What are the types of audit opinion in Hong Kong and what do they mean?
An unmodified (clean) opinion says the accounts are fairly prepared. A qualified opinion flags a material but limited problem, an adverse opinion says the accounts are materially and pervasively misstated, and a disclaimer means the auditor could not get enough evidence to form a view.
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.
Legal basis
- Companies Ordinance (Cap. 622), ss.406-408
- HKSA 700
- HKSA 705
- HKSA 570
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.
- Why does Hong Kong require even a small private company to be audited?Hong Kong's Companies Ordinance makes audit a universal requirement for companies, because an independent report on the accounts protects members, creditors, lenders and the tax authority. Small companies get simpler reporting rules, not an audit exemption.
- 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.
- What is the dormant company audit exemption in Hong Kong?A qualifying private company that has become dormant under s.5 of the Companies Ordinance does not need to appoint an auditor or have its accounts audited while it stays dormant. The exemption is in s.447, not in s.448, which deals with false statements in reports.