Does every Hong Kong company need an audit every year?

Under the Companies Ordinance (Cap. 622), an auditor must be appointed for each financial year of a company (s.394), and the auditor must report to the members on the company's financial statements (s.405). The Companies Registry's own guidance states that all companies are audited, including companies that fall within the reporting exemption for small companies.

What does not change this

• Being small, privately owned or owned by one person.
• Having no staff, no premises or low turnover.
• Making a loss, or having no revenue in the year.

The one exception A private company that has formally become dormant (s.5) is relieved from audit by s.447. This is not automatic. It needs a special resolution and delivery of that resolution to the Registrar, and it ends as soon as the company enters an accounting transaction. How it works is in the answers on the dormant company audit exemption and on making a Hong Kong company dormant.

What you can simplify Small private companies can use the reporting exemption, which allows simpler financial statements and a lighter form of audit opinion. It does not remove the audit itself.

Banks, the Inland Revenue Department and the Companies Registry all work on the basis that an audit has been done, so treating it as optional is a common and costly mistake.

Related questions

• Cost: see the answer on how much a Hong Kong company audit costs.
• Penalty if skipped: see the answer on what happens if a Hong Kong company is not audited.
• Zero revenue or a loss does not remove the duty; the answers on companies with no business and on loss-making companies explain why.