Ultimate Guide to Hong Kong Company Audit (2025/2026): Requirements, Timelines & SME Exemptions
- a22162
- Jan 2
- 5 min read
Complete guide to Hong Kong company audit requirements for 2025. Learn about SME exemptions, deadlines, and the 7-item audit document checklist.
Ultimate Guide to Hong Kong Company Audit (2025/2026): Requirements, Timelines & SME Exemptions
Navigating the regulatory landscape in Hong Kong can be complex, but maintaining compliance is the bedrock of business success. Under the Hong Kong Companies Ordinance (Cap. 622), almost every company incorporated in the region is required to undergo an annual statutory audit.
In this guide, we break down the latest 2026 requirements, the specific criteria for "reporting exemptions," and a step-by-step checklist to ensure your business remains in good standing with the Inland Revenue Department (IRD).
1. Does Your Hong Kong Company Need an Audit?
The short answer: Yes. Unlike some jurisdictions that allow small businesses to "opt-out" based on size, the Hong Kong Companies Ordinance mandates that all limited companies—including those with zero revenue—must prepare audited financial statements.
The One Exception: Dormant Status
The only way to avoid a statutory audit is to formally declare your company as "Dormant" with the Companies Registry. To qualify:
The company must have no "relevant accounting transactions" during the financial year.
A special resolution must be passed and filed (Form ND2A).
2. Hong Kong Audit Requirements 2025: Key Facts
To stay compliant, your audit must meet three non-negotiable criteria:
Certified Auditor: The audit must be performed by a Certified Public Accountant (CPA) holding a valid practicing certificate from the HKICPA.
Accounting Standards: Financials must follow the Hong Kong Financial Reporting Standards (HKFRS).
True and Fair View: The auditor must provide an independent opinion on whether the books accurately represent the company’s financial health.
3. The "Reporting Exemption": Simplified Audits for SMEs
While an audit is mandatory, the complexity of the report can be reduced for Small and Medium Enterprises (SMEs). This is known as the Reporting Exemption.
Category | Revenue Threshold | Asset Threshold | Max Employees |
Small Private Company | ≤ HK$100 Million | ≤ HK$100 Million | 100 |
Small Guarantee Co. | ≤ HK$25 Million | N/A | N/A |
Eligible Private Co.* | ≤ HK$200 Million | ≤ HK$200 Million | 100 |
*Requires 75% shareholder approval.
Benefits of the Reporting Exemption:
No requirement to show a "true and fair view" (accounts are prepared on a historical cost basis).
Simplified Director’s Report (no business review required).
Reduced disclosure requirements regarding auditor remuneration.
4. Important Deadlines & Timelines
Missing an audit deadline leads to heavy fines (up to HK$300,000) and potential prosecution for directors.
First Audit: Must be completed within 18 months of incorporation.
Annual General Meeting (AGM): Private companies must hold an AGM within 9 months after the financial year-end.
Tax Filing (PTR): Audited accounts must be submitted alongside your Profits Tax Return (PTR). The first PTR is usually issued 18 months after incorporation.
5. Audit Preparation Checklist: What You Need
A smooth audit depends on organized record-keeping. Ensure you have the following ready for your CPA:
Banking: All monthly bank statements and reconciliation reports.
Sales/Revenue: All sales invoices, service agreements, and credit notes.
Purchases/Expenses: Supplier invoices, petty cash vouchers, and payroll/MPF records.
Corporate Docs: Updated Business Registration Certificate (BRC), Articles of Association, and Annual Return (NAR1).
6. Strategic Benefits of a Statutory Audit
Beyond mere compliance, a high-quality audit provides:
Banking Credibility: Essential for maintaining corporate bank accounts and securing credit lines.
Investor Confidence: A "clean" audit report is the first document requested during M&A or funding rounds.
Internal Controls: Auditors often identify inefficiencies or fraud risks within your current accounting workflows.
Conclusion: Partnering with the Right CPA
Choosing an auditor in Hong Kong is not just about the lowest price—it's about finding a partner who understands your industry. For 2025/2026, the IRD has moved toward mandatory electronic filing for all companies, making it more important than ever to work with a tech-forward CPA firm.
Why Bestar is the Right CPA for Your Hong Kong Business (2026 Compliance Guide)
Ultimate Guide to Hong Kong Company Audit (2025/2026): Requirements, Timelines & SME Exemptions
In the rapidly evolving financial hub of Hong Kong, a CPA is no longer just a "numbers cruncher." With the Inland Revenue Department (IRD) mandating electronic tax filing and the Accounting and Financial Reporting Council (AFRC) tightening oversight, choosing the right partner is a critical business decision.
Bestar Hong Kong stands out as a mid-tier powerhouse, offering the technical depth of the "Big Four" with the personalized agility of a boutique firm.
1. Compliance Excellence in the Digital Era
As we move into 2026, Hong Kong’s regulatory environment has become digitized. Bestar helps you stay ahead of the curve through:
Mandatory e-Filing Readiness: We ensure your audited accounts and Profits Tax Returns (PTR) are formatted for the IRD’s latest electronic submission requirements.
HKFRS & SME-FRS Expertise: Whether you are a multinational requiring full HKFRS or an SME qualifying for Simplified Reporting, our CPAs optimize your disclosures to minimize tax risk.
2. Beyond Audit: Strategic Financial Advisory
Most firms stop at the audit report. Bestar uses the audit process as a diagnostic tool for your business growth.
Internal Control Reviews: We identify operational inefficiencies and fraud risks before they impact your bottom line.
Cash Flow Forecasting: In a high-interest-rate environment, our advisors provide the data you need to manage liquidity and secure bank financing.
3. Why International Firms Choose Bestar
Hong Kong serves as a gateway to the Greater Bay Area and Southeast Asia. Bestar is uniquely positioned for cross-border success:
Regional Presence: With strong offices in Singapore and Malaysia, we provide a unified accounting experience for companies expanding across the APAC region.
AML & Governance Focus: Led by experts like Cherry Chau, our team specializes in Anti-Money Laundering (AML) compliance and customer due diligence, ensuring your corporate secretarial records are pristine.
4. Transparent Pricing & No Hidden Fees
One of the biggest pain points for SMEs is "scope creep" in audit fees. Bestar prides itself on:
Fixed-Fee Packages: Starting from competitive rates for statutory audits.
Predictable Billing: You will never receive a "surprise" invoice for a quick phone consultation.
Comparison: Why Bestar Outperforms the Competition
Feature | Digital-Only Platforms | Big Firms | Bestar Hong Kong |
Complex Tax Advisory | Limited | High | Expert & Accessible |
Response Time | Automated/Slow | Slower (Junior Staff) | Rapid & Senior-Led |
Regional Reach | HK Only (usually) | Global (High Cost) | Integrated APAC Network |
Pricing | Low (Basic Only) | Premium | Transparent & Value-Driven |
The Verdict: Your Partner for 2026 and Beyond
Choosing Bestar means choosing a partner that understands the nuances of the Hong Kong Companies Ordinance while embracing the future of fintech and global trade. We don't just file your returns; we safeguard your reputation.
Ready to elevate your compliance?
Contact Bestar Hong Kong Today for a customized audit and tax consultation.
Link to our Company Secretarial and Bookkeeping service pages.
Link HKFRS to our SME Accounting resource page.
Link to the HKICPA website or the Companies Registry.
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