How should I prepare my company's books before the annual audit in Hong Kong?

The audit is a separate step. An independent auditor must be appointed for each financial year (s.394), and the Companies Registry confirms that audit applies to every company except a dormant one (s.447), even where simplified reporting is used. Nothing in this answer replaces the audit; it only prepares for it.

Pre-audit checklist

1. Cut-off: all transactions up to the year end recorded; none after it.
2. Bank: reconciliations for every account, with year-end statements and any confirmations.
3. Receivables and payables: ageing lists agreed to the ledger; old balances reviewed.
4. Fixed assets: register updated, depreciation calculated, disposals recorded.
5. Stock: count sheets and valuation workings (if applicable).
6. Payroll and MPF: payroll totals agreed to the ledger and MPF paid.
7. Directors: current account balances confirmed, loans and related-party dealings listed.
8. Loans, leases, share capital: agreements and statements on file.
9. Accruals and prepayments listed with support.
10. Schedule of questions you already know the auditor will ask.

Officers and others holding accounting records must provide the information and explanations the auditor requires, and failing to do so is an offence under section 413. Respond promptly and keep a log of requests.