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Hong Kong Company Audit Requirements: Company Guide

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hong kong company audit requirement

Auditing is one of the most critical financial processes worldwide. However, there are different auditing regulatory requirements in other parts of the world. Before starting a business in Hong Kong, it’s essential to learn about the audit requirements in this region. This piece will reveal Hong Kong Company Audit requirement to note before starting a business in this jurisdiction.

Auditing in Hong Kong: Overview

Auditing in Hong Kong is a vital aspect of the financial landscape. It ensures the accuracy, reliability, and transparency of financial statements, boosting investor confidence. The auditing process follows international standards, primarily set by the Hong Kong Institute of Certified Public Accountants (HKICPA).

Audit firms in Hong Kong conduct independent examinations of financial records, internal controls, and compliance with regulations. They issue audit reports highlighting material misstatements or irregularities, promoting accountability and sound corporate governance. The auditing profession in Hong Kong plays a crucial role in maintaining the integrity and trustworthiness of the financial sector, contributing to Hong Kong’s reputation as a global financial hub.

Hong Kong Standards on Auditing: Hong Kong’s Auditing and Assurance

The auditing standards in Hong Kong are primarily based on the International Standards on Auditing (ISAs) issued by the International Auditing and Assurance Standards Board (IAASB). The Hong Kong Institute of Certified Public Accountants (HKICPA) is responsible for adopting and promulgating these standards within the jurisdiction.

The auditing standards encompass various aspects of the audit process, including planning, risk assessment, internal control evaluation, evidence gathering, and reporting. They provide detailed guidance on conducting audits in compliance with professional ethics, independence, and objectivity.

One fundamental principle in Hong Kong auditing standards is the concept of materiality. Auditors must assess the materiality of misstatements, both individually and in the aggregate when planning and performing their procedures. Materiality refers to the magnitude of an omission or error in financial information that could influence the economic decisions of users.

Additionally, the standards emphasize the need for professional skepticism throughout the audit engagement. Auditors are expected to exercise critical judgment, maintain an attitude of professional skepticism, and remain alert to potential fraud or error.

How Does Auditing in Hong Kong Work? The Auditing and Tax Filing Process

Auditing Process in Hong Kong

The auditing process in Hong Kong involves examining and assessing an entity’s financial statements to provide an independent opinion on their accuracy and compliance with accounting standards. Here are the key steps involved:

1. Selection of Auditor: The entity engaging in an audit selects a Certified Public Accountant (CPA) registered with the Accounting and Financial Reporting Council (AFRC) to conduct the audit.

2. Planning: The auditor plans the audit engagement, understanding the entity’s operations, and internal controls, and identifying areas of risk or material misstatements.

3. Fieldwork: The auditor performs detailed testing, including examining financial records, verifying transactions, and assessing internal controls. They may also request additional information or explanations from the entity.

4. Audit Opinion: After completing the fieldwork, the auditor evaluates the audit evidence gathered. They express an opinion on the fairness of the financial statements, which can be an unqualified opinion (no material misstatements), qualified opinion (material misstatements with limited effect), adverse opinion (material misstatements with significant impact), or a disclaimer of opinion (unable to obtain sufficient evidence).

5. Reporting: The auditor prepares an audit report summarizing the findings and expressed opinions. The report is submitted to the entity’s management and stakeholders.

Tax Filing Process in Hong Kong 

Hong Kong follows a territorial tax system, where taxes are levied only on income derived from or arising in Hong Kong. The tax filing process involves reporting income and fulfilling tax obligations. Here’s a list of the main steps:

1. Profits Tax Return (PTR): Companies in Hong Kong are required to file an annual PTR. The PTR provides details of the company’s income, expenses, profits, and tax computation. The filing deadline is typically within one month after the issue date of PTR.

2. Completion of Tax Forms: Individuals, sole proprietors, and partnerships must complete the appropriate tax forms, such as the Individual Tax Return (BIR60) or the Profits Tax Return – Individuals (BIR61). These forms require reporting of income, deductions, and personal information.

3. Assessment: The Hong Kong Inland Revenue Department (IRD) assesses the tax returns filed, reviewing the information provided and ensuring compliance with tax laws. They may request additional supporting documents or clarification.

4. Tax Payment: Once the assessment is finalized, the taxpayer receives a tax demand note specifying the amount of tax payable. The payment should be made within the designated timeframe, usually within one month from the issue date.

5. Tax Appeals: In case of disagreement with the assessment, taxpayers can object to the IRD within a specified period. Relevant documentation and grounds for the appeal should support the complaint.

6. Other Tax Obligations: Apart from income tax, businesses may have other tax obligations, such as Stamp Duty. Each tax obligation has specific reporting and payment requirements.

Who can Audit a Financial Statement and How to Hire?

In Hong Kong, financial statements can be audited by Certified Public Accountants (CPAs) registered with the Accounting and Financial Reporting Council (AFRC). The AFRC is the statutory body responsible for registering and regulating CPAs holding practising certificates in Hong Kong.

To audit financial statements in Hong Kong, a CPA must hold a practicing certificate issued by the AFRC. The CPA will assess an organization’s financial statements and express an opinion on their accuracy and compliance with accounting standards.

How Can We Help

Looking for a professional to help you audit the financial statements of your Hong Kong business? Say no more. That’s where Premia TNC comes in. Premia TNC is a top-rated business consultancy service. Our job is to partner with businesses to boost their productivity and results.

At Premia TNC, we believe every customer is different. That’s why we adopt a unique approach in dealing with all our clients. Our consultation team will meet with you to gather information and create custom solutions. We have experts who can help you audit all your financial statements. They’ll leave no stone unturned and follow local regulations for a trustworthy result.


Q1. Are there any exemptions from the audit requirement for companies in Hong Kong?

A1. Dormant companies under Companies Ordinance are exempted from the audit requirement.

Q2. What is the timeline for filing audited financial statements with the Companies Registry in Hong Kong?

A2. The annual return of a public company or a guarantee company is required to be filed together with certified true copies of the audited financial statements within 42 days after the company’s return date.

Q3. What happens if a company fails to comply with the audit requirements in Hong Kong?

A3. Non-compliance with audit requirements is a severe offense in Hong Kong and can lead to penalties and legal consequences. The company, as well as its responsible officers, may be held liable. The penalties can range from fines to imprisonment, and the company's reputation and ability to conduct business may be adversely affected.