Hong Kong audit requirements should be assessed separately from whether a company made a profit or owes tax. A small company or a company using simplified reporting is not automatically exempt from audit.
Separate three questions First, what financial statements must the company prepare? Second, is an audit required under the applicable company rules? Third, what must accompany its tax return? These questions interact but are not interchangeable.
The Companies Registry's guidance explains that the reporting exemption for qualifying companies does not itself remove the audit requirement. A qualifying dormant company has a separate statutory position.
Prepare records throughout the year Maintain reconciled accounts, supporting documents and a clear explanation of significant balances. Include processor reserves, founder loans, inventory and unpaid invoices where relevant. The auditor needs evidence beyond a management estimate.
Plan the engagement Agree the period, deliverables, information requests and timetable with the appointed auditor. A first audit can require additional work to establish opening records and understand the business.
For a company claiming that it has not traded, review whether it has nonetheless entered accounting transactions and whether formal dormancy requirements were met. A casual “no activity” statement does not determine the legal position.
Resolve the audit requirement early with a qualified professional. This avoids pricing a company setup on an assumed exemption and discovering later that the records and budget were inadequate for the actual obligations.
Sources and scope
General information, not advice for your individual legal or tax position. Confirm current requirements with the relevant authority or provider.