriptions and donations
9 Insurance (cover and premiums)
10 Repairs and renewals
11 Legal and professional fees
12 Entertainment
13 Auditor's remuneration
14 Loss on disposal of assets
15 Hire of plant & machinery
16 Foreign exchange loss
17 Offshore expenses
18 Commission / Management / Service / Consultancy fee paid
19 Subcontractors' fees
20 Fair value losses on:

- investment property
- financial assets / liabilities at fair value through profit or loss
- trading securities
- biological assets
21 Bad debts written off
Page 326 of 356

Year end: Ri
File no:
R INCOME STATEMENT: EXPENDITURE ITEMS
22 Rental payments in respect of each premises rented
23 Exceptional gains / losses and details of any unusual transactions
24 Sundry expenses
Page 327 of 356

Year end: Reviewed by: Date: R2
File no:
AUDIT PROGRAMME – INCOME STATEMENT: EXPENDITURE ITEMS

Y/N Y/N
General
accounts.
those of budgets and prior periods (e.g.
monthly analysis), obtain explanations in
respect of material variations from those
of expectation or last period.
(b) review and comparison of key ratios (e.g.

G.P.ratio) or other performance
indicators and obtain reasons for
fluctuation.
(c) scrutinize the general ledger on those
accounts with material variances to see
whether there are any unusual and
abnormal items.

date.

verify.
PAF04)
Expenditure
9 Check numerical sequence of good received
notes and investigate missing items.
10 Select a sample of goods received note and

purchase orders for the goods / services
received:
Page 328 of 356

Y/N Y/N
(a) Examine for supplier's name, approval,

clerical accuracy, delivery terms and
other information
(b) Check the goods received note and

purchase order with the supplier
invoices, payments made and other
supporting records
(c) Trace the details of invoices for inventory
items to posting in the perpetual
inventory records (if any) and purchase
day book.
11 Select a sample of purchases from the
purchases day book:
(a) Review the supplier invoice and
supporting data for evidence of approval,
suppliers' name, clerical accuracy,
quantities and prices in relation to the
purchase order and supporting
documentation, reasonableness of the
expenditure; and
(b) Check the goods received note and

purchase order with the supplier
invoices, payments made and other
supporting records.
(c) Consider whether there is adequate
control over the issue of cheques.
Cut-off on purchases
12 Test cut-off on purchases as follows:
(a) If the company retains goods received
records, examine the goods
received/purchased records immediately
before and after the year end and ensure
that:
- all goods delivered prior to the year end
are included in inventories, purchases
and trade payables where appropriate;
- all goods delivered after the year end

are excluded from inventories,
purchases and trade payables where
appropriate.
(b) If the company does not have goods
received records, specify below the audit
work to ensure that cut-off has been
correctly applied.
Accounting estimates
13 Consider the following procedures where
estimates are used by management (e.g. in
determining the value of inventories, accruals
or provisions).
Page 329 of 356

Y/N Y/N
(a) Where not already done, obtain audit

evidence about the general reliability of
the company‟s estimating procedures
and methods, including relevant control
activities.
(b) Consider whether adjustments to any

estimating formulae may be required.
(c) Consider whether differences between
actual results and previous estimates
have been quantified and that, where
necessary, appropriate adjustments or
disclosures made.
(d) If expert opinion is sought, whether

assessment of the independence of the
expert and basis of the underlying
assumptions have been performed.
Wages and salaries

14 Reconcile a list of employees and their gross
pay to the staff costs charge in the accounts.
Explain and verify any material differences.
15 Where considered necessary in view of the

results of the above test:
(a) check the casts and crosscasts;
(b) check the postings to the nominal ledger;
(c) check details of the gross to net pay

calculation;
(d) ensure that the payroll is authorised by a
responsible official.
16 Select a sample of employees and check to
supporting documents (e.g. employment
contracts, time cards, employer's returns)
17 Enquire into unclaimed wages and verify the

explanations.
18 Where payments to causal workers are
significant, check the validity and authority of
such payments (e.g. approved time cards,
wage rate and overtime payments)
19 Obtain details of emoluments paid and

payable, including benefits-in-kind for
directors and key management personnel.
20 Verify whether the directors' emoluments and

interests in contracts are properly stated in the
financial statements by reference to:
(a) Service contracts

(b) Board minutes
(c) Articles of Association
Related party transactions
Page 330 of 356

Y/N Y/N
21 Have we obtained sufficient appropriate audit

evidence regarding the identification and
disclosure by management of related parties
in compliance with HKAS 24 and the effect of
related party transactions that are material to
the financial statements?
22 Where we do not have sufficient evidence or if

there is any indication that a material
misstatement regarding related parties may
have occurred then complete the optional
programme (Rop02) Related Party
Transactions.
Other
23 Prepare analysis schedules for any expense
categories where this is required for tax or
disclosure purposes not yet shown in Q
section. Specify below the accounts to be
analysed:
24 Test the payment side of the cash book:

(a) Test casts and crosscasts.
(b) Test postings to the general ledger.
25 For expense other than purchases, select a
sample of cash paid entries:
(a) compare the information on the cheques
to entries in the cash book and check
dates, amounts, payees, signatures and
endorsements
(b) test vouch with invoices and other

supporting evidence, checking accuracy
of general ledger analysis
(c) investigate cheques, especially those

payable to cash, banks, directors,
employees, subsidiary and related
companies, which appear unusual.
26 Review the general ledger for unusual
adjustments and verify.
Employee benefits and share-based

payment
27 Confirm that an expense and corresponding
liability been recognised for all profit-sharing
and bonus arrangements where a present
legal or constructive obligation exists.
28 Where post employment benefits (such as

pensions) are provided confirm that the
accounting treatment is in accordance with
HKAS 19.
Page 331 of 356

Y/N Y/N
29 Confirm that an expense was recognised in

the income statement as part of the profit or
loss for the period where the entity entered
into any share based payment transaction.
30 Ensure that the accounting treatment of any

share based payment transactions is in
accordance with relevant parts of HKFRS 2; in
particular:
(a) For equity-settled share-based payment

transactions, has the entity measured the
goods or services received, and the
corresponding increase in equity at:
- the fair value of the goods or

services received; or
- if the entity cannot estimate reliably
the fair value of the
goods or services received then by
the corresponding increase in
equity, indirectly, by reference to*
the fair value of the equity
instruments granted?
(b) For cash-settled share-based payment

transactions, has the entity measured the
goods or services acquired and the
liability incurred at the fair value of the
liability?
(c) For share-based payment transactions in

which the terms of the arrangement
provide either the entity or the
counterparty with the choice of whether
the entity settles the transaction in cash
(or other assets) or by issuing equity
instruments: has the entity accounted for
that transaction, or the components of
that transaction, as either:
- a cash-settled share-based
payment transaction if, and to the
extent that, the entity has incurred a
liability to settle in cash or other
assets; or
- as an equity-settled share-based
payment transaction if, and to the
extent that, no such liability has
been incurred?

Page 332 of 356

Y/N Y/N

made.
Bespoke tests
Conclusion
Page 333 of 356

Year end: R3
File no:
SUMMARY SHEET - INCOME STATEMENT: EXPENDITURE ITEMS

Planning Final
met?
Audit objectives
1 To ensure that expenditure is fairly 9, 10, 11,
stated, authorised and correctly classified. 12, 13 Yes/No
2 To ensure that wages and salaries are 14, 15, 16,

correctly accounted for. 17, 18, 19,
20, 24, 25, Yes/No
26
3 To ensure that items requiring specific 21, 22, 23
disclosure are correctly reported. Yes/No
4 To ensure that any share based 27, 28, 29,

payments are properly accounted for. 30 Yes/No
5 To confirm that all necessary disclosures 21, 22, 23,

concerning the profit and loss account 31, 32
have been made and that the information Yes/No
Planning conclusion
Prepared by: Date:
Reviewed by: Date:
Final conclusion
- in my opinion (subject to matters highlighted on B5 or B8)* the income statement is fairly stated/ * is not fairly stated as
described below.
Prepared by: Date:
Reviewed by: Date:

Page 334 of 356

Year end: R
File no:
SAMPLE SELECTION PLANNING – INCOME STATEMENT

Audit area: Revenue / Expenses*


Test of detail only = Inherent risk factor (table figure) x 1/2 1.8 0.9
OR
OR
Tolerable error = Materiality = 300,000.00 = 333,333.33

Monetary value of population ( 100 %) HK$ 8,884,344.71
Value of items above the tolerable error ( %) HK$( - )
Value of scheduled other “key” items ( %) HK$( 5,085,487.50 )
Value of residual population ( %) HK$ 3,798,857.21
Sample size =
(See maximum
Residual population x Sampling risk factor HK$ 3,798,857.21 x 0.9 = 11 below)
Materiality HK$ 300,000.00
Plus: Number of items above the tolerable error = -
Number of other “key” items = 19
Conclusion
Prepared by Date
Reviewed by Date
L M H L M H L M H
L 20 25 30 L 13 17 20 L 10 13 15
risk
M 25 30 35 risk
M 17 20 23 risk
M 13 15 18
H 30 35 40 H 20 23 26 H 15 18 20
analytical review and tests of
review* or tests of
control
control*)
Page 335 fo 356

AUDIT PROGRAMME- RELATED PARTY TRANSACTIONS

Y/N Y/N
General
1 Review information provided by those charged
with governance and management identifying
the names of all known related parties and
perform the following procedures in respect of
the completeness of this information:
(a) Review prior year working papers for

names of known related parties.
(b) Review the company‟s procedures for
identification of related parties.
(c) Enquire as to the affiliation of those
charged with governance and officers
with other companies.
(d) Review shareholder records to determine

the names of principal shareholders or, if
appropriate, obtain a listing of principal
shareholders from the share register.
(e) Review minutes of the meetings of

shareholders and those charged with
governance and other relevant statutory
records such as the register of directors‟
interests.
(f) Enquire of other auditors currently
involved in the audit, or predecessor
auditors, as to their knowledge of
additional related parties.
(g) Review the company‟s tax returns and
other information supplied to the tax
authorities.
(h) Review invoices and correspondence
from lawyers for indications of the
existence of related parties or related
party transactions.
(i) Enquire of the names of all pension and
other trusts established for the benefit of
employees and the names of their
management.
2 Consider the adequacy of control activities

over the authorisation and recording of related
party transactions.
Directors
3 Prepare a schedule of movements on the loan
account for each director and other connected
person.
4 Review all month-end sales and purchase

ledger balances to identify any accounts in the
names of related parties.
Page 336 of 356

Y/N Y/N
5 Obtain a confirmation of amount and terms of

repayment from each director / connected
person.
6 Perform collectibility review (impairment test)

for the amounts receivable where applicable.
7 Enquire as to the interest of the directors in

other companies.
8 Enquire if there are any directors' interest in
contracts and management contracts between
the company and the directors and consider
whether the fact should be disclosed in
directors' report.
Transactions
9 Review the accounting records for large or
unusual transactions or balances, in particular
transactions recognised at or near the end of
the financial period. For example:
(a) Transactions with abnormal terms.

(b) Transactions that appear to lack a logical
business reason for their occurrence.
(c) Transactions in which substance differs

from form.
(d) Transactions processed or approved in a
non-routine manner.
(e) High volume or significant transactions
with certain customers or suppliers as
compared with others.
(f) Unrecorded transactions such as the

receipt or provision of management
services at no charge.
10 Discuss the nature and purpose of any

unusual transactions with the management or
directors.
11 Consider obtaining third party confirmation of

transactions and balances (other than
directors' confirmations which are covered in
Question 5 above)
Disclosure
12 Obtain sufficient appropriate audit evidence as
to whether identified related party transactions
have been properly recorded and disclosed.
13 The auditor should obtain sufficient

appropriate audit evidence that disclosures in
the financial statements relating to control of
the company are properly stated.
Management representations
Page 337 of 356

Y/N Y/N
14 Obtain a written representation from

management concerning:
(a) The completeness of information
provided regarding the identification of
related parties; and
(b) The adequacy of related party

disclosures in the financial statements.
Conclusion
15 Whether sufficient appropriate audit evidence
concerning all related parties and transactions
with such parties and the adequacy of their
disclosure in the financial statements has
been obtained.
Page 338 of 356

Year end: S
File no:
S OPERATIONAL EFFECTIVENESS OF CONTROLS
2 Audit programme
3 Internal Control Evaluation
4 Internal Control Questionnaire

Year end: S
File no:
SUMMARY SHEET - OPERATIONAL EFFECTIVENESS OF CONTROLS

Planning Final
met?
Audit objectives
1 To test the effective operation of key 1, 2, 3 Yes/No
controls where the risk assessment
includes an expectation that they are
operating effectively.
2 To test the effective operation of key 1, 2, 3 Yes/No

controls where substantive tests alone do
not provide sufficient evidence of
operation.
3 To seek to reduce the nature or extent of 1, 2, 3 Yes/No

substantive testing where reliance on
controls is more effective.
4 To ensure that reliance on the testing of 4, 5, 6, 7, 8 Yes/No

controls at the interim stage or in earlier
years is only relied upon where it is
appropriate to do so.
5 To identify weaknesses in internal 9 Yes/No

controls that should be brought to the
attention of management.
Planning conclusion
Prepared by: Date:
Reviewed by: Date:
Final conclusion
From tests of controls carried out I confirm that *(subject to the matters described below and highlighted on B5 or B8) in my
opinion such procedures provide additional appropriate audit evidence as to the completeness, accuracy and validity of
information in the accounts.
Prepared by: Date:
Reviewed by: Date:


Year end: Reviewed by: Date: S2
File no:
AUDIT PROGRAMME - OPERATIONAL EFFECTIVENESS OF CONTROLS

Y/N Y/N
General
1 Testing the operational effectiveness of
internal controls should be undertaken where:
(a) the risk assessment includes an

expectation that controls are operating
effectively;
(b) substantive tests alone do not provide

sufficient evidence of operation;
(c) this is more effective than relying solely
on substantive procedures.
2 Where the assessed risk of material
misstatement at the assertion level is a
significant risk and it is intended to place
reliance on the operating effectiveness of
controls intended to mitigate that significant
risk, confirm that the testing of the operating
effectiveness of those controls is performed in
the current period.
3 Document each control to be tested on the

ICE (S3) and reference each to the working
papers evidencing the compliance test.
Interim testing
4 Where the operating effectiveness of controls
was tested during an interim period has
consideration been given to what additional
audit evidence should be obtained for the
remaining period?
Reliance on testing in prior years

5 Where it is planned to rely on evidence about
the operating effectiveness of controls
obtained in prior audits, has evidence about
whether those specific controls have
subsequently changed been obtained?
6 Where it is planned to place reliance on

controls that have changed since they were
last tested has the operating effectiveness of
those controls been tested this year?
7 Where it is planned to place reliance on

controls that have not changed since they
were last tested, confirm that those controls
were last tested no more than two years ago.

Y/N Y/N
8 Where it is planned to place reliance on a

number of controls that have not changed
since they were last tested, confirm that some
of those controls were tested this year.
Conclusion
9 Consider whether:
(a) It is appropriate to place the planned
reliance on the operational effectiveness
of internal controls.
(b) There are any points which need to be

included in a letter of representation or
letter of comment and record on A5 or
A6 as appropriate.


File no:
INTERNAL CONTROL EVALUATION (See C5.1)
Place
Results
Ref. to reliance
satis-
Business area Key Control Compliance test detailed on
factory
work control?
Y/N
Y/N


File no:
INTERNAL CONTROL QUESTIONNAIRE

This questionnaire is intended as an aid memoire to assist in the identification of systems and controls for inclusion on the
Review of Design & Implementation of Controls schedule (C5.1). Completion of this questionnaire in isolation will not
provide the evidence concerning the design and implementation of controls required by HKSA 315.
Relevant Ref to Ref to:

to audit C5.1 A6 / C6.2
(Y/N) C6.3
1 Are minutes maintained of all board meetings and management meetings,
authorising capital expenditure and also disposals?
2 Does the company maintain fixed asset purchase order requisitions, which
are pre-numbered, authorised and controlled?
3 Is there evidence to show that the addition invoices have been checked for
accuracy and that the posting code has been checked before the items are
posted to the nominal ledger?
4 Is the fixed asset register regularly reconciled to the nominal ledger

account, and also to actual physical assets?
5 Is there independent checking of calculations of profits and losses on
disposal?
6 Is there evidence to show that there have been regular inspections of the
condition and use of assets?
7 Other:
Inventories
8 Is there restricted access to inventories, and physical security over
inventories?
9 Is there an independent check on all despatches, including any made by
persons other than those responsible for inventories?
10 Are regular reconciliations of actual inventory to inventory records
undertaken?
11 Is there independent matching of goods in and out with purchase and sales
documentation?
12 Is there a system for the reporting of slow, obsolete or damaged inventory
to relevant levels of management?
13 Does the client maintain pre-numbered goods received notes (GRN) and
stock requisition notes (SRN), and carry out regular checking for missing
numbers?
14 Is there a record of an authorisation of scrapped/damaged goods?
15 Other:
Sales cycle
16 Does the business have some form of control over who they sell goods to
on credit?
17 Is there prior approval by the credit department of all sales before the
goods are actually despatched?
18 Is there prompt billing of all sales?

(Y/N) C6.3
19 Is effective credit control exercised over outstanding balances?
20 Are sales ledger control account reconciliations carried out?
21 Does the client use pre-printed and controlled sequentially numbered
invoices?
22 Are invoices only raised when the invoicing department is given a valid
order or despatch note?
23 Is there a periodic separate check of the goods that have been despatched
to ensure that they agree with the order details and the invoice details?
24 Are despatch notes independently checked to invoices?

25 Is invoice pricing independently checked and reviewed?
26 Other:
Bank
27 Are the duties of the person writing/posting the cash book separated from
the person responsible for the nominal ledger, making payments or
handling receipts and checking the bank reconciliations?
28 Is there adequate security over blank cheques and procedures to ensure

that under no circumstances should pre-signed cheques be maintained?
29 Are cash book balances regularly reconciled to the nominal ledger control
account?
30 Are cheques despatched immediately after signature and not returned to
the person who has prepared them?
31 Does a senior member of the client‟s staff independently check bank
reconciliations?
32 Are cash counts undertaken on a regular basis, without the person in
charge of petty cash being aware that they are going to be undertaken?
33 Other:
Purchases cycle
34 Are all invoices approved prior to payment?
35 Are there controls to ensure that discounts are taken wherever possible?
36 Are supplier statement reconciliations carried out where available?

37 Are purchase ledger control account reconciliations carried out?
38 Are purchase invoices checked to pre-numbered goods received notes,
which in turn are checked to authorised orders?
39 Are invoices marked when they are being paid to prevent them being
entered into the system again?
40 Other:

(Y/N) C6.3
Payroll
41 Is the payroll independently approved for accuracy?
42 Does an independent department keep proper personnel records?
43 Does the payroll department maintain a formal record of notification of
changes in rates of pay etc?
44 Are payroll control account reconciliations carried out?
45 Other:
General
46 Is the culture of the organisation conducive to the effective operation of
internal controls?
47 Does management use their influence in the business to promote the
effective operation of internal controls?
48 Are reliable management accounts produced at least quarterly and
reviewed by management so that significant errors would be identified and
corrected?
49 Other:

Year end: Ti
File no:
T SUBSEQUENT EVENTS
1 Lead schedule
2 Summary Sheet - subsequent events
3 Audit programme - subsequent events
4 Audit programme - going concern
5 Final programme - subsequent events

Year end: T2
File no:
SUMMARY SHEET - SUBSEQUENT EVENTS

Planning Final
met?
Audit objectives
1 To ensure that all material adjusting and 2, 3, 4 Yes/No
non-adjusting post balance sheet events
are identified and correctly treated in the
accounts.
2 To ensure that the going concern basis of 5, 6, 7, 8 Yes/No

accounting is appropriate.

concerning post balance sheet events
Planning conclusion
Prepared by: Date:
Reviewed by: Date:
Final conclusion
- in my opinion (subject to matters highlighted on B5 or B8)* subsequent events are fairly stated/ * are not fairly stated as
described below.
Prepared by: Date:
Reviewed by: Date:

Page 348 of 356

Year end: Reviewed by: Date: T3
File no:
AUDIT PROGRAMME – SUBSEQUENT EVENTS

Y/N Y/N
General
1 Assess whether the initial materiality, risk
assessment or extent of reliance on controls
should be revised in view of the audit
necessary adjustments on B5 or B8.
date.
Subsequent events
2 Review the following to ensure that nothing
has occurred since the year end which should
be disclosed or provided for:
(a) management accounts;

(b) cash book, invoices and bank statements;
(c) correspondence;
(d) minutes of meetings; and
(e) major contracts.
3 Discuss with management and ensure that all
material items have been identified. Consider
the following:
(a) The current status of items that were

accounted for on the basis of preliminary
or inconclusive data.
(b) Whether new commitments, borrowings

or guarantees have been entered into.
(c) Whether sales or acquisition of assets

have occurred or are planned.
(d) Whether the issue of new shares or
debentures or an agreement to merge or
liquidate has been made or is planned.
(e) Whether any assets have been

appropriated by government or
destroyed, for example, by fire or flood.
(f) Whether there have been any

developments regarding risk areas and
contingencies.
(g) Whether any unusual accounting

adjustments have been made or are
contemplated.
(h) The status of any current or pending

litigation.
Page 349 of 356

Y/N Y/N
(i) Whether any events have happened or

are likely to occur that will bring into
question the appropriateness of
accounting policies used.
4 Consider whether it is necessary to obtain an

updated letter from the company's legal
advisers concerning the status of any current
or pending litigation. (See N2 test 17(d))
Going concern
5 Where available obtain copies of cash flow
forecasts and/or budgets and consider:
(a) the applicability of the bases and
assumptions used;
(b) whether they provide adequate evidence
of the company‟s ability to continue as a
going concern;
(c) where a period of less than 12 months

has been considered, what other
evidence is available to support the
company‟s ability to continue as a going
concern.
6 Where no cash flows or budgets are available:
(a) describe what evidence is available to

support the company‟s ability to continue
as a going concern.
(b) record the evidence obtained to

demonstrate that the directors have
considered a period of at least 12 months.
7 Where going concern is an issue complete the

checklist on T3 and consider what effect, if
any, any “yes” answers will have on the
company‟s ability to continue trading as a
going concern.
8 Seek written representations from

management regarding:
(a) its plans for future action;
(b) its assessment that the company is a
going concern;
(c) any relevant disclosures in the financial
statements.
Page 350 of 356

Y/N Y/N

10 Ensure that there is evidence on the file to

support all disclosures made.
Bespoke tests
Conclusion
12 Consider whether
(a) all events up to the date of the auditor‟s
report that may require adjustment of, or
disclosure in, the financial statements
have been identified;
(b) there are any indications that the going

concern basis may not be appropriate;
(c) matters have been properly presented
and disclosed in the accounts;
(d) there are any points which need to be
included in a letter of representation or
letter of comment and record this on A5
or A6 as appropriate.
Page 351 of 356

File no:
GOING CONCERN – CHECKLIST

1 Financial YES/NO
1.01 Net liability or net current liability position.
1.02 Necessary borrowing facilities have not been agreed.
1.03 Fixed-term borrowings approaching maturity without realistic prospects of renewal or repayment; or
excessive reliance on short-term borrowings to finance long-term assets.
1.04 Major debt repayment falling due where refinancing is necessary to the entity's continued existence.
1.05 Major restructuring of debt.
1.06 Indications of withdrawal of financial support by debtors and other creditors.
1.07 Negative operating cash flows indicated by historical or prospective financial statements.
1.08 Adverse key financial ratios.
1.09 Substantial operating losses or significant deterioration in the value of assets used to generate cash
flows.
1.10 Major losses or cash flow problems which have arisen since the balance sheet date.
1.11 Arrears or discontinuance of dividends.
1.12 Inability to pay creditors on due dates.
1.13 Inability to comply with the terms of loan agreements.
1.14 Reduction in normal terms of trade credit by suppliers.
1.15 Change from credit to cash-on-delivery transactions with suppliers.
1.16 Inability to obtain financing for essential new product development or other essential investments.
1.17 Substantial sales of fixed assets not intended to be replaced.
2 Operational
2.01 Loss of key management without replacement.
2.02 Loss of key staff without replacement.
2.03 Loss of a major market, franchise, license, or principal supplier.
2.04 Labour difficulties or shortages of important supplies.
2.05 Fundamental changes in the market or technology to which the entity is unable to adapt adequately.
2.06 Excessive dependence on a few product lines where the market is depressed.
2.07 Technical developments which render a key product obsolete.
3 Other
3.01 Non-compliance with capital or other statutory requirements.
3.02 Pending legal or regulatory proceedings against the entity that may, if successful, result in claims that
are unlikely to be satisfied.
3.03 Changes in legislation or government policy expected to adversely affect the entity.
3.04 Issues which involve a range of possible outcomes so wide that an unfavourable result could affect
the appropriateness of the going concern basis.
If “Yes”, specify:
4 Conclusion
4.10 Complete the conclusion schedule on T3.1.
Page 352 of 356

Year end: Reviewed by: Date: T4/1

File no:
GOING CONCERN - CONCLUSION
YES/N/A*
1 Where going concern has been reviewed by the directors for a period of less than 12
months has this been disclosed in the accounts or in the audit report?
2 Where you have been unable to obtain all the information and evidence necessary to
adequately assess the company‟s ability to continue as a going concern, has a suitably
worded qualified audit report been drafted?
3 Where the accounts have not been drawn up on a going concern basis, either:
(a) are you happy that the basis of preparation of the accounts is reasonable and that
there is adequate disclosure in the accounts;* or
(b) has a suitably worded qualified audit report been drafted?*
4 Where there is a significant level of concern about the company‟s ability to continue as a
going concern:
(a) have adequate disclosures been made in the accounts:
- a statement that the accounts have been prepared on the going concern basis;
- a statement of the pertinent facts;
- the nature of the concern;
- a statement of the assumptions adopted by the directors, which should be clearly
distinguishable from the pertinent facts;
- (where appropriate and practicable) a statement regarding the directors‟ plans for
resolving the matters giving rise to the concern; and
- details of any relevant actions by the directors.
(b) has a suitably worded qualified audit report been drafted?
Prepared by Date:
Reviewed by Date:
Page 353 of 356


File no:
FINAL PROGRAMME - SUBSEQUENT EVENTS

Y/N Y/N
General
1 Establish whether the management has effective
procedures to ensure that subsequent events are
identified.
2 Read the management minutes held since the final
audit and enquire about matters discussed at
meetings for which minutes are not yet available.
3 Review any available accounting records and

identify whether anything needs to be reflected in
the accounts.
4 Enquire with management whether any subsequent

events have occurred which might affect the
accounts. Cover specifically:
(a) the current status of items involving subjective

judgement or which were accounted for on the
basis of preliminary data: specify:
(b) whether new commitments, borrowings or

guarantees have been entered into;
(c) whether sales of assets have occurred or are

planned;
(d) whether the issue of new shares or
debentures, or an agreement to merge or to
liquidate, has been made or is planned;
(e) whether any assets have been destroyed;
(f) whether there have been any developments

regarding risk areas and contingencies;
(g) whether any unusual accounting adjustments

have been made or are contemplated;
(h) whether any events have occurred or are likely

to occur which might bring into question the
appropriateness of the accounting policies.
Page 354 of 356

Y/N Y/N
5 Consider, where appropriate, the validity of the

going concern basis of accounting.
6 Confirm that the directors‟ review of the future of the
business still extends to a period of at least 12
months (HKSA 570.18).
Page 355 of 356

Assertion level risk
L M H
Financial L 1.2 1.4 1.6
Statement M 1.4 1.8 2.1
risk H 1.6 2.1 2.5

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HKICPA AUDIT MANUAL

Client name Aero North

Falcon CPAs - May 2010 HKICPA Jun 07 Supp 00

D001 Will analytical procedures be applied to reduce

Falcon CPAs - May 2010 HKICPA Jun 07 Supp 00

E001 Does the entity have any goodwill or other

F001 Does the entity have any property, plant,

G001 Does the entity have any investments in group or

H001 Does the entity have any other investments,

Falcon CPAs - May 2010 HKICPA Jun 07 Supp 00

J001 Does the entity have any trade or other

K001 Does the entity have any bank or cash balances?

L001 Does the entity have any trade or other payables?

Falcon CPAs - May 2010 HKICPA Jun 07 Supp 00

M001 Does the entity have any long term loans or

O001 Does the entity have capital, reserves or statutory

P001 Is the entity liable to Corporation tax?

Q001 Qi Do you want the Q section index Yes

R001 Does the entity prepare an income statement?

Falcon CPAs - May 2010 HKICPA Jun 07 Supp 00

S001 Will reliance be placed on the operational

T001 Will a formal subsequent events review be

U001 Section not used

V001 Is the entity required to prepare consolidated

W001 WXi Do you want an index sheet for Section W -

Y001 YZi Do you want an index sheet for Section Y -

Falcon CPAs - May 2010 HKICPA Jun 07 Supp 00

Now click on 'Refresh Programmes' to update your programme selection.

Falcon CPAs - May 2010 HKICPA Jun 07 Supp 00

Client: Aero North Ref:

Year end: INDEX

AUDIT FILE INDEX

FCPA Jan2011 Ai Audit File Index HKICPA Jun 07 Supp 00

Signed Partner Date

Second Partner (if applicable)

Signed Partner Date

FCPA Jan2011 HKICPA Jun 07 Supp 00

CALLING OVER SHEET AND TYPING INSTRUCTIONS

Draft accounts – prior to client approval

Called by: Cast by:

Read by: Referenced to file by:

Note totals agreed to P/L or B/S by: Checklist completed by:

Final accounts for signature

Called by: Cast by:

Read by: Referenced to file by:

Note totals agreed to P/L or B/S by: Checklist revised by:

Copies required Number of copies Notes

Inland Revenue Department

HKICPA Jun 07 Supp 00

HKICPA AUDIT MANUAL

Client Name: Aero North

Prepared by: Date:

Reviewed by: Date:

Page 11 of 356 HKICPA Jun 07 Supp 00

Page 12 of 356 HKICPA Jun 07 Supp 00

a) a statement of the existence of the contract; and

2.0 Income statement

Page 13 of 356 HKICPA Jun 07 Supp 00

i) the sale of goods;

Page 14 of 356 HKICPA Jun 07 Supp 00

d) the capitalisation rate used to determine the amount of

Page 15 of 356 HKICPA Jun 07 Supp 00

Note. For the purposes of this section references to