A brief analysis of the relevant matters to be paid attention to in the audit of Hong Kong companies

To put it simply, annual audit refers to the completion of actions similar to domestic industrial and commercial agents in the Registrar's Office, while audit refers to the audit of your tax statements by the accountant.

The first audit of the Hong Kong company is conducted in the 18th month of the company's establishment, and the audit report issued by a licensed accountant in Hong Kong is a mandatory requirement of the Hong Kong Inland Revenue Department, and the audit report is submitted to the Inland Revenue Bureau when the Hong Kong company returns its tax return. For clients, experienced licensed accountants are more professional and can analyze financial issues and advise on tax planning based on the company's accounts.

Entrust a professional secretarial service provider to assist and issue an audit report, if the report is unqualified, it is beneficial for the company to successfully file taxes and provide favorable proof for the company's long-term development. On the other hand, a qualified audit report of a Hong Kong company is likely to attract the Hong Kong Inland Revenue Department (IRD) to audit the company's finances.

According to whether the audit information submitted by the accountant to the company can truly reflect the company's operation and financial status, and whether the accountant recognizes the company's annual financial statements, the audit report can be divided into the following four types:

1. Unqualified audit report.
2. Qualified Audit Report.
3. Negative opinion audit report.
4. No opinion audit report.

Among them, the unqualified audit report is the best audit report, and the other three will attract the attention of the tax bureau when filing taxes.

When a licensed accountant in Hong Kong audits a company, it will generally check the more significant data before deciding whether to issue a qualified opinion, negative opinion, or no opinion audit report, so the company needs to do the following:

1. The company should provide true, accurate and complete original vouchers during the audit to ensure the authenticity and accuracy of the statement data, and ensure that the company's financial data can be carried out in accordance with accounting standards and auditing standards.
2. At the end of the financial year, a licensed accountant is arranged to conduct an inventory of the company's inventory so that the accountant can draw a complete and accurate conclusion on the inventory and account book data.
3. Before entrusting an accountant, it is necessary to conduct multiple investigations, entrust a company with a good reputation, strong business, and reasonable fees, and avoid accepting services from institutions with lower prices in the market, which will bring negative results to the company's audit.

When issuing an entrustment to the secretarial company to arrange the audit report, it is necessary to pay attention to the qualifications and professional competence of the Hong Kong certified public accountants (practising), the longer they have been in the industry, the more experienced the auditors will be, the more hidden problems and loopholes can be discovered, and the more practical the financial and tax regulations issued for the company.

When carrying out the audit, it is necessary to fully prepare the relevant documents for each transaction matching, as well as the expenses and costs incurred in the company's operation process (such as internal expenses, business expenses, etc.), which is conducive to the accurate statistics of auditors and reduces the time for issuing audit reports. The profits shown in the auditor's report, profits related to Hong Kong are subject to tax in Hong Kong.

According to the provisions of the Hong Kong Company Law, a Hong Kong company conducts an audit once a year to file a tax return, and generally submits the audit report on December 31 or March 31 of each year.

A Hong Kong company will receive its first Profits Tax Return from the Inland Revenue Department (IRD) about 18 months after its establishment, and will start filing tax returns upon receipt. The IRD will automatically extend the filing deadline from 1 month to 3 months from the date of issue of the first return.

Starting from 1 April 2023, all Hong Kong companies' profits tax returns must be submitted to the Inland Revenue Department (IRD) together with the audit report.

• Starting from 1 April 2023 onwards, all profits tax returns in Hong Kong must be submitted together with the audit report, and zero tax returns can no longer be filed.
• Even if a Hong Kong company wants to make zero declarations, it needs to make an audit report that it is not operating.
• If a Hong Kong company marked as inoperable needs to be deregistered, it is required to issue an audit report of inoperating, or apply to be a "dormant company" before it can submit an application for deregistration.
• If the customer has not opened a business for many years, has not operated, and has not opened an account, then it is necessary to submit the audit report of no operation for many years to the tax bureau together, and handle multiple non-operation audit reports together, and in some years, you can ask the accountant whether it can be combined.