Is audit a compulsory requirement?
Yes. Audit is compulsory in Hong Kong. As per the Companies Ordinance, a Hong Kong company must prepare an audit of the financial statements every year. This is also a mandatory requirement if you intend to claim offshore status. You only have to prepare auditing once per year and you can see the reporting time from this page.
What is an Auditor’s Report?
An audit report is usually seen as a check mechanism of director’s work and performance. A Hong Kong Company must appoint an auditor at the first Annual General Meeting. The auditor must prepare an audited financial statement and he should present the report to all directors and members.
In the audited report, the Auditor must give an opinion whether the financial statements provide a true and fair view of the financial position and financial performance of the company as required by section 380 of the Company Ordinance. In general, there are four types of opinion and they can have hugely different implications.
The 4 Types of Auditor’s opinion
The best result is to receive an “unqualified opinion”. It means that the company’s financial statements are fairly and appropriately presented, and the reports were prepared according to the accounting standard in Hong Kong.
If a company fails to provide some information, i.e. several receipts are missing, the auditor may give a “qualified opinion”. It means that his judgment is affected by some limitations but those limitations are not material. In fact, “qualified opinion” is quite common among start-up companies.
Conversely, if the information missing is material, in which the auditor cannot examine the evidence at all, then the auditor may make a “disclaimer opinion”. For example, if you lose ALL your bank statements and you cannot recover them, the auditor will be unable to make a valid comment.
The worst scenario is probably the “adverse opinion”. It means the auditor is in the view that your financial information are misleading, incomplete or misstated. Both disclaimer opinion and adverse opinion are red flags and they are likely to catch the attention of the Inland Revenue Department.
To avoid getting into trouble with the Hong Kong Inland Revenue Department, and to make sure you will receive an unqualified opinion from our auditor, customers shall check with our accounting team at email@example.com before business commencement.
Do I need to share the audited report with the Government authority?
If your company is a small private limited company, you only have to prepare an audit reports in a simplified format to the Inland Revenue Department. There is no need to submit the report to the Hong Kong Company Registry. In other words, the financial data won’t be disclosed in public record.
How much does Auditing service cost?
Our price range is based on the annual turnover (total sales) of a company. It starts at HK$5500 and it generally includes the followings. If you are interested in our auditing packages, you can contact us at firstname.lastname@example.org to tailor make an audit plan.
- Full set audited financial statements
- Multiple currencies
- Profit Tax Return form submission
- Tax computation submission
- Offshore profit tax exemption status
- Auditing solution with professional HK certified public accountants