Hong Kong necessitates well-audited financial statements from all businesses and entities that function within their system. Along with this, there exist Hong Kong accounting standards that every business needs to understand.
6 Important Hong Kong Accounting Standards
Hong Kong compiled its set rules on governing financial transactions in the Hong Kong Accounting Standards or the HKAS. These are particular to Hong Kong institutes and businesses.
As early as January 2005, Hong Kong had its Financial Reporting Standard, or FRS, in effect for businesses to comply with.
There are 41 accounting standards which include all Hong Kong financial reporting standards HKFRS. But, the most applicable ones for small and medium-sized companies are these 6 important standards:
Presentation of Financial Statements (HKAS 1)
Inventories (HKAS 2)
Cash Flow Statements (HKFRS15)
Income Taxes (HKAS 12)
Revenue (HKFRS15)
Employee Benefits (HKAS 19)
The Financial Reporting Requirements in the Accounting Standards of Hong Kong
Hong Kong accounting and auditing falls under various general requirements. For instance, HKFRS is only applicable to profit-earning companies.
Most of the time, these are private companies and companies limited by guarantee. Their primary duty is to commit to filing the taxes of their company and submitting them to the Inland Revenue Department.
Additionally, certain sectors such as the banking and insurance entities may have different means of filing their financial statements.
Therefore, Hong Kong has different regulators in providing their requirements for auditing. And these fall under different requirements based on a company’s operations.
Determining the Right Financial Year in Hong Kong
A yearly financial audit is required in Hong Kong as part of their Companies Ordinance. The disclosure requirements are usually incorporated in documents such as a balance sheet, fixed assets, taxation liabilities, and profits and losses.
The right financial year in Hong Kong is crucial because each filing falls under important milestones.
Moreover, a public company must have a financial report 42 days after their 6-month accounting reference time.
If you are planning to set up a business in Hong Kong, you can easily incorporate a company in Hong Kong with Premia TNC.
Companies Eligible for Reporting Exemption
Optional reporting exemption is granted to a private company and a company limited by guarantee. Here are the criteria to note for reporting exemption for a private company:
Total revenue not exceeding HK$100 million
Total assets not exceeding HK$100 million
Number of employees not exceeding 100
Need any Advice or Help Regarding Hong Kong standards?
The success of a business can be boosted when it can focus on its priority operations. The pressure on complying with the rules governing a business can be debilitating if not addressed prudently.
It would be most efficient to comply with Hong Kong accounting standards with the aid of a professional team such as SJH Global. Focus on your company's needs and let the auditing and financing paperwork to skilled professionals from SJH Global.
Avoid unwanted penalties, provide prudent financial statements, and keep company operations in top shape with the help of SJH Global. These specialists can help a company deal with all financial and accounting aspects!
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