What are the directors' responsibilities for the accounts, and the auditor's?

Directors

• Keep accounting records that explain the company's transactions (s.373) and preserve them (s.377).
• Prepare financial statements for each financial year (s.379), consolidated if a holding company.
• Approve and sign the statement of financial position (s.387) and the directors' report (s.391).
• Give the auditor access and information (s.412) and avoid misleading statements (s.413).
• Lay and send accounts within the deadline (s.431).
• A failure to take reasonable steps to comply with s.379 carries a fine of HK$300,000, and imprisonment up to 12 months if wilful.

Auditor

• Reports to members on whether accounts are properly prepared and, for non-exempt companies, true and fair (s.406).
• Investigates whether records were adequate and agree with the accounts (s.407).
• Signs the report (s.409) and must not include false or misleading content (s.408).

The split The directors own the accounts. The auditor expresses an opinion, based on evidence and sampling, and cannot catch every error.

Practical Do not sign accounts you do not understand. Ask the auditor to explain adjustments and disclosures before you approve.