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Legislation & Regulations



17 December 2002

Circular Letter: SU/CTR/2002/006

To: All Approved Trustees of Registered Schemes

Dear Sirs,

Accounting Treatment of Contributions pending for Allocation to Members'
MPF Accounts in Financial Statements of an MPF Scheme

In the course of reviewing the audited financial statements of approved trustees and registered schemes, it has come to the attention of the Authority that some approved trustees have accounted for those contributions received but pending allocation to members' MPF accounts as assets of the approved trustees. In this regard, the Authority would like to clarify the accounting treatment for those particular contribution monies.

In considering the appropriate accounting treatment, the Authority has taken into consideration the various documents issued by the Hong Kong Society of Accountants, namely, the Framework for Preparation and Presentation of Financial Statements ("the Framework"), Statements of Standard Accounting Practice ("SSAPs") and Industry Accounting Guidelines.

Under the Mandatory Provident Fund Schemes Ordinance, contributions to an MPF scheme vest in the member as soon as they are paid to the approved trustee of the scheme. Paragraph 47 of the Framework sets out the definition of an asset, and paragraphs 51 to 57 of the Framework further explain the factors for determining if a resource should be classified as an asset of an enterprise. With reference to the above, contributions pending allocation are considered as assets of an MPF scheme and not that of the approved trustee.

Having established the fact that contributions collected by approved trustees pending allocation are, in fact, assets of an MPF scheme, in order for the financial statements of the trustee and the MPF scheme to be true and fair in accordance with the applicable SSAPs and Accounting Industry Guidelines on Financial Statements of Retirement Schemes, an approved trustee should account for these contributions only in the balance sheet of the MPF scheme and not in its own.

Approved trustees could also make reference to Question and Answer 1 of the "Members Ask" section in the TechWatch No. 7 issued by the Hong Kong Society of Accountants in July 2002 for further clarification.

Should you have any queries in connection with the above, please feel free to contact your case officer in the Authority.

Yours faithfully,

(Peter Tsang)
Supervision Division

Last Revision Date: 17/10/2014