How should I prepare my company's books before the annual audit in Hong Kong?
Close the year in the ledger, reconcile every bank account, balance receivables, payables, payroll and director accounts, finish depreciation and stock, and assemble supporting documents. Almost every Hong Kong company must be audited, and the auditor is entitled to information from officers, so tidy books save time and cost.
The audit is a separate step. An independent auditor must be appointed for each financial year (s.394), and the Companies Registry confirms that audit applies to all companies except dormant ones, even where simplified reporting is used. Nothing in this answer replaces the audit; it only prepares for it. Audit procedures are covered in another section.
Pre-audit checklist
- Cut-off: all transactions up to the year end recorded; none after it.
- Bank: reconciliations for every account, with year-end statements and any confirmations.
- Receivables and payables: ageing lists agreed to the ledger; old balances reviewed.
- Fixed assets: register updated, depreciation calculated, disposals recorded.
- Stock: count sheets and valuation workings (if applicable).
- Payroll and MPF: payroll totals agreed to the ledger and MPF paid.
- Directors: current account balances confirmed, loans and related-party dealings listed.
- Loans, leases, share capital: agreements and statements on file.
- Accruals and prepayments listed with support.
- Schedule of questions you already know the auditor will ask.
Officers and others holding accounting records must provide the information and explanations the auditor requires, and failing to do so is an offence under section 413. Respond promptly and keep a log of requests.
Legal basis
- Companies Ordinance (Cap. 622), ss.394, 412-413, 447
Sources
Applies to 2026 · Last reviewed 29 October 2026
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.
Related questions
- What is the deadline to approve and send financial statements to members in Hong Kong?For most private companies, the directors must lay the reporting documents at the annual general meeting, or send them to members, within 9 months after the end of the accounting reference period. Public companies have 6 months. The first period and shortened periods have special rules.
- When must MPF contributions be paid, and what happens if they are late?Contributions are generally due by the 10th of the following month for the previous wage period, paid through the eMPF Platform. Late payment can bring a charge of the greater of HK$5,000 or 10% of the amount due, a 5% surcharge on default amounts, and criminal penalties of up to HK$450,000 and four years' jail in serious cases.
- Is a Hong Kong company legally required to keep accounting records?Yes. Section 373 of the Companies Ordinance (Cap. 622) requires every company to keep accounting records that explain its transactions and show its financial position and performance at any time. Directors who fail to take all reasonable steps risk a fine of HK$300,000, and up to 12 months' jail if the failure is wilful.
- How long must a Hong Kong company keep its accounting records?Seven years. Under section 377 of the Companies Ordinance, a company must keep its accounting records for 7 years after the end of the financial year to which the last entry relates. The Inland Revenue Department separately requires business records to be kept at least 7 years after the transactions they relate to.
- What does section 51C of the Inland Revenue Ordinance require from my business?Anyone carrying on a trade, profession or business in Hong Kong must keep enough records, in English or Chinese, to work out assessable profits, and keep them for at least 7 years. Failing to do so without reasonable excuse can lead to a fine of up to HK$100,000.