In Hong Kong, the requirement for an audit depends on your company’s status and turnover. Even if your company is inactive or has a small turnover, an audit might still be necessary.
1. Inactive Company
If your company is inactive (i.e., it has not conducted any business activities during the financial year), you may still need to submit audited financial statements to the Inland Revenue Department (IRD) if the company is registered. However, you might be able to file a "no business" declaration, in which case an audit may not be required.
2. Small Turnover
For companies with a small turnover, Hong Kong law still requires annual audits by a certified public accountant (CPA) to ensure compliance. This applies regardless of turnover size. The Hong Kong Companies Ordinance mandates that all companies, unless exempted, must file audited financial statements.
3. Exemption from Audit
In some rare cases, private companies with very small turnover (less than HK$2 million) and meet other criteria might qualify for audit exemptions, but they must apply for this exemption and meet specific conditions. For example, your company must not be a subsidiary of another company, and shareholders must agree to waive the audit requirement.
Even if your company is inactive or has minimal turnover, it’s recommended to consult a local accountant or auditor to clarify your obligations based on your specific situation and ensure compliance with Hong Kong’s legal requirements.