What a statutory audit is in Hong Kong

Statutory Audit Hong Kong

A statutory audit in Hong Kong is a mandatory annual examination of a company's financial statements. Directors prepare financial statements that give a true and fair view. A practising certified public accountant registered with the HKICPA must conduct the examination. The auditor then issues a statutory audit report addressed to the members. This requirement applies to every company incorporated under the Companies Ordinance (Cap. 622), regardless of size or any reporting exemption.

Hong Kong Company Audit Requirement

The Companies Ordinance governs the annual audit. Every company must appoint an auditor at each annual general meeting, unless the members have dispensed with the meeting by written resolution. The auditor must be a practice unit registered with the HKICPA. The audit covers the company's financial statements, directors' report and, where prepared, the group accounts.

HKICPA Statutory Audit

Only an HKICPA-registered certified public accountant holding a practising certificate may sign a Hong Kong statutory audit report. The audit must be carried out in accordance with Hong Kong Standards on Auditing. The HKICPA regulates the profession and sets the ethical and technical standards auditors must follow. Engaging an unregistered practitioner means the company has not complied with the law.

Auditor's Report Hong Kong

The auditor's report states whether the financial statements give a true and fair view and comply with the Companies Ordinance. The report may be unmodified. It may also contain a modified opinion where the auditor identifies material misstatements or scope limitations. A qualified opinion, adverse opinion or disclaimer of opinion each signals a different degree of departure from the expected standard.

Annual Audit Hong Kong Company

The annual audit must be completed before directors can lay the audited financial statements before the members. The audit cycle follows the company's accounting reference date. Where a company qualifies for the reporting exemption under section 359 of the Companies Ordinance, disclosure requirements are reduced but the audit requirement remains. The exemption does not remove the obligation to appoint an auditor or to file audited accounts.