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.
The audit duty depends on the company being a company, not on whether it earns a profit. Section 394 requires an auditor for every financial year.
What changes when a company is loss-making
- Going concern. The auditor must consider whether the company can keep operating for at least twelve months from the date of the financial statements, looking at cash, creditors and shareholder or bank support. If there is doubt, the directors have to disclose it and the audit report may refer to it.
- Director and shareholder support. Auditors commonly ask for a letter confirming ongoing financial support from shareholders or directors where liabilities exceed assets. This is a standard request rather than a Hong Kong legal rule, so exact wording varies by firm.
- Bank facilities. Lenders often ask for audited accounts and may react to a going-concern note.
Tax angle (pointer only) IRD still expects the return, supported by audited statements where the company has gross income. How losses are treated in the tax computation is a profits tax question and is covered elsewhere.
Time limit Delays do not help. Late accounts still count as late, and the loss position does not extend the Companies Ordinance deadline.
Legal basis
- Companies Ordinance (Cap. 622), s.394
- HKSA 570 (Revised) Going Concern
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.
- What does a statutory audit involve, step by step?The auditor accepts the engagement, plans around risks, tests balances and transactions with evidence, obtains third-party confirmations, reviews events after year-end, agrees adjustments, obtains a management representation letter and issues a signed report. The directors approve the accounts.
- What is going concern in an audit and what happens if there is doubt?Going concern means the company can keep operating for the foreseeable future. Management assesses it and the auditor tests that assessment, covering at least twelve months from the date of the financial statements. Doubt must be disclosed, and the auditor's report may draw attention to it or be modified.
- What are the directors' responsibilities for the accounts, and the auditor's?Directors prepare, approve and sign the financial statements and directors' report and must keep proper accounting records. The auditor forms and reports an independent opinion. Audit does not shift the directors' responsibility to the auditor.