Service of Preparation of Consolidated Accounts in Hong Kong
If you’re running a multinational corporation, you need to know about preparing your consolidated accounts in Hong Kong.
Why Accounting Records Are So Important
When you’re running a business, your finances should reflect all your financial transactions. This includes transactions for business purposes and for investors. All related entities and company assets should be accounted for.
Why You Need to Consolidate Your Accounts
If you are the parent company, the subsidiary company has its own accounting records. But the parent company still controls the subsidiary. Your subsidiary won’t be operating as an independent entity. As such, you need to consolidated accounts in Hong Kong to represent both the parent company and the subsidiary’s finances.
Your consolidated accounts in Hong Kong will give a clear and unified picture of what your company’s finances are like. If you operate in several countries with various accounting and tax laws, you need a clear and concise snapshot of your finances. Consolidating your records is necessary even if you are exempted from having to provide statements. It is much easier for the shareholders and directors to keep track of how well your Hong Kong company is doing.
How to Prepare Your Consolidated Accounts in Hong Kong
Hong Kong is a member of the Special Administrative Region of China. Therefore, its accounting standards are regulated by both the Hong Kong Financial Reporting Standards (HKFRS) and the Companies Ordinance (CO). HKFRS converged with the International Financial Reporting Standards (IFRS) in 2005.
The company director in Hong Kong is required by the Hong Kong CO to prepare the financial statement. It must comply with the requirements in section 380 and 383 in the CO. Third-party auditors, like 3E Accounting, will handle the auditing process. Your financial statement must present the following:
- Total assets
- Any liabilities
- Parent company and subsidiary cash flow as a single entity
Your statements must be prepared at least six months before the end of the financial year. if you miss the deadline, you would need to seek out legal advice to better understand the consequences of not meeting compliance.
Is My Company Exempt?
Per section 379(3) of the CO, your company can be exempted from consolidated financial accounts if one of the following is applicable:
- Your company owns 100% of its shares in the subsidiary of another corporate body during that financial year.
- Your company is a partially owned subsidiary of another corporate body during the financial year. The director must meet the necessary notification requirements in the CO. This can happen only if no one objects to the director’s notifications.
Need to Consolidate Your Accounts in Hong Kong? We Can Help
At 3E Accounting, there is no one size fits all solution. We cater to all our services to suit our individual client needs. This is what makes us unique. Let our experts consolidate your accounts in an accurate and timely manner that represent the best financial results of your business. For more information about our Preparation of Consolidated Accounts Package, contact our team today.