The Audit Report in Hong Kong: Requirements & Timeline

Running a company in Hong Kong means preparing audited financial statements every year and the audit report that sits in front of them.

This report, issued by an independent CPA, tells shareholders, banks, investors, and the Inland Revenue Department (IRD) whether your accounts give a true and fair view under Hong Kong standards.

This guide explains the audit report format, who needs one, how long it takes, what it costs, and how to get ready so you can file your Profits Tax Return (PTR) on time.

Let’s get started.

An audit report in Hong Kong is a formal document prepared by a Certified Public Accountant (CPA) after conducting an audit of a company's financial statements. It provides an independent and professional assessment of the accuracy and compliance of a company’s financial records with the relevant Hong Kong Financial Reporting Standards (HKFRS) and Hong Kong law.

The goal of the audit is to confirm that your accounts follow Hong Kong Financial Reporting Standards (HKFRS) and that they fairly reflect how your business is performing.

Once the review is complete, the auditor issues an audit report that summarises their findings. This report becomes part of your company’s official records and is usually presented to stakeholders and submitted with your annual filings.

Audit Report vs Audited Financial Statement: What’s the Difference?

These two terms are often confused, but they refer to different parts of the audit.

Almost every company in Hong Kong must undergo an annual audit.

The only exception is for dormant companies, which are exempt from both preparing and auditing financial statements under section 447 of the Companies Ordinance.

Smaller companies may qualify for simplified reporting standards (also called reporting exemption) if they meet any two of the following criteria for two consecutive financial years.

*Eligible private companies must have at least 75% shareholder approval and no objections from any member.

No, you cannot prepare your own audit report.

In Hong Kong, only a Certified Public Accountant (CPA) with a practising certificate from the HKICPA can perform and sign an audit.

To stay independent, the auditor cannot be:

• A shareholder, board of directors or employee of your company.
• Anyone with a financial interest in your business.

Most companies hire an external CPA firm to handle their annual audit for transparency and compliance. A truly independent audit also helps assess the effectiveness of your company’s internal controls.

How Much Does an Audit Cost?

For most small private companies, audit fees typically range from HKD 8,000 to HKD 20,000 per year. Larger or more complex businesses, such as those with multiple subsidiaries, high transaction volumes, or international operations, can expect to pay HKD 30,000 or more.

Note that the total cost of an audit depends on several factors, including:

• The number of transactions and accounts to check
• The complexity of your financial structure
• Whether foreign subsidiaries or intercompany dealings are involved
• The condition and accuracy of your accounting records

A standard audit report (or the auditor’s opinion letter) sits in front of your audited financial statements. Together, the package covers:

1. Auditor’s Opinion (The Report Itself)

States whether the financial statements give a true and fair view under HKFRS, based on work performed under the Hong Kong Standards on Auditing (HKSAs).

Types of opinions:

• Unqualified opinion: No material misstatements; framework followed.
• Qualified opinion: Mostly okay, but one or a few areas are materially misstated/limited.
• Adverse opinion: Not reliable overall (pervasive misstatements).
• Disclaimer of opinion: Auditor can’t conclude (insufficient evidence, pervasive scope limitation).

Keep in mind that the audit provides reasonable assurance, not a guarantee of absolute accuracy.

2. Basis & Required Sections (Within the Audit Report)

After the opinion paragraph, the report includes supporting sections such as:

• Basis for Opinion: Explains the standards used, audit methods, and independence.
• Reporting Responsibilities: Outlines what management and auditors are each responsible for, including the company’s going concern assessment.
• Key Audit Matters (KAMs): For larger companies, highlights areas that required special attention.
• Other Information / Legal Reporting: Covers additional disclosures where required by law.

The report ends with the auditor’s name, firm, place, and date of signature.

3. Audited Financial Statements (Attached After the Report)

Following the auditor’s report are the audited financial statements, which include:

• Balance sheet (Statement of Financial Position): Shows what the company owns (assets) and owes (liabilities).
• Income statement: Summarises income earned and expenses incurred during the year.
• Cash flow statement: Tracks how cash moves in and out of the business.
• Statement of changes in equity: Records changes in shareholders’ capital and retained earnings.
• Notes to accounts: Provide details on related-party transactions, directors’ remuneration, loans, accounting policies, and other required disclosures.

Start the audit process as soon as your financial year ends and plan backwards from your Profits Tax Return (PTR) deadline. For most SMEs, expect roughly 6–12 weeks from book close to a signed audit report; first-year audits or more complex groups may take longer.

The IRD typically issues your first PTR about 18 months after incorporation and then annually. When you file, you must attach your audited financial statements, which include the audit report.

Example — 31 December Year-End

• January: Close and tidy records.
• February: Prepare draft financial statements and finish reconciliation
• March: Complete audit fieldwork (if needed)
• Early April: Sign-off.

To avoid a scramble, keep records current during the year, upload requested documents early, and appoint a single point of contact for the auditor.

Audits are a normal part of running a company in Hong Kong, and they don’t have to be complicated. Staying organised and using smart tools can make all the difference.

With a Statrys business account connected to Xero, you can keep your books tidy, simplify reporting, and make audit preparation effortless when tax season arrives.