Getting to Know 4 Different Audit Opinions in Hong Kong

Business owners incorporated their companies in Hong Kong require to have audit process on their financial statements by law annually. Auditor performs audit process with professional qualification, for example Certified Public Accountant (CPA). Auditors practice their professions and skills in the audit process in just and independent manners. You must learn about the 4 different audit opinions in Hong Kong being a business owner.

Duties of Professional Auditors

Upon the conclusion of the audit process on Hong Kong incorporated company’s financial statement, an independent auditor’s report is published as part of the financial statement. 

On the independent auditor’s report, auditor expresses his or her audit opinions on the financial statement throughout the audit process. The audit opinions in Hong Kong are critical reference to any user of financial statement such as financial institutions and investors for making lending or investment decision on the audited company because auditor performs their auditing duties in compliance with the Hong Kong Audit and Assurance Standard and so to ensure the financial statement, on which they perform audit process, are implemented in accordance with Hong Kong Financial Reporting Standard (HKFRS) and the financial statement are free from material misstatement (financial statement reported mistakenly in serious manner).  

4 types of Auditor’s Opinions

There are 4 common types of audit opinions in Hong Kong:

• Unqualified Opinion   
  
  It is called a clean opinion which have neither any adverse comments nor any disclaimers about any clauses or the audit process.
  
  This report indicates that the company’s financial reporting is in accordance with the accounting and auditing standard. The auditor believes the company’s operations comply with rules of corporate governance. 
  
  Such report is regarded by auditor and all users of financial report as free from material misstatements. Investor or financial institutions are willing to provide supports financially on companies possessing financial reports with such opinion.  

• Qualified Opinion
  
  Qualified opinion is written in much the same way as an unqualified opinion, and is also deemed as clean opinion. However there is an exception about the account balances, transactions or disclosures: 
  • There is insufficient evidence for auditor to conclude on information in the financial statements about a particular matter or matters; or
  • Information in the financial statements about a particular matter or matters is not free from material misstatement
  Investor or financial institutions may not find such report favourable for making investment or lending decisions on such company.

• Adverse Opinion
  
  Auditors concludes that the financial statements contain severely material misstatements or irregularities due to misrepresentations or inaccurate information. 
  
  The financial statements with such opinion will build bad impression to any users of this statement for the provision of any financial supports.

• Disclaimer Opinion
  
  A disclaimer of opinion means that the auditor is unable to perform the audit process for obtaining sufficient audit evidence and thus unable to express opinion on the financial statement. 
  
  The company being audited fails to present the enough supporting documents for auditor’s verification during the audit process and the auditor believes that there is high risk of misstatement of information about matters in the financial statements that are potentially material and pervasive.

Chat With Our Accountants

To avoid getting into trouble with the Hong Kong Inland Revenue Department, and to make sure you will receive an unqualified opinion from our auditor, customers shall check with our accounting team at info@getstarted.hk before business commencement. Don’t wait any longer, let us reduce overwhelm. Enjoy open communication with our accountants.