Financial reporting · reviewed 29 July 2026
Financial reporting valuation is an accounting workstream as well as a valuation workstream. The standard determines what is measured, how the subject is defined, what assumptions are permitted and what disclosures are needed.
HKFRS 13: fair value measurement
HKFRS 13 defines fair value using an exit-price perspective based on market participant assumptions. Planning should address the principal or most advantageous market, unit of account, highest and best use for non-financial assets, valuation technique and fair value hierarchy.
HKAS 36: impairment
Impairment testing requires careful identification of cash-generating units and assets that generate independent cash inflows. The recoverable amount is the higher of value in use and fair value less costs of disposal. Forecast consistency, discount rates, terminal assumptions and sensitivity disclosures are frequent review areas.
Business combinations and PPA
A purchase price allocation may require identification and valuation of customer relationships, brands, technology, contracts, licences, property, machinery, contingent consideration and deferred tax effects. The PPA should reconcile to the consideration transferred and the acquired balance sheet.
Financial instruments and HKFRS 9
Debt, derivatives, convertibles, preference shares and expected credit losses require analysis of contractual terms and credit risk. A legal-form label may not describe the accounting components or economic exposures.
Audit-ready evidence
- Approved forecasts and explanation of changes from prior plans
- Reconciliation to audited or management accounts
- Source evidence for market data and assumptions
- Clear model logic and version control
- Method selection and calibration
- Sensitivities and cross-checks
- Accounting memo alignment
Suggested timetable
| Stage | Action |
|---|---|
| Before period end | Scope subjects, identify data owners, agree deliverables and auditor expectations. |
| At period end | Freeze valuation date data, update forecasts and gather market inputs. |
| Draft stage | Review assumptions with management and issue draft model/report. |
| Audit review | Respond to methodology, forecast, market data and disclosure questions. |
| Finalisation | Lock model, report and accounting entries to the final information set. |
Official sources
- HKFRS 13 Fair Value Measurement
- HKICPA financial reporting standards overview
- HKICPA material on HKAS 36 impairment