CW CPA Professional Insights on China and Cross-Border Business

Group audits, especially under ISA/HKSA 600 (Revised), require more than coordinating separate audits—they demand a proactive, risk-based strategy that integrates component work into a cohesive group opinion. With strengthened expectations around communication, access, supervision, and consolidation testing, principal auditors must orchestrate roles, responsibilities, and documentation across global teams. This article explores practical strategies to scope effectively, manage instruction flows, overcome access limitations, and avoid common failure points. From consolidation walkthroughs to aggregation risk control, successful execution hinges on early planning, robust two-way communications, and disciplined quality management aligned with the latest auditing standards in Hong Kong and internationally.

In Hong Kong, nearly all locally incorporated companies must undergo annual statutory audits, regardless of profit or IRD tax return requests. This applies to both private companies limited by shares and companies limited by guarantee. Common misconceptions—such as audits being unnecessary for small or inactive businesses—can lead to legal penalties. Only officially dormant companies that meet strict conditions are exempt. This explainer outlines the legal basis under the Companies Ordinance (Cap. 622), clarifies who must be audited, addresses misunderstandings, and details the directors’ responsibilities and penalties for non-compliance.

In Hong Kong, most companies are required to undergo a statutory audit, but smooth audit outcomes depend largely on how well financial statements and records are prepared before year-end. Audit delays and qualified opinions are often caused by weak close processes, documentation gaps, and misaligned audit, AGM, and tax timelines. This guide explains audit readiness in the Hong Kong context, outlines the audit lifecycle in practice, and highlights what companies can do months in advance to ensure their financial statements are properly prepared and ready for audit.