What to Do If You Haven’t Done Annual Audits?

What to Do If You Haven’t Done Annual Audits?

Haven’t Done Annual Audits

With tax season upon us, many companies are feeling overwhelmed because they haven't conducted annual audits in previous years. They are now seeking our help to understand what information they need to provide in order to complete the audit process smoothly.

What to Do If You Haven’t Done Annual Audits in the Past?

Many companies are worried about not having done annual audits previously and are unsure how to handle the situation now. Let's clarify a few key points to help you understand the actual requirements and strategies to deal with this issue.

1. Is Annual Audit Required?

In Hong Kong, according to the Companies Ordinance, all registered companies are required to conduct an annual audit.

2. What to Do If You Haven’t Done Annual Audits and Received a Profits Tax Return?

If your company hasn’t conducted annual audits previously, you need to catch up on the audits immediately. Delaying the submission of the Profits Tax Return will result in fines. Here are the steps to catch up on your audits:

(1)Prepare Financial Data: Provide financial data from the past few years, including but not limited to income statements, balance sheets, cash flow statements, and relevant documents (such as invoices, receipts, bank statements, etc.).

(2)Find a Professional Accountant: Choose an experienced accounting firm like City AI Accounting, which understands the specifics of your industry and your company’s financial situation. For more information on audit services, you can contact us.

(3)Comprehensive Audit: The accountant will conduct a comprehensive audit based on the provided data, ensuring the accuracy and legality of the financial statements.

(4)Submit the Report: After completing the audit, submit the audited financial statements and the Profits Tax Return to the Inland Revenue Department.

3. How to Avoid Future Issues

To avoid similar problems in the future and ensure you have enough time to prepare for audits upon receiving the Profits Tax Return, follow these recommendations:

(1)Conduct Annual Audits on Time: Ensure annual audits are conducted on time, and financial statements are submitted within the prescribed deadlines.

(2)Maintain Complete Financial Records: Keep all financial records complete and accurate, including audit reports for the audited years.

(3)Regular Internal Reviews: Conduct regular internal reviews to identify and correct potential issues, ensuring the accuracy and truthfulness of financial statements.

While not having conducted annual audits in the past may cause some inconvenience, timely catching up on audits and following the above recommendations can help your company navigate through the tax season smoothly, avoiding legal issues and hefty fines. As a company owner, understanding and complying with Hong Kong's financial reporting regulations is not only a legal requirement but also the foundation for maintaining the long-term stable development of your company.

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