In this course · 5 of 7
Course 3
Pick your year end
7 lessons · 7 min
- 1What Is a Financial Year End in Hong Kong? (Accounting Reference Date)
- 2How do I choose the financial year end for a new Hong Kong company?
- 3How long can a Hong Kong company's first financial period be?
- 4Can I change my Hong Kong company's financial year end, and how?
- 5HKFRS, HKFRS for Private Entities or SME-FRF: Which in Hong Kong?
- 6What Is SME-FRF and Who Can Use It in Hong Kong?
- 7Who can use HKFRS for Private Entities in Hong Kong?
The short answer
A Hong Kong company can use full HKFRS (mandatory for publicly accountable entities), HKFRS for Private Entities (any entity without public accountability) or the SME-FRF and SME-FRS (only companies within the reporting exemption in section 359 of the Companies Ordinance, Cap. 622).
HKFRS means Hong Kong Financial Reporting Standards; SME-FRF and SME-FRS are the Small and Medium-sized Entity Financial Reporting Framework and Standard issued by the Hong Kong Institute of Certified Public Accountants (HKICPA). Section 380 requires financial statements to follow the accounting standards applicable to them, issued by the prescribed body (HKICPA).
| Framework | Who can use it |
|---|---|
| Full HKFRS | Any company; required for listed and other publicly accountable entities |
| HKFRS for Private Entities | Entities without public accountability that publish general purpose statements; no size test |
| SME-FRF and SME-FRS | Companies within the section 359 reporting exemption |
The Companies Registry notes that the old extra disclosure schedules were repealed so that HKFRS and SME-FRS are given statutory recognition through section 380(4).
How to choose: small private companies often use the SME framework because it is lighter. A private company that is too big for the exemption, or that wants closer alignment with full HKFRS (for lenders or a future sale), may use HKFRS for Private Entities or full HKFRS. Banks, insurers, securities firms and similar entities cannot use the lighter options.
The choice should be made with your auditor and documented in the accounting policies note. Standards are revised periodically, so ask for the version in force for your year end.
Legal basis and sources
The law
- Companies Ordinance (Cap. 622), s.380
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
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