Auditing Services

Key Takeaways

• An auditing service is legally required for all Hong Kong limited companies under the Companies Ordinance (Cap. 622).
• The auditor must be an independent, external practising CPA registered with the HKICPA.
• Audited financial statements must accompany your annual Profits Tax Return (PTR) to the IRD.
• There are four possible types of auditor’s opinion, each reflecting a different conclusion about your company’s financial statements.

Is an Auditing Service Really Compulsory in Hong Kong?

Yes, for every private limited company, every year.

Under Section 405 of the Companies Ordinance (Cap. 622), all Hong Kong private limited companies must engage an auditing service annually. There are no exceptions based on size, revenue, or transaction volume. A company with zero revenue still has this obligation.

The audited financial statements are submitted to the IRD together with the Profits Tax Return (PTR). Private companies do not need to file these with the Companies Registry, so your financial information will not appear on any public record.

What Does an Auditing Service in Hong Kong Actually Do?

An auditing service provides an independent examination of your company’s financial statements by an external, qualified professional. The auditor’s job is not to prepare your accounts (that is covered by your accounting services) but to verify them.

The auditor reviews the underlying records (invoices, bank statements, contracts, receipts) and assesses whether the financial statements present a true and fair view of the company’s financial position and performance. At the end of the process, they issue a formal Auditor’s Report containing their opinion.

The Four Types of Auditor’s Opinion

Here is how your accounting service fits into the bigger compliance picture each year.

Unqualified opinion The best outcome. The auditor is satisfied that the financial statements are fairly and appropriately presented, and that the accounts were prepared in accordance with Hong Kong accounting standards.

Qualified opinion The auditor’s judgment was affected by certain limitations, but those limitations are not material enough to invalidate the overall statements. A common example is a few missing receipts. This is actually quite common among startups and early-stage businesses, so it is nothing to be alarmed about.

Adverse opinion Unlike a qualified opinion where only certain areas are in question, an adverse opinion means the auditor has concerns about the financial statements as a whole.

Disclaimer of opinion The auditor was unable to form a conclusion because key evidence was unavailable. For example, if a company loses all its invoices and receipts and cannot recover them. The auditor has no basis to make a valid comment on those figures.

For most well-run businesses, an unqualified opinion is the expected result whilst qualified opinions are also very common for SMEs.

Who Is Qualified to Provide an Auditing Service in Hong Kong?

The auditor must be a practising CPA registered with the Hong Kong Institute of Certified Public Accountants (HKICPA). You can verify any auditor’s registration status on the HKICPA’s public register.

Critically, the auditing service must be provided by someone independent and external. The Companies Ordinance prohibits the same person or firm from both preparing and auditing the financial statements. This is why, even when the same service provider handles both, accounting and auditing must be carried out by separate individuals.

At Get Started HK, we maintain a clear separation between our accounting team and the registered CPA appointed to provide the auditing service for each client.

What Does the Auditing Service Process Involve?

Appointment Your company formally appoints a registered auditor. For Get Started HK clients, we handle this directly. The auditor must be independent of whoever prepared the accounts.

Audit evidence review The auditing service begins with a review of supporting documents to verify the figures in your financial statements: bank statements, sales and purchase invoices, contracts, delivery notes, purchase orders, rental and loan agreements. For year-end balances, the auditor may send confirmation requests directly to your bank or counterparties.

Management enquiries The auditor will ask questions about anything that needs explaining: unusual transactions, accounting estimates, related-party dealings. These are a normal part of any professional auditing service. Clear answers with supporting documentation keep things moving.

Audit report issued The auditor presents the Audit Report to the company’s directors. The director must sign the report confirming their acknowledgement. If you’re based overseas, this is typically handled by courier.

Filing with the IRD Once the signed report is returned, the auditing service is completed with the finalisation of the tax computation, completion of the Profits Tax Return, and submission of all required documents to the IRD. Get Started HK handles this as your tax representative.

IRD assessment The IRD reviews the filing and issues a tax assessment notice for onshore companies. If they have questions or want to review specific items, we will assist our clients with the response.

When Does My Company Need to File?

The IRD typically issues the first Profits Tax Return around 18 months after your company’s incorporation date. After that, filing deadlines are tied to your accounting year-end, with an one month submission timeframe.

Missing the filing deadline may result in penalties. If penalties are ignored, the IRD may escalate the case to court. For onshore companies, the IRD may also issue an estimated assessment, calculating a tax figure themselves based on assumed profits, which may not reflect your actual liability.

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Frequently Asked Questions

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If you’re still in the early stages of setting up your business, our company formation packages include guidance on structuring your accounts correctly from the start, so your first auditing service goes smoothly.