Accounting & Audit

In Hong Kong, all companies—regardless of size, revenue, or number of employees—are required to undergo a compulsory statutory audit (except companies that have obtained a dormant status from the Hong Kong Companies Registry). Given this requirement, many businesses turn to HKWJ Group for assistance in maintaining accurate accounting records, arranging audits, and liaising with auditors.

By handling these complex processes, we enable our clients to focus on their core business activities and growth, rather than getting bogged down with financial statement preparation and compliance requirements.

The Importance of Expert Audit Support

For many newly established businesses in Hong Kong, the first statutory audit can be a challenging experience. Many companies underestimate the lengthy list of documents and financial records required by auditors.

More importantly, receiving an unfavourable audit opinion—such as a qualified opinion, a disclaimer of opinion, or an adverse opinion—can have serious consequences. These opinions may trigger red flags with tax authorities, leading to increased scrutiny, additional compliance burdens, or even penalties.

Want to learn more about different audit opinions and what they mean? Check out our detailed guide explaining Hong Kong audit opinions.

At HKWJ Group, we help our clients avoid such risks by ensuring their financial records are in order and proactively addressing potential audit concerns.

Case Study 1: Avoiding a Disclaimer of Opinion

One of our clients, who initially did not engage us for accounting services, was on the verge of receiving a disclaimer of opinion from its auditor. The issue? The company lacked sufficient supporting documents for past transactions, making it impossible for the auditors to verify the financial statements.

Recognizing the potential risks, the client turned to us for assistance. Leveraging our extensive experience in handling auditor queries, we:
✔ Conducted a detailed review of the company’s financial records.
✔ Helped gather and organize the necessary supporting documents.
✔ Communicated directly with the auditors to address their concerns.

As a result, the auditors reversed their decision and issued an unqualified opinion (clean audit report)—ensuring that the company remained in good standing with regulatory authorities.

Case Study 2: Proper Accounting & Taxation Risk Management

Another client, who had engaged us for both accounting and audit support, encountered a potential issue during their audit. The auditor raised concerns over related party transactions, questioning whether certain financial activities should be disclosed under related party reporting requirements.

The complexity arose because our client had established a foundation/trust structure to hold some of its assets. Due to our in-depth understanding of both the legal and accounting aspects of trusts and foundations, we were able to:
✔ Clarify the proper legal relationships between the entities involved.
✔ Provide documentary evidence to support our position.
✔ Work directly with the auditor to ensure compliance without unnecessary disclosures.

Ultimately, the auditor agreed with our assessment, confirming that the transactions did not need to be disclosed as related party transactions—avoiding unnecessary complications for the client.

The Value of Proactive Accounting & Audit Management

These case studies highlight the importance of professional accounting and audit support. Maintaining accurate financial records and ensuring proper accounting practices on a daily basis can help businesses:

• Avoid unnecessary audit opinions that may raise concerns with tax authorities.
• Ensure compliance with Hong Kong’s audit requirements.
• Minimize risks related to financial reporting and tax assessments.

At HKWJ Group, we provide end-to-end accounting and audit solutions to help businesses stay compliant, reduce risks, and focus on growth—without being burdened by complex financial reporting requirements.