Does your Hong Kong company need an audit?

The Companies Ordinance requires audited financial statements every year, and size does not exempt you. Here is what that actually involves, with every rule and date linked to the Companies Registry or Inland Revenue Department (IRD) page it came from.

Getting the audit done, step by step

1. Keep the books through the year. Who: the company. By when: from the first transaction; records must be sufficient for assessable profits to be readily ascertained and kept for not less than 7 years [2].
2. Have an auditor in place. Who: the company. By when: before the financial year ends, so the auditor can plan; if an auditor resigns, the company delivers Form NA2 within 15 days of receiving the notice [1].
3. Close the year. Who: whoever keeps the books. By when: soon after the end of the accounting reference period, with a balanced trial balance and every bank account reconciled.
4. Prepare the financial statements. Who: the directors, who must prepare financial statements for each financial year and approve and sign the statement of financial position [1]. By when: in time for the audit to finish before the AGM deadline.
5. The audit. Who: the company's auditor. By when: before the statements are laid, within 9 months after the end of the accounting reference period for a private company that is not a subsidiary of a public company [5].
6. Lay or circulate the audited statements. Who: the directors. By when: at the AGM, or by written resolution where the company does not hold one [5].
7. File the profits tax return (BIR51) with the audited statements. Who: the company, usually through its tax representative. By when: the date on the return; for 2025/26, a represented company with a December year-end had a due date that was first set at 17 August 2026, then extended by the IRD's circular of 14 July 2026 to 31 August 2026 (2 October 2026 if filed electronically) [7], and one with a January to March year-end had until 16 November 2026 [3].

The legal requirement

Under the Companies Ordinance (Cap. 622), a company's directors must prepare financial statements for each financial year, and the financial statements must be audited (section 405) [1]. The Companies Registry puts it plainly: audit of financial statements is required for all companies, including companies falling within the reporting exemption, except dormant companies (section 447) [1]. This applies to a two-person trading company just as it applies to a large group.

The audited statements do two jobs. They are laid before members, at the annual general meeting or through the written-resolution route [5]. And for a corporation they go to the IRD: audited financial statements should be submitted with the profits tax return in all cases with gross income [3]. A private company does not deliver its financial statements to the Companies Registry with its annual return; that requirement applies only to public companies and guarantee companies [6]. So a private company's audit is not public, but it is not optional either.

To find an auditor, the Companies Registry points owners to the public registers kept by the Accounting and Financial Reporting Council [1].

Who is exempt

The exemption is a dormant company [1]. A private company becomes dormant by passing a special resolution declaring that it will become dormant and delivering it to the Registrar of Companies; it is dormant from the date of delivery, or any later date the resolution names [4]. A company that has delivered that resolution is exempt from preparing audited financial statements, and the IRD accepts profits tax returns from dormant companies without the supporting documents [3].

Dormancy is narrow. A dormant company stops being dormant when it has an accounting transaction, meaning a transaction required to be entered in its accounting records, other than paying a fee that an Ordinance requires it to pay [4]. If your company invoiced a customer or paid a supplier during the year, it is not dormant, and a company that simply went quiet without delivering the special resolution is not dormant either. The IRD's other exception, a company incorporated in a jurisdiction whose laws do not require an audit where no auditor's report was prepared [3], is about companies formed overseas, not small Hong Kong ones.

What "SME simplified reporting" actually changes

The Companies Ordinance's reporting exemption lets qualifying private companies prepare simplified financial statements and directors' reports [1]. A small private company qualifies if it meets two of three conditions in a financial year: total revenue not exceeding $100 million, total assets not exceeding $100 million, and employees not exceeding 100 [1]. A private company that is not a member of a corporate group also qualifies if all its members agree in writing, and a larger eligible private company can qualify under higher size criteria with 75% member approval and no member voting against [1]. The agreement or resolution goes to the Registrar within 15 days [1].

What the exemption removes is disclosure, not scrutiny. A qualifying company need not give a "true and fair view" in its financial statements, its auditor need not express a "true and fair view" opinion, auditor's remuneration need not be disclosed, the directors' report needs no business review, and the statements may follow the Small and Medium-sized Entity Financial Reporting Framework and Standard issued by the HKICPA [1]. It does not remove the audit: audit is required for companies falling within the reporting exemption too [1]. The statements get simpler and cheaper to prepare; they do not become unaudited.

What your auditor will ask for

An audit goes far faster, and costs less, when the underlying records are complete. The IRD's record-keeping rule is the floor: records in English or Chinese, sufficient for assessable profits to be readily ascertained, kept for not less than 7 years [2]. Expect to produce:

• A closed general ledger, with a trial balance that actually balances
• Bank statements for every account, reconciled to the ledger
• Sales and purchase invoices, contracts and expense vouchers behind each entry
• Records of assets, liabilities, and any director or related-party balances
• The directors' approval: they must approve and sign the statement of financial position [1]

Most audit pain in small companies is not disagreement over accounting treatments. It is missing paperwork and books that were reconstructed at year-end from memory. Our bookkeeping requirements guide sets out what the IRD expects you to keep.

When the audit has to be finished

Two clocks decide it. A private company that is not a subsidiary of a public company holds its AGM within 9 months after the end of its accounting reference period [5], and the audited statements are what is laid there. On the tax side, the IRD bulk issued the 2025/26 profits tax returns to active files on 1 April 2026 [3]; for represented companies, a December year-end's due date was first set at 17 August 2026, then extended by the IRD's circular of 14 July 2026 to 31 August 2026 (2 October 2026 if filed electronically) [7], and the block extension scheme moved a year-end from January to March to 16 November 2026, while year-ends from April to November got no extension [3]. Expect the 2026/27 dates in the IRD's next block extension letter, and check them there. The profits tax return guide has the full timetable.

Changing auditors has its own paperwork. If an auditor resigns, the company delivers Form NA2 to the Registrar within 15 days beginning on the date it receives the notice; if members remove an auditor by ordinary resolution, Form NA1 within 15 days of the resolution [1].

How Suma handles this

Suma is accounting software, not an auditor. It does not audit your financial statements, sign an auditor's report or deal with the IRD for you; the audit is done by an independent auditor. What it does is make the audit file ready when the year closes:

• Double-entry books with 4-digit account codes, where every edit is a void and a re-create, so the auditor sees the history behind each figure.
• A bank feed through Finverse that brings every line from the business bank account into the books, ready to reconcile.
• Receipts and documents vaulted against the books, attached to the entry they support.
• A year-end pack exported to our partner CPA firm, with more than 40 years in practice, under a hash the server computes, and a filed year locked against edits afterwards.
• Auditor questions answered on your request desk, line by line, with the receipt attached to the answer.

Frequently asked questions

Is there a small company audit exemption in Hong Kong?

No, not from the audit itself. The reporting exemption lets a small private company, for example one meeting two of the $100 million revenue, $100 million assets and 100 employee limits, prepare simplified financial statements and directors' reports [1]. But the Companies Registry states that audit of financial statements is required for all companies, including companies falling within the reporting exemption, except dormant companies [1]. A small company gets lighter reporting, not an unaudited year.

Does a dormant company need an audit in Hong Kong?

Not while it is dormant within the terms of the Companies Ordinance: the audit requirement does not apply to dormant companies (section 447) [1], and the IRD accepts a dormant company's profits tax return without the supporting documents [3]. Dormant means the company passed a special resolution declaring it and delivered it to the Registrar [4]. The status ends with the company's first accounting transaction [4], after which the normal audit requirement applies again.

Do I need an audit for a small company in Hong Kong?

Yes, if it is a company incorporated in Hong Kong and it is not dormant. Size does not change that: audit is required for all companies except dormant ones [1]. For a corporation with gross income, the IRD also expects audited financial statements with the profits tax return [3]. What size can change is how much the statements must disclose, under the reporting exemption [1], and how long the audit takes, which mostly depends on how complete your records are.

What does the reporting exemption actually save?

Disclosure, mainly. A company within the exemption need not give a "true and fair view" in its financial statements, its auditor need not express a "true and fair view" opinion, it need not disclose auditor's remuneration, its directors' report needs no business review, and it may prepare its statements under the HKICPA's SME financial reporting standard [1]. The audit itself still happens [1].

General information current as of 16 October 2026. This is not legal, tax or accounting advice. Confirm the current requirements with the Companies Registry, the IRD or a licensed practitioner.