Are all Hong Kong companies required to have audited accounts?
All companies incorporated in Hong Kong are required to appoint an auditor for each financial year in accordance with the Companies Ordinance. Further, the audit report forms part of the reporting documents the directors of a company must produce for the Annual General Meeting. Only dormant companies are exempt from the audit requirement. Dormant in this case refers exclusively to companies whose status is registered as dormant with the Companies Registry. The exemption to submit audited accounts together with the profits tax return for small corporations does not extend to the requirement to prepare audited accounts under the Companies Ordinance.
When does a company need to submit the annual audited report?
A company does not need to file its audit report to the Companies Registry and there is no publication requirement for unlisted companies.
The audit report however is required to be attached to the profits tax return and submitted to the Inland Revenue Department if the company’s revenue exceeds HKD2million or for any of the other specified reason does not qualify as small corporation. Aside from external submission, the directors are required to prepare the reporting documents, which includes the audit report, for presentation to the members of the company at its Annual General Meeting.
How do auditors charge?
Audit fees depend often on the estimated time involved in completing the audit engagement. In addition the auditor will often also consider their professional risk and exposure issuing an opinion. Good preparation and well prepared accounts can help to reduce the audit fee.