The Hong Kong tax policy that requires entrepreneurs to register a company is beneficial because it provides many tax incentives. Doing business in Hong Kong can be a great opportunity for your company, but it is important to ensure you comply with local laws and regulations.

A Hong Kong company audit can help ensure that your business is on track and meet all of the requirements. We will discuss what a Hong Kong company audit is and how to prepare for one.

What is an audit in Hong Kong?

An audit is an official examination of your company’s financial records and is conducted by the Hong Kong government or by a private auditing firm. The purpose of an audit is to ensure that your business is complying with all of the relevant laws and regulations.

There are two types of audits that you may need to undergo:

  • A statutory audit is required by law and must be conducted by a registered auditor
  • A voluntary audit is not required by law but may be conducted by a registered auditor at the request of the company

You might also know the responsibility of The Hong Kong Institute of Certified Public Accountants (HKICPA) as the professional body for certified public accountants in Hong Kong. The HKICPA sets the standards for auditing and assurance and regulates the profession.

The HKICPA guides financial reporting and auditing for businesses in Hong Kong. They also offer training and development opportunities for certified public accountants you.

If you are doing business in Hong Kong, understanding the accounting standards is also the needed information for your SMEs in Hong Kong.

What is the audit report?

This report is the document that is issued by the auditor at the end of the business record evaluation. The report will state whether or not the financial statements are free from material misstatement.

There are two types of reports in Hong Kong: unqualified and qualified. A qualified report means that the financial statements are free from material misstatement. An unqualified report means that there are some errors in the financial statements but they are not material.

What are the auditor’s eligibility, roles, and responsibilities?

To be eligible to conduct an audit in Hong Kong, the auditor must be:

  • A member of the HKICPA
  • Registered with the HKICPA
  • Authorized by the HKICPA to conduct the evaluation process

The roles and responsibilities of auditors vary depending on the type of audit being conducted. However, all auditors must:

  • Conduct the process following HKICPA standards
  • Cooperate with the company during the audit process
  • Report any irregularities or non-compliance to the HKICPA

There are some tips for choosing an auditor for my Hong Kong company, it is important to

  • Choose one who is qualified and registered with the HKICPA
  • Choose one who has experience conducting audits in Hong Kong
  • Cooperate with the auditor during the audit process

What are the documents required?

The documents required for business record evaluation in Hong Kong vary depending on the audit conducted. However, all businesses must provide the following documentation:

Financial statements including:

  • Financial statements
  • Profit or loss and comprehensive income statement
  • Cash-flow statement
  • Statement of changes in equity

To illustrate what to do with the financial statements in Hong Kong, feel free to look into our guide for more helpful details.

Annual reports include:

These statements will be attached to the financial statements as mentioned above:

  • Director’s report
  • Auditors’ report
  • Consolidated financial statements (if applicable)

Tax returns include:

  • Profits tax return
  • Property tax return

Both types of tax returns must be filed with the Inland Revenue Department. Even so, a Hong Kong company should keep the records of transactions and activities documents as follows:

  • Financial statements
  • Bank statements
  • Contracts
  • Invoices
  • Emails
  • Vouchers
  • Book of accounts recording receipts and payments

4 types of taxes that matter for individuals and businesses in Hong Kong


What is the process of auditing in Hong Kong?

The process in Hong Kong varies depending on the audit being conducted. However, all of them follow these general steps:

  • Appointment between all related shareholders
  • Planning the process
  • Conducting the financial examination
  • Reporting the results

The first step in any audit is the appointment of an auditor. The auditor must be qualified and registered with the HKICPA. The auditor will then plan the audit by reviewing the company’s financial statements and other relevant documentation.

The next step is to conduct the audit. The auditor will review the company’s records and interview employees to ensure that all procedures are being followed correctly. Finally, the auditor will report their findings to the HKICPA.

The best way to stay compliant

It’s within any business’s instinct to let their in-house auditing department handle sensitive financial data, but having an external auditor can yield more merits in the long run.

At the surface level, you’re showing tax authorities what they want to see: clean numbers and objectivity.

An internal auditor might feel an emotional inclination towards the business which can set the stage for later problems down the line. Whereas a professional firm addresses the problem with nothing but grounded truths, resulting in a more trustworthy evaluation of your company’s financial situation.

As they screen through dozens of spreadsheets in a forensic-like manner, auditing deficiencies are almost certain to arise – auditing deficiencies that are now within your power to remediate. With all things considered, a professional auditing firm can ensure that your company is compliant with all applicable laws and regulations.

As for hiring one, you can either opt for an independent freelancer or a professional firm. You should generally make the decision based on where your business stands in terms of scale.

If you’re an SME looking to expand then look for firms that offer external audit service Hong Kong in their portfolio. This will help shareholders and investors feel more secure with their investments.

But for big enterprises then the focus should be on performance & compliance auditing.

Additional Tips To Strengthen Your Compliance

Additional Tips To Strengthen Your Compliance

Obtaining a Certificate of Good Standing will further demonstrate your business’s commitment to legal compliance. This certificate adds an additional level of assurance and credibility, streamlining interactions with banks, partners, clients, and government authorities.

Read more in our article today!

The audit fee in Hong Kong

The financial examination fee in Hong Kong is typically between HK$30,000 and HK$80,000. However, the exact fee will depend on the size and complexity of the company being audited.

In addition, reports resulting from the financial evaluation are required to complete before the annual general meeting (AGM) of each company. The company’s AMG also depends on the type of business as the accounting reference period.

Plus, the independent auditor’s report is a document that is issued by the auditor at the end of the examination. The report will state whether or not the financial statements are free from material misstatement.

The reporting exemption

Reporting exemption refers to the fact that exempted companies are allowed to prepare simplified accounts and director’s reports. It should also be noted that unless your company falls into the dormant status, companies under the reporting exemption still have to evaluate financial statements with the Companies Registry. And the company will still need to keep records of its financial transactions.

Section 380 (7) further explained the simplified requirement as your company, if qualified, will not need to give a “true and fair view” on the audited financial statements. Further clarifications of how to prepare financial statements and related directors’ reports under the reporting exemption can be found here.

The qualifying criteria for the reporting exemption are also different based on the business type and revenue. For instance, the total revenue cannot exceed $25 million in a financial year as a small guarantee company. Small private companies or holding companies of a group of small private companies, that want to be eligible for exemption must meet the following conditions in a financial year:

  • Total revenue not exceeding HK$100 million
  • Total assets not exceeding HK$100 million
  • Number of employees not exceeding 100

To learn more about the qualifying conditions, click here.


A good professional auditing firm can ensure compliance for your business while providing invaluable financial insights on the side. A qualified report indicates that there are some areas of the financial statements that require further review.

Interested in accounting services? BBCIncorp might be an option for you in the way of looking for a suitable auditor, contact us via  for more information.

Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.

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