Audited financial statements is a set of financial statements that was prepared by directors and have been audited by an auditor. The auditor will express his opinion on the financial statements by issuing an auditor’s report.

A complete set of audited financial statements should comprise of the followings as required by the Hong Kong Companies Ordinance (the “CO”):

1. Directors’ report (Section 388)
   
   
2.  Auditor’s report (Section 405)
   
   
3.  Financial statements (Section 379)
   

   (1)	Statement of profit or loss
   (2)	Statement of other comprehensive income *
   (3)	Statement of financial position
   (4)	Statement of changes in equity ^
   (5)	Statement of cash flows #
   (6)	Notes to the financial statements
   (7)	Comparative information in respect of the preceding period

   
   

Note *:	It is not applicable when the financial statements are prepared in accordance with Small and Medium-sized Entity Financial Reporting Framework and Financial Reporting Standard (“SME-FRF & FRS”).
Note ^:	It could be presented as a separate statement or as a note to the financial statements depending on the reporting standard.
Note #:	It is optional when the financial statements are prepared in accordance with SME-FRF & FRS.

The CO requires a company’s auditor to prepare a report for the members on any financial statements prepared by the directors (section 405). 

The auditor’s report must state, in the auditor’s opinion whether the financial statements have been properly prepared in compliance with the CO; and in particular, whether the annual (consolidated) financial statements of a company that does not fall within the reporting exemption for the financial year, give a true and fair view of the financial position and financial performance of the company (and all the subsidiary undertakings) as required by section 380 of the CO (section 406(1)).

Moreover, if the information in a directors’ report for a financial year is not consistent with the financial statements for the financial year, the auditor must state that opinion in the auditor’s report and may bring that opinion to the members’ attention at a general meeting (section 406(2)).

If the auditor is of the opinion that adequate accounting records have not been kept by the company; or the financial statements are not in agreement with the accounting records in any material respect, he must also state these matters in the auditor’s report (section 407(2)).