What Changes Have There Been Since the Last Updates of AP3.0?
From 1 April 2024, AP3.0 will feature 320 principal activities and 120 accounting estimates, ensuring an even more tailored experience. These enhancements are specifically designed to reflect the business and accounting practices prevalent in Hong Kong, providing your firm with the most relevant and effective audit programs available. The lists below show the newly added / re-written options in AP3.0:
Newly Added Principal Activities:
Retail and Shops:
- Electronics Stores
- Fashion Boutiques
- Jewellery Shops
- Watch Retailers
- Cosmetics and Beauty Stores
- Traditional Chinese Medicine Shops
- Supermarkets
- Convenience Stores
- Health Food Stores
- Bakeries
Newly Added Accounting Estimates:
Revenue Recognition:
- Allowance for doubtful accounts (bad debt provision)
- Percentage of completion for long-term contracts
- Revenue recognition on service contracts
- Lease term and discount rate for lease liabilities
- Estimated earning rates for deferred revenue
- Measurement of revenue based on royalty and licensing agreements
- Recognition of revenue from milestone payments
- Assessment of variable consideration for revenue recognition
- Measurement of non-refundable deposits for sales
- Estimation of the standalone selling price for distinct performance obligations
Newly Added Principal Activities (Continued):
Non-Retail Businesses:
- Banking and Finance Companies
- Investment Firms
- Insurance Companies
- Real Estate Agencies
- Property Management Services
- Law Firms
- Accounting and Audit Firms
- Consulting Companies
- Marketing and Advertising Agencies
- Public Relations Firms
Newly Added Accounting Estimates (Continued):
Inventory:
- Inventory obsolescence reserve
- Measurement of the cost of sales
- Allocation of overheads to inventory valuation
- Provisions for slow-moving inventory
Provisions, Contingencies, and Liabilities:
- Warranty provisions
- Provisions for restructuring costs
- Provisions for legal disputes and litigation
- Provisions for onerous contracts
- Employee benefit obligations (pensions, post-employment benefits)
- Measurement of decommissioning liabilities
AP3.0 Promotions (March 2024):
From now until March 15, 2024, purchase 150 or more AP3.0 credits at HK$540 / ea. (10% off) and enjoy a 15-month validity period (extended from 12-month) and the following add-on services at promotional prices:
- Completed File Monitoring Reivew at HK$5,000.
- AFRC Inspection Preparation Consultancy at HK$8,000.
- Drafting of SoQM Manual and Appendices at HK$6,000.
- Review of AML Record-keeping documentation at HK$3,000.
Registration Form for
Audit Program 4.0 Live Events
Events on Audit Program 4.0 will resume form the week of November 20, 2023. We will have pre-scheduled back-to-back sessions on each day introducing Audit Program 3.0 and Audit Program 4.0, so that those who have previously attended our events on AP3.0 can directly just attend the latter session.
Please review the information you have provided to ensure successful registration. Please ensure you enter your CPA Practice Name and Contact Details correctly.
Please click “Register Now” when complete, and we will get in touch with you as soon as possible.
Thank you for your interest, and we look forward to seeing you at the online webinar!
AP4.0 Deck Will Be Released Soon
7% Monthly Price Hikes from November 4, 2023
We are implementing a 7% price hike every month in order to cover the cost of these upgrades. The first price hike was effective on 1 September, 2023. Existing clients who have purchased AP3.0 credits earlier than 1 September will enjoy maximum value and avoid the impact of our monthly price hikes, as you will be entitled to purchase additional credits at the same price as your last purchase!
The next monthly price hike will become effective on November 4, 20231
AP4.0 Features Available in AP3.0
Applicable to AP3.0 Advanced & AP3.0 All-Inclusive:
In addition to the section-specific summary pages in sections E to X, we will also be generating additional consolidated worksheets for the following that will help streamline your audit processes:
- Consolidated Audit Request List
- Consolidated Audit Procedures List
- Consolidated Management Representation Letter
- Consolidated Significant Accounting Policies
We will also be labelling the audit procedures by type of procedures, and generating some templates for test of details audit procedures that are generated for that specific financial statement line item.
Applicable to AP3.0 Advanced & AP3.0 All-Inclusive:
- Testing templates will be generated for selected balance sheet and profit & loss financial statement line items based on the selected financial reporting framework.
- Component Materiality will be determined with justifying audit documentation on the method of determination. The submission form will be amended to allow input of the consolidated sales, consolidated total assets, consolidated total liabilities, consolidated equity and consolidated profit / losses before tax, and to link audit programs between subsidiaries and the audit program of the consolidated financial statements.
Launch date of Audit Program 4.0
- y-o-y fluctuation analytical reviews for each financial statement line item, and written reviews are GAAP-specific and Principal-activity specific too.
- generation of completed lead-sheets / breakdowns with current and prior year numbers, and audit documentation on procedures and hyperlink cross references in each lead-sheet with direct and easy access to the respective working papers performing each procedure
- generation of sample selection planning based on imported figures, with automatic calculation of samples that are greater than PM, and sample sizes on the residual population
- generation of test of details templates for all selected financial statement line items, and automatic extraction from ledgers and completion of sampled data in our test of details templates
- generation of individual audit confirmations based on sample selection planning and debtor / creditor sub-ledgers
- generation of alternative tests for non-replied audit confirmations with automatic extraction of data from ledgers
- automatic error checking mechanisms for un-balanced BS, or PL mismatches with the statement of changes in equity and mismatches with the BS.
- automatic error checking mechanisms for mismatches between financial information and the mapped financial statements with user-friendly single-page list of all mismatches and hyperlinks to easily go to the page with the mismatch
We have decided to implement monthly upgrades to AP3.0 effective immediately, and we will publish our monthly upgrades on a notifications board that only subscribed users have access to. These upgrades will not only be limited to adding more options in the submission forms, but will be new functionalities, so that the audit programs generated by AP3.0 will provide even more value to you than when you initially engaged us!
We will be generating working paper templates for some selected tests of details on most financial statement line items, and the design of these test of details working paper templates will be generated based on the supporting documents specified in the audit procedures within the program!
From then on, any audit working program generated will also have audit testing templates, and sampling sheets!
June 13 - AP3.0 First Launch Event Photos
Save 99.9998% of your time costs now!
EQC Audit Program 3.0 can help you reduce error rates , and here are 8 Pain Points that the Service may help address and we explain why your practice should engage us for Audit Program 3.0.
With the release of Audit Program 4.0 on November 20, 2023, not only will you be saving time on the completion of the APM, but you will also be saving time and money on completion of audit working papers! Leadsheets, breakdowns, balance sheet movements, completed sample selection plannings, tests of details, confirmations, alternative tests of details for non-replied confirmations and final analytical reviews are prepared by a click of a button!
Pain Point 1: Talent Shortage
Problem 1 and Solution 1:
The talent exodus due to strict COVID-related regulations and emigration waves in recent years has left many SMEs in Hong Kong suffering from a high staff turnover rate of 20% per annum or being significantly understaffed. The audit industry is particularly affected, as many young talents are unwilling to enter this field due to its mundane, repetitive nature and long working hours.
Audit Program 3.0 and Audit Program 4.0 address the talent shortage issue by automating many mundane and repetitive tasks, making the audit process less labor-intensive and more efficient. This can help attract young talent to the industry by reducing the long working hours typically associated with audit work, making the profession more appealing and less monotonous. Automation also allows CPA firms to maintain high-quality services even with limited staffing resources.
Pain Point 2: SMP's Limited Access to Competent Staff
Problem 2 and Solution 2:
Small-and-medium sized practices (SMPs) in the audit industry face a constant challenge in recruiting competent staff, as young and experienced talents are less likely to join these firms due to the lack of career-building opportunities. This leaves SMPs with limited options for recruitment, often having to settle for inexperienced and less-educated candidates.
By streamlining the audit process and eliminating the need for extensive industry-specific knowledge, Audit Program 3.0 and Audit Program 4.0 enable SMPs to better utilize their existing staff and reduce the pressure to recruit highly experienced auditors. The automation provided by the service allows even less experienced auditors to perform high-quality audit work, bridging the competence gap and making SMPs more competitive in the market.
Pain Point 3: Labor-Intensive Audit Work
Problem 3 and Solution 3:
With new auditing standards being released almost every year, auditors have more standards to comply with, increasing the workload and resulting in labor-intensive audit work. This includes many mundane, repetitive tasks that can lead to long working hours, low profitability and recoverability on audit projects, and errors due to exhaustion and boredom when completing audit programs.
Audit Program 3.0 and Audit Program 4.0 tackle labor-intensive audit work by automating a significant portion of the audit process, including risk assessments, designing audit procedures, and generating completed audit programs. This reduces the workload on auditors, allowing them to focus on more value-added tasks, minimizing the risk of errors due to exhaustion and boredom, and increasing the overall efficiency and profitability of audit projects.
Pain Point 4: Industry-Specific Knowledge Gap
Problem 4 and Solution 4:
When auditing clients in unfamiliar industries, audit efficiency is often significantly reduced, as auditors lack the necessary knowledge and experience to understand the client’s industry. This can be challenging, as auditing standards require auditors to document industry-specific business processes, revenue recognition, and workflows. CPA firm owners are also faced with the difficulty of choosing to serve only specific client industries.
Audit Program 3.0 and Audit Program 4.0 help bridge the industry-specific knowledge gap by providing guidance on internal controls, revenue recognition, and cost of sales for 110 client industries. This allows auditors to quickly gain an understanding of unfamiliar industries and ensures that audit documentation is accurate and compliant with auditing standards. The service acts as a technical hub for auditors, significantly improving audit efficiency in industries where they may have limited experience.
Pain Point 5: Reviewer's Challenges
Problem 5 and Solution 5:
Reviewing completed audit programs can be a daunting task, as each set can consist of up to 300 pages of information, much of which is similar but slightly different. Reviewers face significant challenges in efficiently and effectively reviewing these audit programs prepared by junior auditors.
By automating the completion of audit programs, Audit Program 3.0 ensures consistency and compliance with auditing standards, allowing reviewers to focus their attention on high-risk areas.
Audit Program 4.0 also completes most of the working papers using programming and automation, allowing error-free working papers to be generated and reducing the workload of audit reviewers!
This reduces the time and effort required for reviewing large volumes of information, and ensures that the quality of audit programs is maintained even in lower-risk areas.
Pain Point 6: Regulatory Pressure
Problem 6 and Solution 6:
With the Accounting Financial Reporting Council (AFRC) taking over the regulatory oversight of Hong Kong CPA practices from the HKICPA, practitioners in the audit industry face increased regulatory pressure and scrutiny. Ensuring compliance with these heightened regulations is more important than ever.
Audit Program 3.0 and Audit Program 4.0 help alleviate regulatory pressure by ensuring that the audit process complies with all Hong Kong Standards on Auditing, including the latest HKSQM 1 and 2. The automation provided by the service ensures consistent compliance with these standards and reduces the risk of non-compliance, allowing CPA firms to confidently navigate the heightened regulatory environment.
Pain Point 7: New Review Procedures in AFRC Inspections
Problem 7 and Solution 7:
Under the AFRC’s new regulatory regime, there is an increased emphasis on having an effective system of quality management in place. Compliance experts speculate that the AFRC will place more focus on the timing of working paper preparation and review during practice inspections.
With Audit Program 3.0 and Audit Program 4.0, CPA firms can generate audit programs and working papers covering all substantive audit procedures ahead of time once the management accounts are received from the client, enabling auditors to only focus on the judgmental areas.
Late client adjustments and audit adjustments can be added to working papers by simply adding them to our templates, and all working papers can be updated by a click of a button!
This reduces the risk of being caught modifying working papers after archive dates, addressing the concerns around new review procedures under the AFRC’s regulatory regime.
Pain Point 8: Limitation of Traditional Templates
Problem 8 and Solution 8:
Traditional templates provided by CPA firms or consultancy firms for auditors to use in completing audit engagements have their limitations. Auditors may choose the wrong templates or omit important papers, and they may also lack the knowledge to properly complete or customize these templates.
Audit Program 3.0 and Audit Program 4.0 go beyond traditional templates by not only providing the template but also completing illustrative model answers specific to each audit engagement. Working papers are completed based on the imported financial information, and templates used for importing financial information are so user friendly that even untrained client’s accounting team can complete them.
This ensures that the right templates are used and that auditors know how to customize them to suit the particular circumstances of the engagement. The service eliminates the limitations of traditional templates, allowing CPA firms to streamline their audit process and maintain compliance with the latest accounting and auditing standards.
Six More Reasons to Use AP 3.0 and AP 4.0
i. Resolves the Most Common Practice Review Findings
Over the past 3 years, EQC has been constantly improving our documentation in addressing common practice review findings, and we can confidently confirm that our Audit Program 3.0 can effectively address TEN of the most prevalent audit deficiencies that are commonly found in audit programs across the entire SMP industry.
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- Lack of understanding of the internal controls on key business processes.
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- Lack of assertion-level, financial statement-level, inherent and control risk assessments.
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- Lack of fraud risk considerations and inadequate procedures on management override of controls.
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- Lack of assessments and evaluation of key accounting estimates.
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- Lack of customized audit procedures tailored for your specific industry, when applying a specific financial reporting framework, such as SME-FRS, HKFRS for PE, or HKFRS.
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- Lack of considerations of the impact of new accounting standards on opening balance and current year financial statements.
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- Lack of documentation on work done on going concern considerations.
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- Lack of documentation to justify the use of a specific type of audit opinion, such as material uncertainty paragraph, qualified opinion, adverse opinion or disclaimer of opinion.
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- Lack of considerations of prior year’s modified audit opinion, and how it affects your client acceptance and engagement continuance procedures.
- Lack of audit scoping for significant components of group audits, and insufficient documentation on the proper determination of group and component materiality.
- Lack of extensive analytical review performed to corroborate understanding obtained throughout the audit. These analytical reviews should include explanations of year-over-year fluctuations that go beyond explaining impact of socio-economic trends.
- Lack of a systematic method in determining extend of audit work through a sampling method that is consistent with audit planning’s risk-based assessment
- Lack of documentation of particulars of tests of details, often with just ticks with no documentation on the selected journal voucher and particulars that were examined.
- Lack of audit confirmations sent out to debtors and creditors
- Lack of audit evidence on alternative procedures performed for any non-replied audit confirmations
- Lack of step-by-step audit procedures documented on each test of detail
- Inconsistency between working papers after late audit adjustments are taken up by the management of the client.
ii. Fastest Turnaround Delivery in the Market
Now you are familiar with the problems it resolves, you would probably be wondering if we have the manpower the complete so many audit programs. We adopt Artificial Intelligence, Machine Learning and Complex coding that we have internally developed in the delivery of completed audit programs using Audit Program 3.0 and completed working papers using Audit Program 4.0.
We proudly guarantee a 2-week turnaround time. With EQC, it is no longer a dream that audit documentation that complies with Auditing Standards, can be completed and archived within 60 days from your audit report date. What worries would you still have over practice reviews if all your audit engagements have sufficient documentation, and all your audit files are created AND archived before the archive deadline?
iii. Save 99.9998% of your Time Costs
Through our determination on digital transformation, we have been able to lower the cost to levels significantly below the equivalent time-cost of a typical audit junior.
The lowest cost of a qualified auditor who can write effective audit documentation on internal controls, revenue recognition processes, evaluation of key accounting estimates, etc. would cost around HK$30,000 per month before annual leaves, bonuses and benefits. To write one of these documentation, it may take 20-30 minutes, equivalent to a cost of HK$57 – 85.
Our Advanced version (not the strongest version) of the program provides in excess of 22,500,000 permutations of customized model answers, at a cost as low as HK$450 per completed audit program for your audit engagement. The permutations of Audit Program 4.0 is further raised to billions, effectively reducing the cost to infinitely close to zero per written answer., effectively saving up to 99.9999% of your time costs.
The generation of completed working papers will merely cost 2 to 3 more credits, and the whole audit can be completed on a budget of under HK$2,000 (subject to monthly price hikes, this was written in October 2023).
You no longer have to pay hefty upfront costs to buy working paper templates or other audit systems, which would still require an additional budget for training and audit inefficiencies, and payments of salaries, and more often than not, these trained staff may “jump-ship” to other firms after a short period of employment. Imagine all the recurring fixed costs that you can start saving today.
iv. Technology Helps to Eliminate Human Errors
Human mistakes arising from carelessness is always inevitable. If you have previously purchased / encountered working paper templates available in the market, you would realize that it would almost be an impossible feat to digest the 1000-page long audit practice manual to ensure that the documented procedures have indeed been carried out in your working paper files.
Any inconsistencies between your firm’s audit practice manual and the archived working papers would be undisputable indicator of weakness in the firm’s engagement performance procedures.
Our technological-based Audit Program 3.0 and Audit Program 4.0 help to eliminate any inconsistencies between the 200-page programs, your audit schedules sample size calculations, your working papers, and your audited financial statements, which would also significantly reduce your costs in file reviews. Your time can thus be re-invested into areas that commercially matter to your business.
v. Over 1 billion permutations
Audit Program 4.0 offers the following options when generated the illustrative completed audit program!
1. Financial Reporting Framework: 3 choices
2. Risk Levels: 2 choices
3. Financial Statement Line Items: 96 choices
4. Principal Activities: 115 choices
5. Accounting Estimates: 27 choices
6. Modified Audit Opinions: 25 choices
7. Line-by-line Analytical Reviews that can detect whether the line item increased / decreased, and whether the decrease is material when compared to PM, and thus giving a explanation of the fluctuation that is GAAP and Principal activity specific.
8. Tests of details directly extract relevant data from the ledgers
9. Confirmations to drafted and prepared based on debtor / creditor ledgers
10. Alternative tests of details extract invoice issuing and settlement data from the ledgers.
There are over 1 billion possible permutations for your program with these parameters and choices. That is real customization at a very low cost!
vi. Use for Consultancy Services, Internal Training and More!
Who said that the Audit Program 3.0 can only be used for your practice’s audit and assurance services?
Imagine your client engaged you for internal control consultancy prior to a planned IPO, and your client operates in a specific industry that you are unfamiliar with. All you have do is, use 1 of your purchased credits to generate an Audit Program specific to your client’s industry, and you will have pre-written internal controls specific to that industry!
Imagine your client needs to improve their internal controls to address previous financial statement level or fraud risks, and needs to write a comprehensive internal control manual covering all business processes of the company, from sales, marketing, human resources, disbursement claims, management of investment properties, property plant and equipment, making investment decisions, managing loans, and registering patents and trademarks. Yes! We cover the internal controls of all these processes and much more!
Imagine you have a network of potential clients in regulated industries, such SFO regulated, brokers regulated under Insurance Ordinance, or Solicitors’ Firms under the Accountants’ Reports Rules, and Law Society of Hong Kong. Now you can generate audit programs for each of these industries, and have customized list of audit procedures when preparing the compliance reports or accountants report of these engagements, significantly lowering your regulatory risks!
Imagine you are going through a AFRC inspection, and you are asked to elevate your practice’s audit quality in auditing specific account balances, or when applying specific new accounting or auditing standards. Now with Audit Program 3.0, you can create your own in-house training materials using our generated model answers, and use these training decks as evidence of remedial actions taken by your practice!