Auditing for Hong Kong Companies

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Auditing for Hong Kong companies is one aspect you cannot neglect. You should consider auditing and accounting right at the time you set up your business. You do not want to procrastinate because any delay could cost you unnecessary expenses later.

After the adoption of the new Companies Ordinance on March 3, 2014, Hong Kong has made it mandatory for companies to file a Statutory Audit in accordance with the Hong Kong Financial Reporting Standards.

Auditing in Hong Kong

If you plan to do business in Hong Kong, it is important to understand accounting, bookkeeping, and auditing standards to avoid the risk of incorrect tax filings. The only licensed entity in Hong Kong responsible for registering and certifying accountants is the Hong Kong Institute of Certified Public Accountants.


It is responsible for the issuance of Hong Kong Standards on Auditing, Quality Control, Assurance, and Related Services, which is submitted in an annual tax assessment by the Inland Revenue Department (IRD). The HKICPA members must observe these accounting and auditing standards.


As far as rules governing auditing in Hong Kong are concerned, a Hong Kong incorporated company must get its financial statements audited by a registered and certified public accountant.


The purpose behind conducting an audit is to ensure that the information and documents submitted to the IRD in the financial statements are accurate, with no internal bias. The audit of taxes, profits, and financial statements is done by a third party (CPA) to ensure compliance with taxation laws in Hong Kong.  In order to avoid any miscalculations and false audit reviews, the IRD requires a third-party audit review of accounts and financial statements of companies in Hong Kong.

Audit and tax compliance in Hong Kong

A business receives the first tax return form from the IRD 18 months after the incorporation. Upon completion, the Profit Tax Return form is submitted along with the audit report and tax computation.


Documents Required

Financial statements to be presented to the auditor should include:

  • Balance sheet
  • Income statement
  • Ledger of business transactions
  • All financial statements
  • All sales and purchase invoices
  • All expenditure receipts
  • All consulting service invoices
  • All bank statements
  • All contracts
  • All subcontractor's invoices
  • All merchant account statements
  • All management accounts
  • All relevant accounting documents

A company is advised to keep in additional records of documents supporting all company transactions and activities, including:

  • Organisation chart that shows the location of the company operations overseas
  • Travel receipts and passport copies as proof of visit
  • Shipping documents
  • Sales orders
  • Itemised telephone bills and faxes as proof of official call records

Upon receipt of the documents, the auditor reviews the statements, accounts, and supporting documents and shares opinion on their accuracy. The documents are required for a proper review of the company accounts.

The process of auditing

The whole audit process involves a number of steps, wherein the CPA accurately checks and verifies financial statements and figures as well as the entire company. This is crucial to ensure that the financial statements presented show a true representation of your business.


Before presenting the documents to the CPA, the company management is responsible for preparing financial statements and supporting documents. Upon receipt of the same, the auditor starts reviewing the documents. They also try to understand the company activities and consider relevant factors, which may affect their audit.

  • The CPA identifies and evaluates any fallacies in the financial statements that could significantly influence the financial accounts.
  • Based on the evaluation, they analyse the company’s activities to confirm the accuracy of financial statements. All the supporting documents are also examined for accuracy.
  • The auditor then shares their opinion on the accuracy and fairness of financial reports.
  • The next step is to create an audit report based on their opinion.
  • The company directors must sign the audit reports along with other crucial audit documents before sending them back to the auditor.
  • All of these documents, including Profits Tax Return and computed tax form filed by the CPA are submitted to the IRD.

A Hong Kong incorporated company is required by the local law to work with the CPA to ensure all audit reports are accurate. The company must submit signed audit reports along with necessary auditor documents. Only the original hard copy of the audit report signed by the company directors is accepted by the IRD.


The IRD may take a few weeks or months to review the audit figures and provides the tax payable schedule to the company in case of any assessable profits.


As far as preparation of financial statement is concerned, the company should prepare documents and statements for the next financial year upon completion of the initial audit. This is better done in advance because if the company chooses to wait for the PTR, it might be too late. In that case, there will be only one month for the company to file the audit report and tax.


A startup in Hong Kong must have a profit and loss account, balance sheet, general ledger and trial balance to ensure compliance of accounts with the local accounting standards.

We built a calculator to estimate your Audit fee. Try it now! 

Offshore company audit in Hong Kong

An offshore company in Hong Kong should submit any profits report to the IRD if the profits have accrued within the special administrative jurisdiction. Any offshore company that has made profits in the territory of Hong Kong is liable to profits tax and is thus required to prepare an audit report in this regard.

Next steps

We offer no-nonsense accounting for companies looking to set themselves up in Hong Kong. Get in touch with us to begin. 

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