What are the types of audit opinion in Hong Kong and what do they mean?

The Hong Kong Standards on Auditing (HKSA 700 and 705) use four outcomes.

• Unmodified (clean): the financial statements are prepared, in all material respects, in line with the applicable framework.
• Qualified ("except for"): either misstatements are material but not pervasive, or the auditor could not get enough evidence and the possible effects are material but not pervasive.
• Adverse: misstatements are both material and pervasive, so the accounts as a whole are misleading.
• Disclaimer of opinion: the auditor could not obtain sufficient evidence and the possible effects could be both material and pervasive, so no opinion is given.

Separate from the opinion An unmodified report can still include an emphasis or a material uncertainty related to going concern section (HKSA 570).

What the Ordinance asks the auditor to say The report must also state whether accounts are properly prepared under the Ordinance, whether true and fair (unless the company is in the reporting exemption), whether the directors' report is consistent, whether proper records were kept, and whether all necessary information was obtained (ss.406-407).

Practical point Offences relate to the contents of the auditor's report (s.408); the auditor must call out problems rather than avoid them. The best way to reach a clean opinion is complete records, timely answers and corrected errors.