On 9 June 2022, the Legislative Council approved the Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Ordinance 2022. This ordinance abolishes the use of the accrued benefits from an employer's mandatory contributions under the Mandatory Provident Fund System to offset the severance payment and long service payment.
The HKICPA published an educational guidance on 4 July 2023 (Guidance), following the Financial Reporting Alert 44 issued on 22 February 2023. The Guidance discusses the accounting implications of the abolition and proposes two corresponding accounting approaches.
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