The Hong Kong Institute of Certified Public Accountants (HKICPA) oversees the accounting industry in Hong Kong, ensuring compliance with accounting standards. Companies incorporated in Hong Kong are required to maintain proper accounting books and fulfill statutory audit requirements annually as per the Hong Kong Companies Ordinance.
In 2010, the HKICPA introduced the Hong Kong Financial Reporting Standard for Private Entities (HKFRS for Private Entities) as an option for private entities to ease reporting requirements under full HKFRS. The HKFRS for Private Entities sets qualifying criteria outlined in Section 1 for applying this standard.
Accounting standards in Hong Kong follow the accrual basis, recognizing transactions and events within the same financial statement periods. Financial statements prepared on this basis provide insights into past transactions, future cash obligations, and potential cash accruals.
HKICPA’s responsibilities include applying HKFRS to general-purpose financial statements of profit-oriented entities, and serving various users’ information needs, such as shareholders, creditors, employees, and the public. HKFRS includes Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (HKAS), and Interpretations delivered by HKICPA. The required financial documents comprise a statement of cash flow, accounting policies, explanatory notes, a statement of financial position, a statement of comprehensive income, and a statement showing changes in equity.