Audit Hong Kong Financial Reporting Standards - CASPlus

1 Audit hong kong Financial Reporting Standards Model Financial Statements and Disclosure Checklist 2006. A practical guide for preparers An IAS Plus guide About Deloitte Touche Tohmatsu Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms, and their respective subsidiaries and affiliates. Deloitte Touche Tohmatsu is an organisation of member firms around the world devoted to excellence in providing professional services and advice, focused on client service through a global strategy executed locally in nearly 140. countries. With access to the deep intellectual capital of approximately 135,000 people worldwide, Deloitte delivers services in four professional areas - Audit , tax, consulting and Financial advisory services - and serves more than 80 percent of the world's largest companies, as well as large national enterprises, public institutions, locally important clients, and successful, fast-growing global growth companies.

2 Services are not provided by the Deloitte Touche Tohmatsu Verein, and, for regulatory and other reasons, certain member firms do not provide services in all four professional areas. As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other's acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names "Deloitte", "Deloitte & Touche", "Deloitte Touche Tohmatsu", or other related names. About Deloitte's China practice Deloitte's China practice provides services through a number of legal entities and those entities are members of Deloitte Touche Tohmatsu (Swiss Verein).

3 We are one of the leading professional services providers in the Chinese Mainland, hong kong SAR and Macau SAR. We have 6,000 people in ten offices including Beijing, Dalian, Guangzhou, hong kong , Macau, Nanjing, Shanghai, Shenzhen, Suzhou and Tianjin. As early as 1917, we opened an office in Shanghai. Backed by our global network, we deliver a full range of Audit , tax, consulting and Financial advisory services to national, multinational and growth enterprise clients in China. We have considerable experience in China and have been a significant contributor to the development of China's accounting Standards , taxation system and local professional accountants.

4 We also provide services to around one-third of all companies listed on the Stock Exchange of hong kong . For more information, please visit our website at HKFRS Model Financial Statements 2006. Foreword For entities Reporting under hong kong Financial Reporting Standards (HKFRSs), 2005 was certainly a remarkable year. The harmonisation of HKFRSs with the International Financial Reporting Standards (IFRSs) resulted in changes in some significant accounting policies and new disclosure requirements. For many preparers, I believe this big bang adoption created a lot of hard work and the preparation of the 2005 Financial statements was the most challenging task for many years.

5 The new HKFRSs aim to improve transparency and provide clear and unambiguous information to users and accordingly requires significantly increased disclosure requirements. However, with this increased disclosure burden, regulators and reviewers have found that there is a tendency for preparers to use boiler-plate type disclosures irrespective of their relevance to the specific entity's Financial information. While these illustrative model Financial statements provide guidance on disclosure, it is essential for preparers to tailor the descriptions according to the specific circumstances of the entity, in particular, those describing accounting policies, key sources of estimation uncertainties and Financial instruments risk disclosures.

6 With the promise by the International Accounting Standards Board to provide a stable platform until 2009, the new Standards , interpretations and the changes in Standards that impact Reporting entities in 2006 have been less significant. However, due consideration does need to be given to these changes as well as the option to early adopt those Standards , amendments or interpretations issued but not yet effective. As well as addressing these new and revised requirements, I. also strongly encourage preparers to respond to the challenge of producing annual reports that are clear and unambiguous and that are tailored specifically to the circumstances of the entity.

7 This publication includes an illustrative 2006 annual report issued by a fictitious listed company, a presentation and disclosure checklist for 2006 and a section which gives a summary of the key changes to HKFRSs and listing rules which affect the disclosure and presentation of information in the Financial statements in issue as of 25 January 2007. Please continue to keep up to date with the new international developments that will shape hong kong Standard setting in future via our IAS Plus website ( ) . Stephen Taylor Partner Deloitte Touche Tohmatsu, February 2007. 1. HKFRS Model Financial Statements 2006. Deloitte's website provides comprehensive information about international Financial Reporting in general and IASB activities in particular.

8 Unique features include: daily news about Financial Reporting globally. summaries of all Standards , Interpretations and proposals. many IFRS-related publications available for download. model IFRS Financial statements and disclosure checklists. an electronic library of several hundred IFRS resources. all Deloitte Touche Tohmatsu comment letters to the IASB. links to nearly 200 IFRS-related websites. e-learning modules for each IAS and IFRS at no charge. complete history of adoption of IFRSs in Europe and information about adoptions of IFRSs elsewhere around the world. updates on developments in national accounting Standards . 2. Contents What's new for 2006 and beyond?

9 3. 1. hong kong Financial Reporting Standards New Standards , amendments and intepretations 4. effective for the first time in 2006 and 2007. Standards and interpretations already issued by 10. the IASB but still to be approved by the HKICPA. New accounting guideline issued by the HKICPA 12. 2. Listing Rules 13. Model Financial Statements 15. Presentation and disclosure checklist 137. HKFRS Model Financial Statements 2006. Abbreviations AG = Accounting Guideline issued by the HKICPA. App = Appendix to the Listing Rules EPS = Earnings per Share GEM = Growth Enterprise Market of the SEHK. GR = Rules Governing the Listing of Securities on the GEM (the GEM Rules).

10 HKAS = hong kong Accounting Standard HKFRS = hong kong Financial Reporting Standard HKICPA = hong kong Institute of Certified Public Accountants HK-Int = HK Interpretation HK(IFRIC)-Int = HK (IFRIC) Interpretation HKSA = hong kong Standard on Auditing issued by the HKICPA. HK(SIC)-Int = HK (SIC) Interpretation IAS = International Accounting Standard IASB = International Accounting Standards Board IFRS = International Financial Reporting Standard IFRIC = International Financial Reporting Interpretations Committee Preface = Preface to hong kong Standards on Quality Control, Auditing, Assurance and Related Services LR = Rules Governing the Listing of Securities on the SEHK (the Listing Rules).