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2022-03-23 |
【4 mins Read】OneStart Weekly - HK Audit Standards

Audit & Standard

In our last blog, we started to talk about one of the most important aspects in business – Accounting and Auditing. If you recall, it is required by the Inland Revenue Ordinance and the Companies Ordinance that Financial Reports and Statutory audit reports have to be prepared by all companies incorporated in Hong Kong.

Accounting could be conducted by the accounting team and the CFO of your company, but auditing must require a third-party to conduct. This is regulated as a means to ensure the process of auditing the prepared financial records are fair and accurate. There are mainly three different types of audits:

l   Financial Statement Audit 

A financial statement audit refers to the report that conclude the examination of the financial statements and accompanying disclosures of your business. The audit report produced is the attestation from the third-party auditor, to ensure the credibility and fairness of presentation of the financial statements and related disclosures.

l   Audit and Internal Review 

Interna review is part of the course of an internal audit cycle. Auditing of the financial reviews is an evaluation of the accounting and reporting of financial transactions. Related financial transactions include commitments, authorizations and receipts and disbursement of funds. In other words, such auditing is to ensure the accurate provision of receipts from different departments in your company, therefore to account for a fair and accurate financial transactions record.

l   Audit Report on Special Purpose Engagements 

The statements prepared in the special purpose audit are reports on specific financial information for a special purpose to specific users. Such reports would then be compared with the general audit of financial statements, to search for any false. An example is that, such special purpose audit reports are usually required by the government, to present related financial information in a reporting framework.

 

Auditing is not just checking the sum and digits, to see if they add up to the final grand total. It differs from ticking the mathematics homework and is strictly regulated by the Hong Kong Auditing and Assurance Standards. Such standards are known as the Hong Kong Standards on Quality Control, Auditing, Assurance, and Related Services. Therefore, as you can see, the abovementioned financial assessments are all regulated, and are set out in due process with the Institute Council.

The Handbook for Auditing and Assurance Standards could be found on the webpage of the Hong Kong Institute of Certified Public Accountants. There are clear instructions and regulation on how to perform quality control and quality management over the abovementioned aspects. There is also specific regulation on audit documentation, and listed responsibilities of Auditors in their audit of financial statements to fraud. It is clearly noted that auditors should hold “profession judgement” and “professional skepticism”, and audit with a critical mind without pre-assuming the business in in fraud or is innocent.

The Hong Kong Standards on Auditing is basically similar with, or say based on the International Standards on Auditing. But the Hong Kong Standards differ from the US Generally Accepted Auditing Standards. Therefore, if you, as foreign investors or new to the business field, wish to incorporate business in Hong Kong and is not familiar with the regulations and ordinance in Hong Kong, feel free to ask OneStart Business Centre for help! OneStart Business Centre is one of the CPA in Hong Kong. We have years of experience in auditing and accounting. Contact our consultant or CLICK HERE to learn more. Apart from auditing and accounting services, we also provide professional company formation services, in not limited to Hong Kong, but also overseas countries like Singapore and even British Virgin Islands.

 

A certified auditor should have adequate knowledge in accounting. Therefore, auditors are also Hong Kong Certified Public Accountants (CPA).  Experience in the field of auditing and information management, financial reporting, financial management and taxation is required, and should be in a minimal of 150 hours. Therefore, auditing is a professional process, and finding professional help is very important. Here are few tips to help you find the right auditor for your business:

l   CPA that understands your business 

Third-party CPA does not mean you could completely leave the process to the CPA, so it is important that you can openly communicate with the CPA and get clear with the expectations, for example the types of documents you should provide, or to clear any misunderstandings in the transaction records, or depreciations calculations.

l   CPA with rich industry experience 

Different industries would have different costs and therefore leading to differences in transaction records. In order to minimize the troubles of misunderstanding of suspicious transactions, it is always better to find a CPA who knows your business and industry. Such CPA would understand more thoroughly the necessary transactions of your company and could help you to audit reports much more efficiently.

l   CPA familiar with the accounting software you have chosen 

When preparing for the financial reports, clearly you would not use pen and papers to mark down the calculations. So among the seas of accounting software one can choose from, you should be aware if your chosen auditor knows how to use the software you are using. This should only be a trouble for those who don’t hire a third-party accountant. Or else, it is normally the case that you would hire auditors and accountants for dealing with the financial records and statements from the same CPA.

 

It might be difficult to search for an accounting company that knows your industry. OneStart Business Centre’s clients come from different sectors and industry. Hence, OneStart Business Centre has years of rich industries experience, and would be able to understand the needs of your company, no matter which industry you are from.

OneStart Business Centre would encourage clients that used our company formation services to find us for auditing and accounting services. As we have been together from the setting up of the business, we understand what you need and your business way better than the other accounting firms.

Interested in OneStart Business Centre’s Company Formation, and Accounting and Audit Services? Phone in to our hotline 3575 6888 or WhatsApp our helpful consultants!