Hong Kong Accounting Standards: All You Need to Know in 2026

If you run a company in Hong Kong, you must follow Hong Kong accounting and financial reporting standards. Understanding which framework applies to your business is essential for compliance in 2026. They define how businesses must record transactions, prepare financial statements, and present financial information accurately and consistently.

In this guide, we explain Hong Kong Financial Reporting Standards (HKFRS), the frameworks available to different types of companies, and the key compliance requirements to understand in 2026.

Hong Kong Accounting Standards, also known as Hong Kong Financial Reporting Standards (HKFRS), are a set of rules that tell businesses how to record, report, and present their financial transactions. 

Issued by the Hong Kong Institute of Certified Public Accountants (HKICPA) and overseen by the Accounting and Financial Reporting Council (AFRC), these standards promote consistency, transparency, and accuracy in financial reporting.

While HKFRS is closely aligned with International Financial Reporting Standards (IFRS), it contains modifications that suit Hong Kong’s local legal and business environment.

Why Are Accounting Standards Important?

Here are the key reasons why getting your accounting right is so important.

• Compliance with the Law: Under the Companies Ordinance (Cap. 622), Hong Kong companies must keep accounting records sufficient to show and explain their transactions and disclose their financial position.
• Accurate Tax Reporting: Proper accounting supports accurate Hong Kong tax filings and reduces the risk of underreporting, penalties, or overpayment.
• Investor and Creditor Confidence: Transparent and audited financial statements build trust with banks, investors, and partners.
• Better Decision-Making: Accurate accounts help identify profit trends, cost inefficiencies, and investment opportunities.

All companies incorporated under the Companies Ordinance (Cap. 622) are required to prepare financial statements that comply with Hong Kong Financial Reporting Standards (HKFRS) or an applicable reporting framework issued by the Hong Kong Institute of Certified Public Accountants.

The Hong Kong Financial Reporting Standards (HKFRS) comprise multiple standards that govern various aspects of financial reporting. Below are the core components most relevant to companies operating in Hong Kong.

Hong Kong Financial Reporting Standards (HKFRS) consist of several standards that govern different aspects of financial reporting. Below are the core components most relevant to companies operating in Hong Kong.

Relevant Standards
HKAS 1 – Presentation of Financial Statements
HKAS 7 – Statement of Cash Flows

These standards define how financial statements must be structured and presented. Financial statements form the foundation of a company’s financial reporting and provide a clear view of its financial performance and position.

The main components include:

• Statement of Profit or Loss: Reports revenue, expenses, and profit or loss over a reporting period.
• Statement of Financial Position (Balance Sheet): Lists the company’s assets, liabilities, and equity at a specific date.
• Cash Flow Statement: Reports cash inflows and outflows during the reporting period.
• Statement of Changes in Equity: Explains movements in shareholders’ equity over time.

For an example of how financial statements are structured in practice, refer to the illustrative interim financial report from KPMG as an example.

Relevant Standard
HKFRS 15 – Revenue from Contracts with Customers

Revenue is recognised when it is earned, not when payment is received. Under the accrual basis of accounting, income is recorded when goods or services are delivered, regardless of when payment is made.

Relevant Standards
HKAS 16 – Property, Plant, and Equipment
HKAS 38 – Intangible Assets

Assets are recorded at cost and depreciated over their useful life. Intangible assets, such as software, are amortised. If assets are impaired, they may need to be written down.

Relevant Standard
HKAS 37 – Provisions, Contingent Liabilities, and Contingent Assets

Liabilities are obligations that arise from past events, including loans, trade payables, and accrued expenses. They also include provisions and contingent liabilities (possible obligations depending on future events). Proper recognition of liabilities ensures a fair and accurate financial position.

In Hong Kong, companies must adopt one of three financial reporting frameworks depending on their level of public accountability, size, and eligibility under the Companies Ordinance.

Who must apply it
You must apply full HKFRS if your company is publicly accountable, regardless of size.  This includes companies with debt or equity instruments traded in a public market, as well as entities that manage money or assets on behalf of a large number of outside parties, such as insurance companies or investment funds. 

What it means for you
Full HKFRS is the most comprehensive reporting framework in Hong Kong. For you, this means strict disclosure requirements, detailed and complex financial reporting, and high compliance costs.

Who can apply it

You may apply HKFRS for Private Entities if your company does not have public accountability and does not qualify as a small company. This means it meets the following size thresholds.

This framework is typically used by private companies that prepare financial statements for external users such as lenders, investors, or regulators.

What it means for you

HKFRS for Private Entities simplifies financial reporting compared with full HKFRS. For you, this means fewer disclosure requirements and less complex reporting rules, while still maintaining alignment with international accounting standards.

2025 Revision — Effective January 2027

• Aligns more closely with updated IFRS standards, including IFRS 9 and IFRS 15.
• Simplifies certain disclosure and transition requirements.
• Early adoption is permitted.

For more information about HKFRS for Private Entities, refer to the official handbook on HKICPA’s website.

Who can apply it
You may apply the Small and Medium-sized Entity Financial Reporting Framework and Financial Reporting Standard (SME-FRF & SME-FRS) if your company qualifies as a small private company under the size thresholds shown in the table below and obtains approval from at least 75% of shareholders.

What it means for you
The SME-FRF & SME-FRS is the simplest reporting framework available in Hong Kong. For you, this means significantly fewer disclosure requirements and simpler financial reporting, while still meeting basic financial reporting obligations.

Scenario

A Hong Kong private limited company provides B2B software services. In its first full financial year, it generates HKD 8 million in annual revenue, holds HKD 3 million in total assets, and employs 12 people.

The company has no public accountability. It does not have listed debt or equity and does not hold assets in a fiduciary capacity.

Because it is a private company without public accountability, it is not required to apply full HKFRS.

Its revenue, total assets, and employee count are all below the size thresholds set out in the Companies Ordinance. As a result, it qualifies to adopt the SME-FRF & SME-FRS, which is the simplest reporting framework available.

If the company later exceeds two of the three size thresholds, it must reassess its eligibility. Depending on its circumstances, it may need to transition to HKFRS for Private Entities or full HKFRS.

Once a company identifies its applicable reporting framework, it must apply it consistently throughout the financial year:

1. Prepare financial statements: Transactions are recorded and summarised in accordance with the selected HKFRS framework and reporting requirements.
2. Board approval: Directors review and approve the accounts before they’re finalised.
3. Audit: A certified public accountant (CPA) audits the financial statements to confirm they present a true and fair view. (Only dormant companies are an exception.)
4. Tax filing: Audited financial statements are submitted to the Inland Revenue Department together with the Profits Tax Return.
5. Record retention: Hong Kong companies must keep their accounting records for at least seven years.

To remain compliant with Hong Kong accounting and tax requirements, you must prepare and maintain a complete set of financial documents for each financial year.

These documents include:

• The full set of financial statements prepared under your applicable reporting framework (such as Balance Sheet, Profit and Loss Statement, etc.)
  
• Notes to the financial statements, including significant accounting policies and explanatory disclosures
  
• An auditor’s report
  
• Supporting accounting records that substantiate reported figures
  

In most cases, your financial statements must be audited annually by a Certified Public Accountant holding a practising certificate in Hong Kong. Dormant companies may qualify for exemption.

When filing a Profits Tax Return, the figures reported must be based on audited financial statements.

If your company’s gross income exceeds HKD 2 million, you are generally required to submit audited financial statements to the Inland Revenue Department. If your gross income is below this threshold, you may not need to submit the audited accounts, but you must retain proper accounting records for at least seven years.

Hong Kong accounting standards define how companies must record, prepare, and present their financial information each year. Staying compliant requires more than understanding the rules. It depends on maintaining accurate transaction records, preparing complete financial statements, and meeting annual audit and tax obligations.

At Statrys, we support Hong Kong companies through both our multi-currency business account and professional accounting services. By combining structured transaction management with bookkeeping and financial reporting support, we help ensure your records remain organised, audit-ready, and aligned with Hong Kong reporting standards.