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CPA in Hong Kong
Updated on Thursday 10th November 2022 Rate this article
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A CPA in Hong Kong, a certified public accountant, is a professional who has obtained the license that allows him or her to offer accounting services to the public. In Hong Kong, this profession is regulated and supervised by the Institute of Certified Public Accountants, which sets forth conditions for licensing and practicing, among others.
Working with a certified public accountant is advisable for business owners in Hong Kong as they can thuds make sure that a licensed CPA in Hong Kong will have proper command of the accounting principles in force and, at the same time, will follow the standards imposed in the regulated profession.
When needed, investors can choose to work with a professional who is trained and experienced either in accounting and financial reporting or in auditing and assurance.
For investors interested in setting up a company in Hong Kong, working with a certified accountant in HK is a suitable solution.
| Quick Facts | |
|---|---|
| Bookkeeping services | Financial statements, monthly reports, management accounts, bank reconciliation |
| Payroll in Hong Kong | Monthly payroll processing, overtime calculations, accurate monthly salary payments, new employee documentation, employee data updating |
| Invoicing
| Invoice issue and tracking, processing received monthly invoices |
| Cash management | Cash flow statement to reflect the cash inflow and outflow |
| Reporting | Annual financial statements filing with the Companies Registry for companies subject to this requirement |
| Financial analysis | Corporate performance analysis according to |
| Forensic accounting | Assistance from our CPA in cases involving securities or insurance fraud, money laundering, financial statement information falsification and other crimes |
| Tax compliance | The payment of all the applicable relevant taxes |
| The payment of all the applicable relevant taxes | There is no need to register for VAT as this is not imposed in Hong Kong. Our team can help you with information about other taxes |
| Audit offered by our CPA in Hong Kong | Annual financial statements audit, when required by the Inland Revenue Department of Hong Kong |
| Property financial matters | Property financial matters |
| Statutory compliance in Hong Kong | Statutory compliance in Hong Kong |
| Tax authority assistance | Our CPA in Hong Kong can represent clients in front of the relevant authorities and during other processes, as needed |
| Support for voluntary dissolution | We are able to assist investors who wish to close a company in Hong Kong and are in need of a final financial report and bank account liquidation |
| Services for foreign companies offered by our CPA in Hong Kong | Accounting for branches, as well as subsidiaries, information about the tax implications in case of double taxation agreements, etc. |
Who can become a CPA in Hong Kong?
Individuals can become a recognized and licensed certified public accountant when they follow a Qualification Programme, such as the one offered by the Hong Kong Institute of Certified Public Accountants. This is a comprehensive training that includes education and examination stages and members of the Institute gain international reignition.
In order to become a registered CPA in Hong Kong, one needs to pass the practicing certificate examinations, which are mandatory for registration as a CPA. Those who complete the qualification programme offered by the Institute are exempt from the examinations, however, non-Hong Kong individuals who hold an accounting degree will need to follow through with the requirements for fulfilling the competency requirements.
Our team of experts specializing in setting up a company in Hong Kong can give you more details about the laws that are in place for foreign professionals who wish to practice their profession in Hong Kong or open a business here.
Working with one of the accounting firms in Hong Kong is advisable for small and large businesses alike.
What are the standards followed by a Hong Kong accountant?
A CPA in Hong Kong is an individual who adheres to the standards and the regulations currently in place. These refer not only to the accounting standards that are in place and implemented in Hong Kong, but also to quality assurance practices, compliance regulations and anti-money laundering rules and laws.
The Hong Kong Financial Reporting Standards are set forth by the Institute in close collaboration with the International Standard Setting Boards and by taking into account consultation documents and the regular meetings with key stakeholder groups.
A CPA in Hong Kong also observes the Code of Ethics for Professional Accountants, which sets forth key ethical principles for preparing and presenting information, as well as guidance for accountants in public practice.
Our accountants in Hong Kong can give you more details about the regulations in force.
Should I work with a CPA in Hong Kong?
It is recommended to choose working with a team of professional, licensed accountants. No matter the size of the business, private and public companies in Hong Kong are all subject to accounting and financial reporting requirements (and, depending on size, also subject to auditing requirements).
A close collaboration with a licensed accountant will allow investors to maintain proper books and records, and follow through with the ongoing compliance requirements.
Investors who wish to set up a company in Hong Kong can start working with an accountant as soon as the company is registered.
Our accountants in Hong Kong offer a wide range of services to clients and have packaged that are suited to the size of the business. Read below for more information about these services, as well as examples.
What accounting services in Hong Kong can I receive from a certified CPA?
Accounting firms offer complete solutions for businesses in Hong Kong, including for foreign companies that open branches in HKSAR.
Working with a team of certified CPAs is advisable, as opposed to handling accounting on one’s own, even for small businesses.
Below is a summary of the common services offered by a Hong Kong accountant:
- Bookkeeping: accounts receivable and accounts payable, complete financial transaction recording, preparing the annual financial statements;
- Payroll: the complete management of the payments related to employees; making the salary payments, issuing payslips, and making the social security payments;
- Audit: an accountant in HK can also assist clients who are in need of audit services, when this is required by the authotiries.
- Tax compliance: a professional can handle matters related to tax filing so that the business can pay all the due taxes in time and avoid unnecessary penalties.
The accounting standards that apply in Hong Kong are the Hong Kong SAR Financial Reporting Standards.
Companies are required to prepare annual financial statements. Public companies are asked to submit the audited annual financial statements.
When audited financial statements are required, they are duly submitted to the Inland Revenue Department, at the same time the company submits the annual profits tax return.
Small companies are not subject to the requirement described above.
Private companies are not subject to complex annual financial statements submissions, however, they are asked to maintain proper books.
According to law, companies in Hong Kong may not submit consolidated returns. Companies that are part of the same group file the tax returns and pay their taxes separately.
Financial reporting in Hong Kong and the applicable reporting exemption for companies
The Companies Ordinance stipulates the main financial reporting requirements for companies.
The current disclosure requirements have been simplified and they overlap with the accounting standards.
The general requirements for financial reporting in Hong Kong are the following:
- - the company’s directors prepare the financial statements for each financial year;
- - the consolidated financial statements are drawn up to include all the subsidiaries of the company, unless an exemption applies;
- - special conditions apply in case of holding companies and partially owned subsidiaries;
- - the financial statements must reflect a true an fair status of the company’s financial performance and condition;
- - the financial statements comply with the accounting standards and the disclosure requirements and must be audited.
Companies are also subject to a number of other requirements when making a voluntary revision of their financial statements.
By working with a CPA in Hong Kong from our team, you can make sure that your company complies with these requirements.
In addition to the main financial reporting obligations, investors who open a company in Hong Kong should also be aware of the reporting exception for qualifying legal entities.
Private or guarantee companies can be subject to a reporting exemption, meaning that part of the conditions for preparing the financial statements are less stringent in their case.
To qualify for the exemption, the legal entity needs to satisfy two of more of the following criteria:
- have a total revenue or aggregate total revenue of no more than $100 million;
- have total assets or aggregate total assets of no more than $100 million;
- have no more than 100 employees.
The conditions above are for one financial year for a small private company incorporated in Hong Kong or a holding company that is part of a group of small private companies.
Companies that are subject to the lighter reporting requirements are not required to:
- - disclose the auditor’s remuneration in their financial statements;
- - provide a true and fair view of the financial statements;
- - disclose the material interests of the directors in certain transactions, important contracts or arrangement;
- - include in the director’s report the business review, donations, the resignation of the director, or other material interests of the directors;
- - there is no requirement for the auditor state a true and fair view and opinion on the financial statements.
For these exempted legal entities, the financial statements are prepared according to the Small and Medium-Sized Entity Financial Reporting Standard.
Audit services in Hong Kong
Our accountants in Hong Kong can also provide audit services for clients and our accounting services include the preparation of the required documents when performing an audit.
In Hong Kong, the requirement to have an audit of the financial statement if required for all companies, including those that are subject to the reporting exemption set forth in the Companies Ordinance.
The only companies that are not subject to audit requirements in Hong Kong are dormant companies.
Our accounting staff can perform both statutory and non-statutory audits according to the Companies Law in Hong Kong. Limited liability companies are required to appoint external auditors who must realize statutory audits and our accountants are prepared to provide this type of service, as well.
We provide audit services in compliance with the Statements of Auditing Standards released by the Hong Kong Institute of Certified Public Accountants (HKICPA).
Our accountants in Hong Kong also provide non-statutory audit services such as due diligence in merger and acquisition cases or company valuations. We can also provide investigation reports on companies our clients are about to go into business with, if required.
Concerning the auditor’s duty in Hong Kong, our team reminds company owners that certain requirements are also in place regarding the replacement, removal or the resignation of an auditor.
The requirements for reporting the status of the auditor within the company are also set forth in the Companies’ Ordinance.
When the company’s auditor resigns, the company must submit a notification, under a special form, to the Registrar, within 15 days of the date on which the company received the notice of resignation from the auditor.
When the auditor of the company is dismissed (removed) from office, the company passes an ordinary resolution for this purpose, and it also needs to submit a special notice (under a special form) to the Registrar within 15 days from the date on which the resolution to remove the auditor was passed.
The advantages of outsourcing accounting services in Hong Kong
Companies of all sizes benefit from choosing to work with a certified public accountant.
Business owners will often choose to outsource this service, as it allows for reduced costs, compared to having an in-house accounting department.
While large corporations will have a dedicated accounting department, not all companies employ an in-house Hong Kong accountant.
The advantages of outsourcing the accounting and bookkeeping services are the following:
- - Professional assistance: access to specialized knowledge, through a team of dedicated experts and financial professionals;
- - Reduced costs: the company will reduce the labor costs associated with employing a Hong Kong accountant;
- - Flexibility: the accounting and bookkeeping package is tailored to the needs of the client; small businesses are subject to lower reporting and auditing requirements, which is also reflected in more accessible accounting solutions;
- - Business advantage: investors who work with a team of professionals who offer accounting services in Hong Kong will have more time to focus on growing their business, all while resting assured that the company is compliant.
The main different between accounting and bookkeeping is that the accountant in HK can act as a bookkeeper, while the latter cannot perform the functions of a CPA without the proper certifications discussed in this article.
Accounting firms in Hong Kong can employ both bookkeepers and accountants, although most will choose to work with certified CPAs.
Hong Kong accountancy statistics
According to the Hong Kong Institute of Certified Public Accountants, at the end of June 2021 there were 3,593 practicing certified public accountants. Other data shows the following:
- - Members: in June 2021, the Institute of Certified Public Accountants had 40,577 total members;
- - Fellow members: in addition to the members of the Institute, another 1,540 individuals were fellow members;
- - Non-practicing: out of the total number of certified public accountants in the Institute, 36,964 were non practicing;
- - Mode of practice: 49% of the total number of individuals were practicing in their own name and 1,635 as a sole proprietor or a partner in a firm; only 839 individuals were practicing as a shareholder or director of a corporate practice and 142 as an authorized signatory of a firm;
- - Gender distribution: 49.4% of the total number of members were men and 50.6% were women (both practicing and non-practicing members);
- - Registered office: most of the practicing certificate holders had their registered office of practice located on Hong Kong Island (60.2%); 95.1% of the registered members also had Hong Kong as their location of residence and only 4.9% stated that they resided outside of Hong Kong.
According to the available statistics, most of the certified public accountants in Hong Kong started that the undertake most of their work in Hong Kong, and only 3% also undertake work overseas.
Contact us if you need more information about the general accounting rules or if you wish to work with a CPA in Hong Kong.
With our assistance, you will benefit from the services offered by one of the accounting firms in Hong Kong with relevant experience both in case of local and foreign companies.
We can help you set up a company in Hong Kong.
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