Hong Kong Audit Support Services

Hong Kong Audit Support Services | Bestar

Audit Support or Audit Preparation Services

Hong Kong Audit Support Services

There are numerous firms in Hong Kong that offer audit support or audit preparation services, which are essential for businesses, particularly limited companies, to comply with the statutory annual audit requirement.

These services help companies get their financial records in order before the formal statutory audit is conducted by an independent Certified Public Accountant (Practising) (CPA), ensuring a smoother, faster, and often less costly audit process.

Core Audit Support Services

Audit support and preparation services in Hong Kong typically focus on ensuring a company's accounts and records are compliant with local standards and ready for the appointed auditor.

Service	Description	Benefit to the Business
Financial Statement Preparation	Preparing the full set of financial statements (Income Statement, Statement of Financial Position, etc.) according to HKFRS (Hong Kong Financial Reporting Standards) or IFRS (International Financial Reporting Standards).	Ensures compliance with the required reporting framework.
Accounts Reconciliation	Reconciling major accounts, such as bank balances, debtors, creditors, and intercompany transactions, to ensure accuracy.	Minimizes discrepancies that can prolong the audit and lead to auditor adjustments.
Documentation Organization	Organizing and compiling all necessary supporting documents (invoices, receipts, contracts, bank statements, general ledger, etc.) for the auditors.	Streamlines the audit fieldwork, saving time and reducing audit fees.
Mock/Pre-Audit Assessment	A preliminary review of financial records and internal controls to identify potential risks or non-compliance issues before the official audit begins.	Allows the company to proactively fix issues, such as inadequate documentation or internal control weaknesses.
Tax Computation & Filing	Preparing the necessary Profits Tax Computation and assisting with the submission of the Profits Tax Return (PTR) and audited financial statements to the Inland Revenue Department (IRD).	Ensures timely and accurate tax compliance.

Required Documents for Audit Preparation

To start the audit preparation process, you typically need to gather and organize a comprehensive set of documents for the firm providing the support and, ultimately, the appointed auditor.

• Financial Records:

  
  

  • General Ledger and Trial Balance for the financial year.

  • Income Statement and Statement of Financial Position (or Balance Sheet).

  • Prior year's audited financial statements and audit report (if applicable).

    
    

• Source Documents:

  
  

  • All bank statements and bank reconciliation statements.

  • Sales and purchase invoices, receipts, and payment vouchers.

  • Contracts, loan agreements, and lease agreements.

  • Payroll records and MPF (Mandatory Provident Fund) contribution records.

    
    

• Corporate Documents:

  
  

  • Company incorporation documents and Business Registration Certificate.

  • Corporate secretary documents and statutory records (e.g., shareholders' and directors' registers).

✅ Hong Kong Statutory Audit Preparation Checklist

A detailed checklist is the key to minimizing audit time and fees. The preparation goes beyond just gathering documents; it involves a final review of the bookkeeping to ensure compliance with Hong Kong standards.

Here is a comprehensive audit preparation checklist, broken down into key sections for a Hong Kong limited company:

I. Financial Statements & Accounting Records

This section covers the core output of your bookkeeping for the year. Ensure all reports are finalized and tie in with the Trial Balance.

Item	Status	Notes
Final Trial Balance	Complete	Must be fully reconciled and balanced for the financial year.
General Ledger	Complete	A complete listing of all transactions, sorted by account, for the entire period.
Balance Sheet	Finalized	Statement of Financial Position, prepared in accordance with HKFRS or SME-FRS.
Income Statement	Finalized	Statement of Comprehensive Income, showing revenue, cost of sales, and expenses.
Statement of Cash Flows	Finalized	Required for full HKFRS, and often needed for comprehensive audit review.
Fixed Asset Register	Updated	List of all company assets (e.g., computers, furniture), including purchase date, cost, depreciation method, and net book value.
Bank Reconciliation	Complete	All bank accounts reconciled up to the year-end date.

II. Corporate & Legal Documents

These documents establish the legal existence and structure of the company.

Item	Status	Notes
Certificate of Incorporation	Attached	Copy of the company's founding document.
Business Registration Certificate	Attached	Current copy, valid for the audit period.
Articles of Association	Attached	The governing rulebook of the company.
Annual Return (NAR1)	Attached	Most recent filed with the Companies Registry.
Directors’ & Shareholders’ Resolutions	Compiled	Minutes/Resolutions for all significant decisions made during the year (e.g., dividends, major loans, asset purchases).
Previous Audit Report	Attached	The audited financial statements and audit report from the prior year.

III. Supporting Documents (Assets & Liabilities)

These documents provide external verification for the balances shown on your Balance Sheet.

Item	Status	Notes
All Bank Statements	Compiled	Full 12 months for ALL business bank and payment gateway accounts (e.g., PayPal, Stripe).
Loan & Mortgage Agreements	Attached	Full documentation for all outstanding loans, detailing interest and repayment schedules.
Trade Debtor Listing (A/R)	Attached	Aged list of accounts receivable at year-end, along with details of any irrecoverable debts (bad debts).
Trade Creditor Listing (A/P)	Attached	Aged list of accounts payable at year-end.
Intercompany Transaction Details	Attached	Statements/reconciliations for all transactions with related parties or subsidiaries.
Inventory Records	Attached	Year-end inventory count sheets, valuation basis, and method (if applicable).

IV. Supporting Documents (Revenue & Expenses)

These documents verify the items on your Income Statement. Auditors often focus on large or unusual transactions.

Item	Status	Notes
Sales Invoices/Contracts	Sample Ready	Documentation for all major revenue streams and a sample of regular sales.
Purchase Invoices/Receipts	Sample Ready	Documentation for major purchases and a sample of regular operating expenses.
Rental/Lease Agreements	Attached	For office, equipment, or any major operating leases.
Payroll Details	Attached	Summary of staff salaries, MPF (Mandatory Provident Fund) records, and related tax filings (e.g., Employer's Return).
Travel & Entertainment Expenses	Organized	Clear segregation and supporting receipts/invoices as per IRD rules.

V. Tax Compliance Documents

Item	Status	Notes
Profits Tax Return (PTR)	Attached	The original form received from the Inland Revenue Department (IRD).
Tax Assessment Notices	Attached	Any tax assessment notices received during the period.
Tax Computation	Draft	Draft computation of Profits Tax for the current period (usually prepared by the audit support firm).

💡 Best Practice for Preparation

1. Start Early: Begin gathering and organizing these documents 3-4 months before your tax filing deadline.

   
   

2. Organize Digitally: Create clear, labeled folders on a shared drive (e.g., "2024 Audit Documents > Bank Statements," "2024 Audit Documents > Invoices").

   
   

3. Ensure Completeness: Auditors will often require a bank confirmation letter to verify the final bank balance. Ensure all supporting documents are available for every significant transaction. Missing documents are the biggest cause of delays and higher fees.

Cost Factors for Audit Support

Audit support and fees for the statutory audit itself in Hong Kong can vary significantly based on the size and complexity of the business.

Key factors that influence the cost include:

1. Company Revenue and Transaction Volume: Higher revenue and more transactions mean more work for the auditor.

   
   

2. Business Industry: Specialized industries (e.g., finance, manufacturing) with more complex regulations may incur higher fees.

   
   

3. Quality of Records: Poorly maintained or disorganized records will significantly increase the time and cost required for both preparation and the final audit.

   
   

4. Nature of Services: A statutory audit for a basic service company is generally less expensive than one for a trading company with inventory and complex transactions.

As a general guideline, the statutory audit fee for a simple, small Hong Kong service company with fewer than 100 transactions per year might start from around HK$5,000 to HK$8,000, with fees increasing based on the factors above. Audit preparation services are charged separately and depend on the extent of the work required to get the books in order.

Bestar Specializes in Audit Preparation for Small to Medium-sized Enterprises (SMEs) in Hong Kong

Bestar is a professional services firm in Hong Kong that offers a comprehensive suite of services, including audit preparation, accounting, and assurance services, which we specifically target toward Small to Medium-sized Enterprises (SMEs).

We market outselves as a "one-stop-shop solution" that helps SMEs ensure mandatory compliance and provides the necessary financial support for the annual statutory audit.

🇭🇰 Bestar's Services for Hong Kong SMEs

Bestar's offerings are designed to get an SME's financial records ready for the formal statutory audit, which is a mandatory requirement for all active Hong Kong limited companies.

1. Audit Preparation and Assurance

• Bookkeeping & Accounting: We provide accurate, often cloud-based, bookkeeping services to maintain financial records in accordance with Hong Kong Financial Reporting Standards (HKFRS) or the simplified SME-FRS. Maintaining clean, compliant books is the core of audit preparation.

  
  

• Statutory Audit: Our Certified Public Accountant (CPA) team conducts the mandatory annual audit, ensuring compliance with the Companies Ordinance and issuing the required Auditor's Report for tax filing.

  
  

• SME Focus: We position themselves as a mid-tier firm, offering more personalized attention and a deeper understanding of unique operational challenges compared to larger global firms, which is often a better fit for SMEs.

2. Regulatory Compliance

• Profits Tax & IRD Compliance: We handle the complex preparation and timely filing of the annual Profits Tax Return (PTR) and accompanying audited financial statements to the Inland Revenue Department (IRD).

  
  

• Corporate Secretarial Services: This service manages the administrative burden of being a corporation, which is crucial for the audit, including filing Annual Returns, maintaining statutory registers, and ensuring compliance with the Companies Ordinance.

In essence, Bestar's model is to handle the entire financial back-end—from daily bookkeeping to tax filing and audit completion—making it easier for an SME owner to meet their legal obligations.

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