What are audit confirmations, and why does the auditor write to my bank?
The auditor sends requests directly to third parties, mainly banks, to confirm balances and facilities. Evidence received directly from outside parties is generally more reliable than company-held documents, and if management blocks a request the auditor must ask why.
What they are An external confirmation is a reply the auditor gets directly from a third party, such as a bank, customer, supplier or lawyer, about a balance or term. HKSA 505 sets the rules.
Why they matter
- Evidence obtained directly from an independent source is generally regarded as more reliable than records the company produced itself.
- Banks confirm balances, loans, guarantees and securities. HKICPA provides a standard bank confirmation request form and local guidance in the standard's appendices.
What you need to do
- Sign the authority so the bank can reply to your auditor.
- Give a complete list of every bank account, including accounts closed during the year.
- Tell the auditor about customers or suppliers who may need to confirm balances.
If you object If management refuses to let the auditor send a confirmation request, the auditor asks for the reasons and considers the effect on the audit. Refusal without a convincing reason can lead to a qualified opinion or a disclaimer.
Timing Banks take time to reply, and it is usually a critical-path item, so give authority early.
Digital or paper formats vary by bank; ask your auditor which route they use.
Legal basis
- HKSA 505 External Confirmations
- Companies Ordinance (Cap. 622), s.407(3)
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
- Does every Hong Kong limited company need an audit?Yes. Every Hong Kong company must have an auditor for each financial year and its financial statements audited, whatever its size or whether it trades. The only company that escapes is a qualifying private company that has validly become dormant under s.5 and s.447 of the Companies Ordinance.
- Do I still need an audit if my company had no revenue or no business activity?Yes, unless the company has formally become dormant. Having no sales does not make a company dormant in law. If it had any expenses, bank charges or other recorded transactions, the audit duty continues for that year.
- My company is loss-making. Do I still need to audit it?Yes. Profit or loss has no bearing on the audit requirement. A loss-making company is audited every year, and the auditor will also look closely at going concern.
- How do I make my Hong Kong company dormant to avoid the audit?Check the company qualifies, pass a special resolution declaring it will become dormant from a stated date, and have the directors deliver that resolution to the Companies Registrar. Dormancy takes effect from the delivery date or the later date in the resolution.
- Does a dormant Hong Kong company still have to file a profits tax return?Dormancy under the Companies Ordinance relieves the company from audited accounts, and IRD accepts a profits tax return from it without the audited statements. It does not by itself cancel the duty to file a return when IRD issues one.