Quick Answer: Every Hong Kong company that is not dormant must have its accounts audited every year, whatever its size. The reporting exemption for small companies simplifies the accounts, not the audit. Here is who needs one, the deadlines, what it costs in 2026 and how to keep the fee down.
Hong Kong has no small-company audit exemption. Under the Companies Ordinance (Cap. 622), every company incorporated here must have its financial statements audited each year by a CPA firm registered with the Accounting and Financial Reporting Council, whether it turned over HK$100,000 or HK$100 million; the only exception is a company that has formally declared itself dormant. What small companies do get is a reporting exemption that simplifies the accounts. This guide sets out who needs an audit, the deadlines, the 2026 costs and how to prepare. Find an auditor in the CPA firm listings or the audit services category.
Who must be audited?
All companies incorporated in Hong Kong under the Companies Ordinance, including private companies limited by shares, companies limited by guarantee and public companies. The Companies Registry's own summary of the accounts and audit provisions confirms the requirement applies regardless of size. Two categories are outside it:
- Dormant companies: a company with no relevant accounting transactions in the year that has passed a special resolution declaring itself dormant and delivered it to the Registrar. It is exempt from preparing audited accounts until it ceases to be dormant.
- Non-Hong Kong companies: a foreign company registered as a branch files its home-country accounts with its annual return and is audited under its own law.
Sole proprietorships and partnerships registered only under the Business Registration Ordinance are not companies and need no statutory audit, though the Inland Revenue may still ask for accounts.
What does the reporting exemption change?
| Small private company (reporting exemption) | Other private company | |
|---|---|---|
| Qualifying conditions | Two of three: revenue not more than HK$100 million; total assets not more than HK$100 million; not more than 100 employees | Does not meet two of the three, or is a listed or regulated company |
| Accounting framework | SME Financial Reporting Framework and Standard, or full HKFRS by choice | Full Hong Kong Financial Reporting Standards |
| Audit | Required | Required |
| Directors' report | Business review may be omitted | Business review required |
| True and fair view | Auditor reports whether the statements are properly prepared under the framework | Auditor reports on true and fair view |
The exemption reduces disclosure and the accounting work behind the statements. It does not remove the auditor, the audit report or the audit fee, though a simpler set of accounts usually means a cheaper audit.
When is it due?
- Financial year end. The company chooses it; 31 March and 31 December are the most common in Hong Kong.
- Audit. The auditor needs closed books, usually two to four months of work after the records are complete.
- Annual general meeting. A private company must hold it, or pass a written resolution instead, within nine months of the year end, with the audited financial statements laid before it.
- Profits tax return. The audited accounts and tax computation accompany the return. Under the Inland Revenue's block extension scheme for 2025/26 returns issued in April 2026, the deadlines are 4 May 2026 for March-to-November year ends (N code), 17 August 2026 for December year ends (D code) and 16 November 2026 for January-to-March year ends (M code), each extendable by a month for e-filers; see our profits tax filing guide.
- Annual return. Separately, the annual return to the Companies Registry is due within 42 days of the incorporation anniversary; the audit does not attach to it for a private company.
What does it cost in 2026?
Providers' published 2026 pricing puts a statutory audit for a small company with simple transactions at HK$8,000 to HK$20,000 (PAT CPA) and, more broadly, HK$8,000 to HK$30,000 for a company with one business activity and no group structure (HKICS). What pushes the fee up: inventory and stock counts, several bank accounts and currencies, related-party and group transactions, revenue recognition questions, an offshore profits claim, and records that arrive as a box of receipts. A first audit of a company with two years of unfiled accounts costs more than two annual audits would have.
How do you prepare?
- Keep books monthly. Reconciled bank accounts and a ledger in accounting software cut the audit fee more than anything else.
- Collect the year's documents: bank statements, sales and purchase invoices, receipts, contracts, loan agreements, payroll and MPF returns, fixed asset register, share register and board minutes.
- Close the year: accruals, prepayments, depreciation, provisions for doubtful debts, and stock count at year end if you hold inventory.
- Answer the auditor's questions in one pass. Confirmations from banks, customers and suppliers are standard; delays in replying are the usual cause of a late audit.
- Agree the fee and timetable in writing in the engagement letter, including who signs the report. Our guide on choosing a CPA firm lists the questions.
What if you skip it?
The profits tax return cannot be properly completed, the Inland Revenue can issue an estimated assessment with surcharges, the directors are in breach of the Companies Ordinance, and no bank, buyer or investor will rely on unaudited accounts. Companies that have fallen behind should engage an auditor to clear the backlog year by year; the cost is real but the alternative is worse. If the company has stopped trading, declaring it dormant or deregistering it ends the requirement properly. For the company secretarial side of that, see company secretary in Hong Kong: duties, fees and how to switch, and browse CPA firms and accountancy services on Portal Hong Kong.
Frequently asked questions
- Does a small Hong Kong company need an audit?
- Yes. The Companies Ordinance (Cap. 622) requires every company incorporated in Hong Kong to have its annual financial statements audited by a registered CPA firm, and there is no size-based exemption. The only exception is a dormant company that has passed a special resolution and filed it with the Companies Registry.
- What is the reporting exemption?
- A small private company, one meeting at least two of three conditions (revenue not more than HK$100 million, total assets not more than HK$100 million, not more than 100 employees), may prepare simplified financial statements under the SME Financial Reporting Framework and omit certain disclosures and the business review in the directors' report. It still needs an audit.
- When is the audit due?
- Audited financial statements must be laid before the annual general meeting, which for a private company is within nine months of the financial year end, and they accompany the profits tax return to the Inland Revenue Department, due between May and November under the block extension scheme depending on the year-end. Most companies plan the audit for three to six months after year end.
- How much does a small company audit cost?
- Published 2026 price lists put a simple small company audit at HK$8,000 to HK$20,000, rising to HK$30,000 for companies with inventory, multiple currencies or group transactions. The fee depends more on the state of the records than on turnover.
- What does the auditor need from me?
- Bank statements for the year, sales and purchase invoices, expense receipts, payroll and MPF records, contracts and loan agreements, the fixed asset register, prior-year audited accounts, the statutory books and the tax return. Companies that keep books monthly get cheaper and faster audits.
- What happens if I skip the audit?
- The company cannot file a valid profits tax return, the Inland Revenue can raise an estimated assessment and penalties, directors are in breach of the Companies Ordinance, and banks, buyers and investors will not deal with a company whose accounts are unaudited. Late audits also cost more than timely ones.
