If you plan to do business in Hong Kong, it is important to understand Hong Kong’s accounting, bookkeeping, and auditing standards to avoid the risk of incorrect tax returns. The only authorized body responsible for registered and certified accountants in Hong Kong is the Hong Kong Institute of Certified Public Accountants.
He is responsible for issuing hong kong incorporation standards for audit, quality control, warranty, and related services, which are reflected in the annual tax assessments of the Internal Revenue Service (IRD). Members of the Hong Kong Institute of Certified Public Accountants must comply with these accounting and auditing standards.
For Hong Kong’s audit requirements, the financial statements of Hong Kong-registered companies must be audited by registered and certified auditors.
What is a Hong Kong audit?
Before we dive into the article to understand the requirements, let’s take a look at the audit in Hong Kong.
By definition, an audit is a formal review of accounts conducted by a third party to Get Started HK. The purpose of the Hong Kong audit is to have a fair and accurate understanding of the company’s financial statements without internal bias.
In Hong Kong, unlike other countries, government taxes, financial statements, and profits are audited and verified by a third party to ensure compliance with relevant Hong Kong tax laws. The company can modify its financial information intentionally or unintentionally to provide false statements about your company’s financial information.
Who is a chartered accountant in Hong Kong?
The audit can be conducted by a certified public accountant accredited by the hong kong incorporation Certified Public Accountant (CPA). The CPA you choose will review your invoice and submit it to the Hong Kong Internal Revenue Service (IRD) to Get Started HK. CPA applies to any inconsistencies or inaccuracies. Any suspicious entries can be flagged, and the CPA may need to follow up. A receipt may be required.
We strongly recommend that you find a qualified, suitable, and professional CPA as your Hong Kong auditor. According to section 28A (5) (a) of the Professional Accountants Ordinance (PAO), a certified public accountant must obtain “approved accounting experience” before obtaining a practicing certificate (PC). According to applicable PAO rules, applicants must have at least 4 years of full-time work experience.
Hong Kong audit requirements:
Hong Kong Companies Ordinance requires all companies to have accounting records:
All payments received or paid by the company and matters related to execution, income, and expenses; All company sales/service income and direct operating expenses; company assets And debt. The bookkeeping files must be kept for seven years after the end of the last booking or the fiscal year associated with the last booking.
Please note that companies operating abroad still need to keep relevant receipts and receipts and other relevant records.
What documents are required for the audit?
The company must provide annual accounts to the auditor to show the entire business. If possible, annual financial statements should include income statements, balance sheets, and company registers. The auditor will then review these reports and, together with supporting documents, review your accounts and comment on the accuracy of the financial statements.
In order for the CPA to conduct the audit effectively, the company must prepare the following audit documents:
- All financial statements/administrative accounts
- All invoices/invoices/consulting contracts
- All purchase invoices/subcontractor invoices
- All expense receipts
- All bank statements
- All merchant account statements
- All other relevant accounting documents
General requirements for private companies:
Private companies are considered to be the most common type of hong kong incorporation. According to the country’s law, private companies must submit annual accounts to the IRS as part of the company’s tax obligations.
These financial statements must comply with the Hong Kong Accounting Standards applicable to the company; H. HKFRS, or SMEFRF and SMEFRS, depending on the situation. Introduce different annual financial statement reporting rules; each department can also have an appropriate supervisory authority to which the company must submit financial statements.
Only private companies with qualified dormant status are exempt from submitting these annual financial statements.
What happened during the audit process?
- Keep your annual financial statements and related business documents in order.
- CPA users view your invoices by viewing all the documents you send.
- The review is not limited to finances, as it also attempts to clearly understand your company’s performance.
- Submit verified accounts and tax calculations to the Hong Kong Inland Revenue Department.
- If it matches your income tax return, the IRD will send you a tax assessment. (You always have the right to request additional supporting documents, so you must keep the documents properly for 7 years after paying taxes.)
Hong Kong Holding Company Consolidation Audit:
Consolidated Financial Statements provide a clear and consistent picture of the company’s financial status. This is especially important for companies that operate in multiple countries and need to comply with the tax and accounting laws of different jurisdictions. Even if the company is exempt from preparing consolidated financial statements, shareholders usually view the audit as strengthening the company’s position in tax authorities and banking institutions.
Submit an annual statement to the Registrar of Companies:
A limited liability company incorporated in hong kong incorporation under the Companies Ordinance must submit an annual statement signed by the authorized agent, the director, company secretary, or manager at the time of incorporation to Get Started HK. Companies that are dormant in accordance with the rules of procedure (that is, companies that do not have relevant accounting operations in the fiscal year) are exempt from submitting annual accounts.
An annual statement is a special form of a statement that contains information about the company, such as the address of the secretary, registered office, shareholders, directors, etc.