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When 2025 rolls in and your company closes its books, two things matter:
- Compliance with Hong Kong’s Companies Ordinance and Inland Revenue rules;
- Confidence from investors, banks, and partners.
Most companies meet one of those. Very few consistently achieve both. And that’s the risk.
According to our company Hong Kong CPAs, nearly 40% of already-established Hong Kong companies, owned by foreigners, missed this critical knowledge and sought our support after receiving a court summons.
Below is the case of one of the clients we helped. He received a court summons from the Hong Kong Eastern Magistrate’s Courts for failing to comply with the company audit and Profit tax return preparation.
We had to step in, secure all documents from his previous corporate service provider, and communicate with CR, IRD, and the court to help him reduce the penalty and comply with the laws.
Our customer story and how we helped
In this guide, you will learn, with insight from IRD-approved auditors that we partner with:
- Who really needs an audit in Hong Kong this year
- Key deadlines, exemptions, and costs you must know
- Step-by-step process to manage your company audit without a headache
Let’s break it down.
1. Overview of the Hong Kong auditing regulations
1.1. What is an audit for a Hong Kong company?
An audit in Hong Kong is a compulsory formal review of your company’s financial statements by a licensed Certified Public Accountant (CPA).
Under Hong Kong’s Companies Ordinance (CO) Part 9 Accounts and Audit, every Hong Kong-incorporated company, except those officially declared dormant, must have its financial statements audited each year.
In addition, the Inland Revenue Ordinance (IRO) requires corporations to submit audited financial statements and an auditor’s report as supplementary documents when filing their Profits Tax Return (PTR).
The Inland Revenue Department (IRD) and Companies Ordinance require this to:
- Verify accuracy – Make sure your reported profits, taxes, and records match reality;
- Ensure compliance – Confirm your company is following Hong Kong tax and corporate laws;
- Build trust – Provide investors, banks, and partners with reliable, unbiased numbers.
The audit is performed by an independent CPA. This third-party check prevents internal bias or miscalculations.
2. Who needs auditing in Hong Kong (and who doesn’t need?)
Not every business in Hong Kong has to go through a full audit. But most do.
Here’s how it breaks down:
Under the Hong Kong Companies Ordinance, these entities must comply with full audit requirements
- All active Hong Kong companies (private and public);
- Subsidiaries of Hong Kong companies;
- Companies with gross income over HK$2 million (new requirement as of April 2023);
- Listed companies on The Stock Exchange of Hong Kong Limited (SEHK), with enhanced requirements;
- If you are a foreigner opening a Hong Kong company, your company must have its financial statement audited annually.
Only these specific entities can avoid the audit requirement:
- Dormant companies with no significant accounting transactions;
- Hong Kong branches of foreign companies (under specific conditions);
- Companies incorporated outside Hong Kong that don't require audited statements in their home jurisdiction.
Unless your company is dormant, a properly documented foreign branch, or exempt under another narrow category, you’ll need a statutory audit in Hong Kong.
3. When do you submit your company audit and tax documents to IRD?
After your audit, you must submit your audited financial statements, tax computation, and PTR.
First PTR: Issued 18 months after incorporation.The exact compliance date is printed on page 1 of your PTR—always double-check to avoid late filing.
If you need extra time to file tax returns, you can apply for an extension through your auditor or tax representative like Global Link Asia Consulting.
Let’s say your company was incorporated on January 1, 2024.TR would be issued by the IRD around June 2025 (18 months after incorporation).
| Financial year ended | Filing due date |
| Between 1 January and 31 March | 15 November of the calendar year in which the financial year ended |
| Between 1 April and 30 November | 2 May of the calendar year following which the financial year ended |
| Between 1 December and 31 December | 15 August of the calendar year following which the financial year ended |
4. Small company exemptions: How to qualify for simplified reporting
If your company qualifies as a “small private company”, “eligible group,” or “dormant entity,” you may be able to:
- Reduce audit fees by 15–30%;
- Prepare much simpler financial statements;
- Avoid full disclosures under HKFRS;
- Minimize regulatory workload and review time.
But before you apply, you need to meet the size tests and follow the right approval process.
Global Link Asia Consulting recently reviewed a Hong Kong-based e-commerce company with low operating costs and a lean team.
At first glance, they assumed they were too “active” to qualify for small company reporting exemptions.
But after checking their latest financials, we found they easily met the threshold.
The result? They qualified, and with that came a 25% reduction in their annual audit fees and simplified filing requirements for both directors and the tax team
To see if your company qualifies, you can use our qualification matrix here:
| Company Type | Revenue Threshold | Asset Threshold | Employee Threshold | Additional Requirements |
| Small Private Company | < HK$100 million | < HK$100 million | < 100 | Must meet 2 out of 3 criteria |
| Small Guarantee Company | < HK$25 million | No limit | No limit | Revenue threshold only |
| Small Group (Private) | < HK$100M (aggregate) | < HK$100M (aggregate) | < 100 (aggregate) | Must meet 2 out of 3 criteria |
| Small Group (Guarantee) | < HK$25M (aggregate) | No limit | No limit | Revenue threshold only |
| Other Private Company | Any size | Any size | Any size | Unanimous written agreement required |
5. How to choose an audit service in Hong Kong
Once you know if your company in Hong Kong needs an audit or not. It is time you found an audit service.
Your auditor must be external and independent, but beyond that, the right choice can save you time, money, and headaches.
Key factors you must consider are licensing, cost, and industry expertise.
The auditor’s license is non-negotiable.
In Hong Kong, only Certified Public Accountants (CPAs) registered with the Hong Kong Institute of Certified Public Accountants (HKICPA) can conduct statutory audits.
You can verify your auditor's license by checking their HKICPA membership via this link Membership. It protects you from compliance risks.
HKICPA doesn’t just register accountants. It sets the Hong Kong Standards on Auditing, Quality Control, Assurance, and Related Services.
These standards are the benchmark for every statutory audit under the Companies Ordinance (Cap. 622).
To put that in perspective:
- If you hire an unregistered accountant, your audit won’t meet legal requirements.
- Even firms with solid reputations abroad must hold HKICPA registration to audit Hong Kong companies.
Audit fees in Hong Kong can vary widely. The auditing cost depends on the Hong Kong company’s revenue and the industry
For example,
- For companies with zero turnover, the price is around 5000 HKD;
- For companies with a turnover from 1 HKD to 250,000 HKD, the price can be from 9,000 to 16,000 HKD;
- For companies with a turnover from 250,000 HKD to 500,000 HKD, the price can be from 12,000 to 20,000 HKD.
Or, a small trading company with straightforward accounts might pay HK$10,000–20,000, while a mid-sized firm with complex revenue streams could see fees upwards of HK$50,000–100,000.
But cost isn’t just about the price tag. Hidden fees can creep in if:
- Extra schedules or reports weren’t quoted upfront;
- Your company did not have any accounting done.
That’s why you should:
- Ask for a detailed, itemized quote;
- Clarify what’s included and what triggers additional costs.
Not all CPAs understand your business model.
A tech startup relying on R&D tax credits needs an auditor who can navigate expense capitalization and intangible assets.
A trading firm with multi-currency transactions and inventory valuation issues needs someone fluent in complex revenue recognition.
Without the right expertise, your auditor may:
- Miss opportunities for legitimate deductions or credits;
- Flag unnecessary issues that delay your filing.
6. Document required for your Hong Kong company audit
Audits aren’t just about numbers on a page. Missing or incomplete paperwork is one of the fastest ways to delay your audit or invite unnecessary scrutiny.
Staying organised makes the entire process faster, smoother, and less stressful. Here’s exactly the documents you need to prepare for the Hong Kong auditors.
| Documetns | Examples |
| Core financial statements |
|
| Invoices and Receipts |
|
| Banking and Contracts |
|
| Additional supporting records |
|
Once your auditor receives these documents, they’ll review the statements and supporting records, then provide their professional opinion on accuracy and compliance.
Proper preparation ensures your audit is handled efficiently and without surprises.
7. Step-by-step process for auditing with us
If you’re ready to audit your company, knowing what to expect can make the process far smoother and less stressful.
The steps below break down exactly how to stay audit-ready, file correctly, and optimize your tax position with Global Link Asia Consulting.
You can start by sending us a quick email. We’ll review your needs and provide a clear, no-surprises quotation, so you know exactly what you’ll pay.
Once you’re happy with the quote, you fill out our short registration form.
From there, we’ll handle everything, coordinating your audit, preparing filings, and keeping you fully compliant, so you can focus on running and growing your business without the paperwork headaches.
The most effective audit starts months before the auditor arrives.
- We will begin by setting an annual audit calendar that outlines your accounting reference date, interim checks, and planned audit window.
- We keep your bookkeeping current every month (posting invoices, reconciling bank statements, and storing receipts as you go)
- We reconcile critical accounts like payables, receivables, and payroll quarterly, and run spot checks on controls such as expense approvals or segregation of duties.
- Six to eight weeks before your scheduled audit, we prepare a pre-audit pack containing your trial balance, reconciliations, fixed asset register, and board minutes.
- We will help you comply with annual obligations for your Hong Kong companies
If some of your profits are earned outside Hong Kong, you may qualify for offshore tax exemptions. To benefit, we start by mapping where each revenue stream is sourced and documenting where services were delivered or contracts performed.
Our tax advisor will apply Hong Kong’s profit-sourcing rules and gather strong evidence, such as foreign contracts, shipping documents, or bank receipts.
We keep separate ledgers for Hong Kong and offshore activities to make your tax computation transparent.
Before submitting your PTR, we prepare a clear explanation with supporting schedules for your offshore claim.
Finally, we maintain board resolutions and meeting minutes explaining your offshore operations so you can easily respond to IRD queries if they arise.
Hong Kong companies must file an annual return (NAR1), profits tax return (PTR), and audited financial statements that comply with Hong Kong Financial Reporting Standards (HKFRS);
- First, we will confirm your filing deadlines so you can plan the audit timeline;
- Next, we prepare year-end accounts under HKFRS, making all necessary adjustments for accruals, depreciation, or impairments;
- We engage your auditor early, providing them with reconciliations, contracts, and tax computations;
- Once the statutory audit is complete, we attach the signed financial statements and auditor’s report to your PTR;
- On your behalf, we submit your PTR and audited financial statements on time and respond promptly to any Inland Revenue Department (IRD) queries;
- We file your NAR1 with the Companies Registry and archive all signed accounts and tax documents securely for the statutory retention period.
8. What audit non-compliance actually costs (Real penalty case)
Failing to comply with audit requirements in Hong Kong is expensive. And regulators are cracking down harder than ever.
Here are some real examples that you should know to see that Hong Kong takes audit requirements seriously.
Imagine if your audit firm faced a million-dollar penalty, not for fraud, but for failing to follow the standards.
That’s exactly what happened to BDO Limited in Hong Kong.
On December 20, 2024, the Accounting and Financial Reporting Council (AFRC) took disciplinary action against BDO and two of its partners for serious audit deficiencies.
But this case didn’t just result in a major hefty fine
It marked two major firsts in Hong Kong’s regulatory history:
- The first audit settlement case involving a listed entity
- The first disciplinary order mandating Continuing Professional Development (CPD)
And it sets a precedent for how Hong Kong regulators will treat audit quality failures moving forward — even if the breaches happened years ago.
BDO, along with Mr. Lo Ngai Hang and Mr. Lam Hung Yun Andrew, were sanctioned for their audit work on China Water Affairs Group Limited and its subsidiaries, covering five consecutive years (2011–2016).
The AFRC found multiple violations of auditing standards over this extended period. And even though the firm and its partners cooperated, the penalties were steep:
- Total fines imposed: HK$1.456 million
- Additional penalty: Each auditor was ordered to complete extra CPD hours — a first in Hong Kong enforcement history.
BDO and the individuals accepted responsibility and settled early, which triggered a 30% penalty reduction under the AFRC’s Cooperation Policy.
KPMG case is the testimony that audit non-compliance, after 20 years, can still leave a major negative effect on those who commit the act.
On 18 June 2021, the Hong Kong Institute of Certified Public Accountants (HKICPA) announced disciplinary action against KPMG and three of its partners for audit work performed two decades earlier.
Between 1999 and 2001, KPMG served as the auditor for Moulin International Holdings Limited (later renamed Moulin Global Eyecare Holdings Limited).
For all three years, the firm issued unqualified (clean) audit opinions on the financial statements of Moulin and its subsidiaries.
But years later, the audit work came under scrutiny — and the outcome wasn’t pretty.
The HKICPA’s Disciplinary Committee found that all four respondents failed to observe or apply professional standards expected of certified public accountants.
As a result, they were publicly reprimanded and fined
| Respondent | Penalty (HK$) |
| KPMG | $400,000 |
| Mr. Fung | $100,000 |
| Ms. Wong | $150,000 |
| Mr. Tse | $50,000 |
They were also ordered to pay HK$215,672 in legal costs, jointly and severally.
It’s easy to think of audits as short-term deliverables — documents signed, filed, and forgotten after the financial year closes.
But in reality, audit decisions live on long after the report date, especially in high-stakes situations like IPOs or public company filings.
In those cases above, audit work done over 20 years ago was still subject to investigation, enforcement, and public reprimand. The professional standards still applied, and once questioned, the accountability remained intact.
When you sign off on an audit today, you’re not just certifying the past; you’re shaping your firm’s future legal and reputational exposure.
9. Are you ready to get your Hong Kong company’s financial statement audited?
In Hong Kong, audits don’t just keep you legal, they shape how investors, banks, and tax authorities view your company’s credibility.
And right now, staying compliant is easier than ever. The rules are clear, and reliable CPAs are ready to handle the heavy lifting.
The process above gives you the direction. Run every step, and stay audit-ready year after year.
And if you need help, you can always count on us. Give us a call or send us an email, and our auditing and accounting experts will get back to you straight away to make sure everything is handled seamlessly.
With 10 years of expertise helping hundreds of Hong Kong companies comply and grow over the years, we know how to help your Hong Kong company create a breakthrough in the global market.
- Register a company in Hong Kong;
- Open a corporate bank account in Hong Kong with a 99% success rate;
- Choose the right company types for tax optimization in Singapore;
- Consular legalize all your Hong Kong important documents
Apply for Singapore business licenses; - Get an affordable, professional registered office address for business;
- Support to open, authenticate, and manage Stripe Paypal Business in Singapore, Hong Kong, and the U.S;
- Handle all your Hong Kong tax accounting needs, timely annual filings, auditing, and more.
10. FAQs about Hong Kong company auditing
Your company is exempt from filing audited financial statements and an auditor’s report in conjunction with its Profits Tax Return (PTR) submission if it belongs to”
- Companies that qualify as dormant under the Hong Kong Companies Ordinance;
- Companies incorporated in jurisdictions where the preparation of audited financial statements is not mandated;
- Branch offices of foreign corporations operating in Hong Kong.
Audits for Hong Kong companies are a professional service and always involve costs, even for small or inactive entities.
The total fee typically depends on several factors, including:
- Volume and complexity of transactions;
- Quality of your bookkeeping records;
- Whether your company is active or dormant;
- Whether your accounting is done in-house or outsourced.
For reference:
- A dormant or low-activity company may incur audit fees starting around HKD 5,000–8,000;
- A trading company with regular transactions can expect fees from HKD 10,000 up to HKD 30,000+, depending on scale.
No, they are completely different documents, filed with different authorities for different purposes.
An annual return is a statutory summary of the company's details. It must be filed annually with the Companies Registry, within 42 days of the incorporation anniversary.
Audited financial statements are a formal report of the company’s financial health. It must be filed annually with the Inland Revenue Department (with the Profits Tax Return).
We offer a comprehensive range of accounting and tax services for US companies. Our services include:
- Tax Consulting .
- Monthly/Annual Tax Accounting services in accordance with HKFRS.
- QuickBooks Consulting and Licensing.
- Profits Tax Return Preparation.
- Offshore claim form Preparation.
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