Can the same firm do my bookkeeping, tax and the audit?

Why it is a concern Independence means the auditor should not review its own work. If the firm keeps your books and then audits the same books, there is a self-review threat, one of the threat categories in the Code of Ethics (alongside self-interest, advocacy, familiarity and intimidation).

How firms usually handle it

• Many firms separate the teams and review processes, or the audit team does not prepare the accounting entries.
• Some services are more sensitive than others: management responsibilities (making decisions for the company) are not allowed, and preparing accounts that will later be audited creates the clearest self-review threat.
• Tax services are also assessed under the Code's rules on non-assurance services.
• Some owners prefer a different firm for bookkeeping to keep the audit clearly independent.

What the law says The Companies Ordinance's own disqualification rule covers officers, employees and their partners (s.393). Non-audit service rules sit in Section 600 of the HKICPA Code of Ethics, with a subsection (601) on accounting and bookkeeping services. The Code notes that stakeholders expect heightened independence where the audit client is a public interest entity.

What to ask

• Who prepares the accounts and who audits them?
• Which safeguards does the firm apply?
• Is the audit fee separate from the other fees?