Accounts, Financial Statements and Audit in Hong Kong (continued)-Company Formation_Trademark Registration_Tax Service - Hong Kong CPA

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Auditing - Hong Kong

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Accounts, Financial Statements and Audit in Hong Kong (2)

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(I) General Questions (continued)

Q：

Who is an eligible person to be appointed as auditor to engage in statutory audit under Companies Ordinance?

A：

According to section 393(1) of the Companies Ordinance, only a practice unit is eligible for appointment as auditor of a company. According to the Professional Accountants Ordinance (Cap. 50) ("PAO"), a practice unit means:

a firm of certified public accountants (“CPA”) (practising) practising accountancy;
a certified public accountant (practising) practising accountancy on his own account; or
a corporate practice registered under the PAO.

The Hong Kong CPA practices registered can be searched in the link as follow: https://www.hkicpa.org.hk/en/Membership/Find-a-CPA/Hong-Kong-CPA-Practice-Directory

However, the following are disqualified for appointment as auditor of a company:

(a)	a person who is an officer or employee of the company;
(b)	a person who is a partner or employee of a person mentioned in paragraph (a);
(c)	a person who:
	(i)	is, by virtue of paragraph (a) or (b), disqualified for appointment as auditor of any other undertaking that is a subsidiary undertaking, or a parent undertaking, of the company or is a subsidiary undertaking of that parent undertaking; or
	(ii)	would be so disqualified if the undertaking were a company.

Q：

When and how should the accounting reference period be determined under Companies Ordinance?

A：

According to the section 368(2) of the Companies Ordinance, the primary accounting period of statutory audited financial statements begins on the date of incorporation and ends on its primary accounting reference date.

According to Section 369(5) and (6), the primary accounting reference date is specified by the directors on the date of incorporation and must fall within 18 months after the date of incorporation. In the absence of such specified date, the primary accounting reference date is presumed at the last day of the month in which the anniversary of the company’s incorporation falls.

Under Section 368(3), every subsequent accounting reference period of a company is the period of 12 months beginning immediately after the end of the previous accounting reference period, unless the accounting reference period is shortened or extended, as stated in a directors’ resolution under section 371(3).

Q：

When should the audited financial statements be completed and laid before the company in annual general meeting under Companies Ordinance?

A：

According to the section 429 of the Companies Ordinance, the directors must lay financial statements before company in annual general meeting (“AGM”) that must be held in respect of each financial year of the company.

Also, a company’s AGM must be held within the following period under Section 610 of the Companies Ordinance:

(a) For a private company or a company limited by guarantee:
9 months after the end of its accounting reference period.
(b) For any other company:
6 months after the end of its accounting reference period.

If that accounting reference period is the first accounting reference period of the company and is longer than 12 months, the company must hold a general meeting as its annual general meeting within the following period:

(a)	in the case of a private company or a company limited by guarantee—

	(i)	9 months after the first anniversary of the company’s incorporation; or
	(ii)	3 months after the end of that accounting reference period, whichever is the later; and

(b)	in the case of any other company—

	(i)	6 months after the first anniversary of the company’s incorporation; or
	(ii)	3 months after the end of that accounting reference period, whichever is the later.

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