Preparation of Financial Statements in Hong Kong: What You Need to Know
In Hong Kong, Part 9 (Accounts and Audit) of the new Companies Ordinance (Cap. 622) (“new CO”) has stipulated the requirements regarding accounting and auditing. In accordance to the laws as stated in the new CO, the requirements include the keeping of accounting records, the preparation, and circulation of annual financial statements, directors’ and auditors’ reports to the appointment and rights of auditors. See below for more information on Compilation and Preparation of Financial Statements in Hong Kong.
All companies incorporated in Hong Kong must submit a statutory report that contains Audited Financial Statements for the current year (inclusive of corresponding amounts of the preceding year, a balance sheet, profit and loss account, and cash flow statement). These Audited Financial Statements must have a valid signature from a Certified Public Accountant (“CPA”).
What Are Audited Financial Statements?
The Audited Financial Statements are actually part of financial accountability. It’s a company document that provides transparent records to its investors, board members and constituents. Generally speaking, CPAs must prepare the Audited Financial Statements on behalf of a company or a non-profit organisation.
A company will provide the source documents to the auditor for the preparation of audited financial statements. The source documents are inclusive of a slew of financial documents. These include Accounts Payable and Receivable information, expense reports, budgets, and any relevant financial records, if applicable.
The Audited Financial Statements are usually prepared annually and will be made available to investors, Management team as well as the Board of Directors while the non-profit organisations can decide to share the audited financial statements with members, staff as well as stakeholders within the organisation. Simply put, the audited financial statements will include a professionally verified viewpoint by the CPA on the company’s finances and can be present to interested parties as mentioned above.
Unqualified Opinion by CPA
The audited financial statements will have a section called CPA’s opinion – a section that the CPA is responsible to give either an “Unqualified Opinion” or a “Qualified Opinion”.
An unqualified opinion refers to that after the CPA’s review (on the financial documents). Moreover, the CPA agrees with the methods used in those documents preparation. Also, he or she is able to provide reasonable assurance on the accuracy of the audit (in accordance with Hong Kong financial reporting framework). Having said that, the unqualified opinion does not tantamount to a company’s financial health or integrity record.
Qualified Opinion by CPA
A qualified opinion, on the other hand, refers to a statement issued after the completion of the audit. This suggests that the provision of information has limitations and/or the audit does not comply with generally accepted accounting principles.
You may want to also refer to the Financial Reports and Disclosure Checklists for more information.
Are You Looking for Assistance in Preparation of Audited Financial Statements?
If you are one of the companies that must have your company’s audited financial statements prepared, then you have come to the right place. Our associated auditors can help you to prepare the financial statement. We can also complete the audit according to the accounting principles.
Contact us today to find out our service on Compilation or Preparation of Financial Statements in Hong Kong!