Presentation and Disclosure Checklist - IAS Plus

[Pages:120]! Hong Kong GAAP

Presentation and Disclosure Checklist

March 2004

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About Deloitte Touche Tohmatsu

Deloitte Touche Tohmatsu is an organisation of member firms devoted to excellence in providing professional services and advice. We are focused on client service through a global strategy executed locally in nearly 150 countries. With access to the deep intellectual capital of 120,000 people worldwide, our member firms (including their affiliates) deliver services in four professional areas: audit, tax, consulting and financial advisory services. Our member firms serve over one-half of the world's largest companies, as well as large national enterprises, public institutions, and successful, fastgrowing global growth companies.

Deloitte Touche Tohmatsu is a Swiss Verein (association), and, as such, 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. The services described herein are provided by the member firms and not by the Deloitte Touche Tohmatsu Verein. For regulatory and other reasons certain member firms do not provide services in all four professional areas listed above.

About Deloitte Touche Tohmatsu's China national practice

Deloitte Touche Tohmatsu, one of the nation's leading professional services firms, provides audit, tax, consulting and financial advisory services through more than 2,500 people in nine Chinese cities including Beijing, Dalian, Guangzhou, Hong Kong, Macau, Nanjing, Shanghai, Shenzhen and Tianjin. Our national practice serves some of the largest multinational corporations, as well as major local enterprises. We provide services to around one-third of all companies listed on the Stock Exchange of Hong Kong. For more information, please visit Deloitte Touche Tohmatsu's web site at

Publications

This guide is one of a series of publications intended to assist users in the preparation of financial information in accordance with accounting and regulatory requirements in Hong Kong. These include:

Hong Kong GAAP: A Practical Guide to Generally Accepted Accounting Practice

Hong Kong GAAP: A Guide for the Preparation of Interim Reports

2nd Edition. Written by Stephen Taylor and Norma Hall, Deloitte Touche Tohmatsu, Hong Kong. Published by Sweet & Maxwell Asia.

2nd Edition. Guidance on the requirements for interim reports for listed enterprises, including model interim report and disclosure checklist.

Implementing Hong Kong GAAP: Moving towards IFRS

Accounting for Income Taxes : A Guide to SSAP 12 (Revised)

Comparison of Hong Kong GAAP and IFRS

Hong Kong GAAP ? Update

Review of Hong Kong SSAPs effective in 2002 and later, and discussion of expected future developments.

A comprehensive publication addressing the implementation of SSAP 12 (Revised) Income Taxes

Brief standard-by-standard comparison of Hong Kong GAAP and IFRS, and plans for future convergence.

Regular newsletter on accounting developments in Hong Kong.

Further details of these publications, and materials for download, can be found at: country/hongkong.htm

If you would like to receive copies of our regular Updates, whether by post or email, please email your name and contact details to the Technical Administrator at technical@.hk

Deloitte Touche Tohmatsu publications intended to assist users in understanding International Financial Reporting Standards are listed on the inside back cover of this publication.

! Hong Kong GAAP

Presentation and Disclosure Checklist

November 2003

The information in this publication is written in general terms. It is intended as a guide only and the application of its contents to specific situations will depend on the particular circumstances involved. It cannot be applied to a specific situation without appropriate professional advice. Accordingly, we recommend that readers seek such professional advice regarding their particular circumstances. This publication should not be relied on as a substitute for such professional advice. All offices of Deloitte Touche Tohmatsu would be pleased to advise you.

While all reasonable care has been taken in the preparation of this publication, neither Deloitte Touche Tohmatsu, nor any of its offices, partners or employees, accept any responsibility for any errors it might contain, whether caused by negligence or otherwise, or for any loss, howsoever caused, incurred by any person as a result of relying on it.

? 2003 Deloitte Touche Tohmatsu. All rights reserved. Printed in Hong Kong HK-143-03

CONTENTS

Section 1

Information Accompanying Financial Statements

Section 2

Report of the Directors

Section 3

Report of the Auditors

Section 4

General Principles of Presentation

Section 5

Income Statement

Section 6

Balance Sheet

Section 7

Statement of Changes in Equity

Section 8

Cash Flow Statement

Section 9

Accounting Policies

Section 10

Explanatory Notes

Standards effective after 1 January 2003

Section 11 Section 12

Agriculture (SSAP 36 - effective 1 January 2004) First-Time Adoption of HKFRSs (HKFRS 1 - effective 1 January 2004)

PAGE

1 27 30 32 37 39 43 45 48 51

104 107

ABBREVIATIONS

The following abbreviations have been used throughout this checklist:

App

Appendix to the Listing Rules

CBP

Code of Best Practice, Appendix 14 of the Listing Rules

GEM

Growth Enterprise Market of the SEHK

GR

Rules Governing the Listing of Securities on the GEM (the GEM Rules)

HKFRS Hong Kong Financial Reporting Standard(s) issued by the HKSA

HKSA Hong Kong Society of Accountants

IAS

International Accounting Standard(s)

IFRS

International Financial Reporting Standard(s)

INT

Interpretation issued by the UIISC

LR

Rules Governing the Listing of Securities on the SEHK (the Listing Rules)

MDA

Management Discussion and Analysis (Directors' Business Review)

PN

Practice Note to the Listing Rules

s

Section Reference, Hong Kong Companies Ordinance

SAS

Statement of Auditing Standards issued by the HKSA

Sch 10 Hong Kong Companies Ordinance, Tenth Schedule

SEHK Stock Exchange of Hong Kong Limited (the Stock Exchange)

SFO

Securities and Futures Ordinance

SSAP Statement of Standard Accounting Practice issued by the HKSA

UIISC Urgent Issues and Interpretations Sub-Committee of the FASC

Disclosure requirements that are applicable only to enterprises listed on the Stock Exchange of Hong Kong Limited, whether on the Main Board or the Growth Enterprise Market, are shown in blue.

Presentation and Disclosure Checklist

SECTION 1 INFORMATION ACCOMPANYING FINANCIAL STATEMENTS

Ref.

Requirement

Source

ANALYSIS OF THE GROUP'S PERFORMANCE

1001

A separate statement is required, containing a discussion and analysis of the enterprise's performance during the year and the material factors underlying its results and financial position. The statement should emphasise trends and identify significant events or transactions during the year under review. As a minimum, the directors of the enterprise should address all of the following points:

App 16.32 GR 18.41

a) the enterprise's liquidity and financial resources. This may include comments on the level of borrowings at the balance sheet date, the seasonality of borrowing requirements, and the maturity profile of borrowings and committed borrowing facilities. Reference may also be made to the funding requirements for capital expenditure commitments and authorisations;

b) the capital structure of the enterprise in terms of maturity profile of debt and obligation, type of capital instruments used, currency and interest rate structure. The discussion may cover:

i) funding and treasury policies and objectives in terms of the manner in which treasury activities are controlled;

ii) the currencies in which borrowings are made and in which cash and cash equivalents are held;

iii) the extent to which borrowings are at fixed interest rates;

iv) the use of financial instruments for hedging purposes; and

v) the extent to which foreign currency net investments are hedged by currency borrowings and other hedging instruments;

c) the state of the enterprise's order book (where applicable) and prospects for new business, including new products and services introduced or announced;

d) significant investments held, their performance during the year and their future prospects;

e) details of material acquisitions and disposals of subsidiaries and associates in the course of the year;

f) comments on segment information. This may cover changes in industry segments, developments within each segment and their effect on the results of that segment. It may also include changes in market conditions, new products and services introduced or announced and their impact on the enterprise's performance, and changes in turnover and margins;

g) where applicable, details of the number and remuneration of employees, remuneration policies, bonus and share option schemes and training schemes;

h) details of charges on group assets;

A Guide for the Preparation of Financial Statements s 1 s

Presentation and Disclosure Checklist

Ref.

Requirement

Source

i) details of future plans for material investments or capital assets and their expected sources of funding in the coming year;

Note: It is the responsibility of the directors to determine what investment or capital asset are material in the context of the enterprise's business, operations and financial performance. The materiality of an investment or a capital asset varies from one enterprise to another according to its financial performance, assets and capitlisation, the nature of its operations and other factors.

App 16 Note 32.1 GR 18.41 Note 1

j) gearing ratio;

Note: The basis on which the gearing ratio is computed should be disclosed.

App 16 Note 32.2 GR 18.41 Note 2

k) exposure to fluctuations in exchange rates and any related hedges; and

l) details of contingent liabilities, if any.

Notes:

1. Both Main Board and GEM listed enterprises are required to address each of the points listed at item 1001.

2. Additional guidance on the recommended content for a MDA can be found in the HKSA's Corporate Governance Disclosure in Annual Reports - A Guide to Current Requirements and Recommendations for Enhancement and the Reference for Disclosures in Annual Reports issued by the SEHK.

CONVERTIBLE AND REDEEMABLE SECURITIES

1002

The enterprise should disclose details of the classes, numbers and terms of any convertible securities, options, warrants or similar rights issued or granted by the company or any of its subsidiaries during the year, together with the consideration received by the company or any of its subsidiaries.

App 16.10(1) GR 18.11

1003

The enterprise should disclose particulars of any exercise made during the financial year of any conversion or subscription rights under any convertible securities, options, warrants or similar rights issued or granted at any time by the company or any of its subsidiaries.

App 16.10(2) GR 18.12

1004

The annual report should disclose particulars of any redemption or purchase or cancellation by the company or any of its subsidiaries, of the redeemable securities of the company, and the amount of such securities outstanding at the balance sheet date.

App 16.10(3) GR 18.13

1005

The annual report should disclose particulars of any purchase, sale or redemption by the company, or any of its subsidiaries, of the listed securities of the company during the year, or an appropriate negative statement.

App 16.10(4) GR 18.14

Notes:

1. The statement required by item 1005 should distinguish between those listed securities that are purchased by the company (and, for Hong Kong companies, therefore cancelled) and those that are purchased by a subsidiary of the company.

App 16.10(4) GR 18.14

s 2 s A Guide for the Preparation of Financial Statements

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