Hong Kong – Listed Companies – Financial Statements Review Programme 2014.

The Hong Kong Stock Exchange has finished its review of issuers' published financial reports for compliance with the disclosure requirements of the Listing Rules and accounting standards. The Financial Statements Review Programme Report 2014, published on 17 July 2015, sets out the Hong Kong Stock Exchange's key observations and findings.

Certain omitted or incomplete disclosures were noted by the Hong Kong Stock Exchange and it reminded listed companies to continue to improve disclosures in the following areas as required under Appendix 16 of the Listing Rules:

• currencies in which borrowings are made;

• the extent to which borrowings are at fixed interest

  rates;

• significant investments held and their performance;

• comments on segmental information, such as changes in the industry segment;

• additional explanations should be given for significant events or material balances;

• details of the policy regarding credit terms granted to trade customers;

• ageing analyses of accounts receivable (based on the revenue recognition date) and accounts receivable due but not impaired (based on the payment due date);

• discretionary bonuses paid/payable to directors should not be aggregated with their basic salaries and other allowances and benefits-in-kind;

• contributions to pension schemes for directors;

• contractually entitled bonus payments to directors should be disclosed under the category of the bonuses paid or receivable by directors;

• in respect of disclosures of directors' remuneration under paragraph 24 of Appendix 16 of the Listing Rules, "directors" in this context includes "chief executives who are not directors";

• details of remuneration paid to the senior management by band;

• statement of the reserves available for distribution to shareholders;

• review work by auditors on continuing connected transactions is an assurance engagement rather than an agreed-upon procedure engagement; and disclose whether related party transactions are connected transactions. This disclosure is required even if the transaction is a fully exempt connected transaction.