Hong Kong S.A.R., China

The Companies Ordinance (Cap. 622) establishes the financial reporting and audit requirements for companies incorporated in Hong Kong Special Administrative Region (S.A.R.). Under the Ordinance, companies are required to prepare annual financial statements in accordance with accounting standards issued by the Hong Kong Institute of Certified Public Accountants (HKICPA). The Ordinance also requires all companies, except dormant companies, to have their financial statements audited.

The HKICPA is the statutory standard-setting body responsible for issuing Hong Kong Financial Reporting Standards (HKFRS), Hong Kong Standards on Auditing (HKSA), and related professional standards under the Professional Accountants Ordinance (Cap. 50). Since the 2022 regulatory reform, the Accounting and Financial Reporting Council (AFRC) exercises independent oversight over the HKICPA’s standard-setting and other specified functions pursuant to the Accounting and Financial Reporting Council Ordinance.

HKFRS are substantially converged with International Financial Reporting Standards (IFRS) Accounting Standards as issued by the International Accounting Standards Board. HKICPA maintains an ongoing process to update HKFRS in line with new and amended IFRS Accounting Standards. For private entities, the HKFRS for Private Entities, which is substantially aligned with the IFRS for Small and Medium-sized Entities, is available as an alternative reporting framework. In addition, companies meeting the reporting exemption criteria under the Companies Ordinance, other than banks, licensed corporations, insurers, and certain other financial institutions, may apply the Small and Medium-sized Entity Financial Reporting Framework and Financial Reporting Standard (SME-FRF & FRS).

Additional sector-specific reporting requirements apply to listed companies, banks, and insurance companies. Listed companies are subject to the Listing Rules of the Stock Exchange of Hong Kong and the Securities and Futures Ordinance (Cap. 571). Licensed banks, restricted licence banks, and deposit-taking companies are additionally subject to requirements issued by the Hong Kong Monetary Authority under the Banking Ordinance (Cap. 155), while insurance companies are subject to requirements established by the Insurance Authority under the Insurance Ordinance (Cap. 41). These entities generally prepare financial statements in accordance with HKFRS. Mainland Chinese companies listed on the Stock Exchange of Hong Kong may apply either HKFRS or China Accounting Standards for Business Enterprises, which are substantially converged with IFRS Accounting Standards.

HKICPA also issues HKSA, which are converged with the International Standards on Auditing as issued by the International Auditing and Assurance Standards Board and are required for all statutory audits conducted in the jurisdiction. All companies incorporated in Hong Kong S.A.R., except dormant companies, are subject to a statutory audit requirement under the Companies Ordinance.

The accountancy profession in Hong Kong Special Administrative Region (S.A.R.) is regulated under a shared framework involving the Accounting and Financial Reporting Council (AFRC) and the Hong Kong Institute of Certified Public Accountants (HKICPA), pursuant to the Accounting and Financial Reporting Council Ordinance and the Professional Accountants Ordinance (Cap. 50).

Professional accountants in the jurisdiction are designated as Certified Public Accountants (CPA). Individuals who wish to engage in public practice and sign audit reports are required to hold a practicing certificate and are designated as Certified Public Accountants (Practising). Membership in the Hong Kong Institute of Certified Public Accountants is mandatory for individuals seeking qualification as a CPA and for those practicing as auditors.

To qualify as a CPA, individuals must complete the Qualification Programme administered by HKICPA. The programme comprises the Associate Level, Professional Level, and Capstone, followed by a final assessment. Candidates are also required to complete a minimum of three years of relevant practical experience in accordance with the Practical Experience Framework.

Individuals seeking to obtain a practicing certificate as a Certified Public Accountant (Practising) must meet additional requirements, including relevant post-qualification practical experience in public practice, fulfillment of continuing professional development requirements, and, where applicable, completion of the Practising Certificate Examinations covering auditing, local law, and taxation.

The Accounting and Financial Reporting Council is the independent regulator responsible for the registration, inspection, investigation, and discipline of Certified Public Accountants (Practising), practice units, and public interest entity auditors. This includes the issuance of practicing certificates, registration of audit firms, quality assurance inspections, and investigative and disciplinary procedures.

The Hong Kong Institute of Certified Public Accountants remains responsible for administering the Qualification Programme, registering Certified Public Accountants, establishing continuing professional development requirements, and setting accounting, sustainability, auditing, and ethical standards. These functions are carried out under the oversight of the Accounting and Financial Reporting Council.

There are currently no established independent audit oversight arrangements in Hong Kong, with the conduct of auditors monitored by the Hong Kong Institute of Certified Public Accountants (HKICPA).

Under the Professional Accountants Ordinance, HKICPA is responsible for maintaining a registry of all professional accountants and firms, regulating the practice of accountancy professionals by establishing quality assurance reviews and an investigation and discipline systems for members and member firms, setting ethical requirements for members, setting auditing and accounting standards to be applied in Hong Kong, and setting initial professional development and continuing professional development requirements.

Established in 2006 under the Financial Reporting Council Ordinance, the Financial Reporting Council (FRC) is an independent statutory body with the role of conducting independent investigations into auditing and reporting irregularities in relation to listed companies, and enquiring into possible non-compliance with accounting requirements on the part of listed companies. However, the FRC has no disciplinary authority and all findings by the FRC that concern HKICPA members and member firms are referred to the HKICPA.

HKICPA reports that the system of audit regulation in Hong Kong is undergoing changes to introduce an independent oversight of the inspection of listed company audits. In June 2015, the Financial Services and Treasury Bureau (FSTB) of the Hong Kong Government concluded a consultation on proposals to introduce an independent regulatory regime for listed entity auditors in Hong Kong and a summary of the consultation and comments to the consultation has been released to the public. Based on the conclusions of the consultation, which included overwhelming support to establish an independent regulatory regime for auditors of listed entities, the FSTB plans to prepare legislation during the 2017–2018 Hong Kong Government Legislative Session.

The Hong Kong Institute of Certified Public Accountants (HKICPA)

The Hong Kong Institute of Certified Public Accountants (HKICPA) was established in 1973 under the Professional Accountants Ordinance (Cap. 50) as the statutory professional accountancy organization in Hong Kong Special Administrative Region (S.A.R.). HKICPA is the sole membership body for Certified Public Accountants in the jurisdiction and membership is mandatory for individuals seeking qualification as a Certified Public Accountant and for those engaged in public practice.

As set out in the Regulation of the Accountancy Profession section, HKICPA is responsible for administering the Qualification Programme, registering Certified Public Accountants, establishing continuing professional development requirements, and setting accounting, sustainability, auditing, and ethical standards, all under the oversight of the Accounting and Financial Reporting Council.

In addition to being a member of IFAC, HKICPA is a member of the Global Accounting Alliance and actively participates in regional and international standard-setting and professional development initiatives.

Under the Accounting and Financial Reporting Council Ordinance (Cap. 588), the Accounting and Financial Reporting Council (AFRC) is responsible for all quality assurance (QA) review functions in Hong Kong Special Administrative Region (S.A.R.), including inspections of Certified Public Accountants (Practising), practice units, and audit firms. The QA review system is operational and aligned with the requirements of SMO 1.

The Hong Kong Institute of Certified Public Accountants (HKICPA) retains responsibility for setting relevant auditing and quality management standards under the oversight of the AFRC. This includes the adoption of Hong Kong Standard on Quality Management 1 (HKSQM 1), Hong Kong Standard on Quality Management 2 (HKSQM 2), and Hong Kong Standard on Auditing 220 (Revised), which are aligned with the corresponding International Standards on Quality Management (ISQM 1 and ISQM 2) issued by the International Auditing and Assurance Standards Board.

The new quality management standards became effective on 15 December 2022 and apply to firms performing audits or reviews of financial statements and other assurance or related services engagements. Accordingly, the jurisdiction’s QA framework incorporates the relevant quality management standards required under SMO 1.

Current Status: Adopted

Under the Professional Accountants Ordinance (Cap. 50), the Hong Kong Institute of Certified Public Accountants (HKICPA) is responsible for establishing initial professional development (IPD) and continuing professional development (CPD) requirements for professional accountants in Hong Kong Special Administrative Region (S.A.R.), under the oversight of the Accounting and Financial Reporting Council (AFRC).

Professional accountants in the jurisdiction are designated as Certified Public Accountants. Individuals seeking to qualify as a CPA must complete the HKICPA Qualification Programme, which comprises the Associate Level, Professional Level, and Capstone, followed by a final assessment. Candidates are also required to complete a minimum of three years of relevant practical experience in accordance with the Practical Experience Framework.

Individuals seeking to obtain a practicing certificate as a Certified Public Accountant (Practising) must meet additional requirements, including relevant post-qualification practical experience and, where applicable, completion of Practising Certificate Examinations in auditing, local law, and taxation.

HKICPA has established mandatory CPD requirements for its members, which are aligned with International Education Standard 7 on continuing professional development. The Qualification Programme incorporates a learning outcomes approach, practical experience requirements, and final assessment processes consistent with the International Education Standards.

HKICPA indicates that its education requirements are aligned with the International Education Standards in effect at the time of the assessment and, in certain areas, exceed baseline requirements. The Qualification Programme is subject to periodic review and benchmarking against leading global professional accountancy bodies, including through collaboration with members of the Global Accounting Alliance.

Current Status: Adopted

Under the Accounting and Financial Reporting Council Ordinance (Cap. 588), the Accounting and Financial Reporting Council (AFRC) is responsible for overseeing audit standard-setting activities in Hong Kong Special Administrative Region (S.A.R.). Under the oversight of the AFRC, the Hong Kong Institute of Certified Public Accountants (HKICPA) continues to set auditing standards. The latest Statement of Protocol on the oversight arrangements between the AFRC and HKICPA was signed in August 2022.

Hong Kong Standards on Auditing (HKSA) are issued by the Auditing and Assurance Standards Committee of HKICPA and have been continuously updated since 2005 to maintain convergence with the International Standards on Auditing (ISA) issued by the International Auditing and Assurance Standards Board.

HKICPA maintains an established process to review and incorporate new and revised ISA into the Hong Kong auditing framework. Recent updates continue to reflect pronouncements included in the 2025 Handbook of International Quality Management, Auditing, Review, Other Assurance, and Related Services Pronouncements, including developments such as the adoption of the Hong Kong equivalent of the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities.

Accordingly, ISA in their entirety in effect as of the time of the assessment are adopted and applied in all mandatory audits in the jurisdiction

Current Status: Adopted

Under the Accounting and Financial Reporting Council Ordinance (Cap. 588), the Accounting and Financial Reporting Council (AFRC) is responsible for overseeing the setting of ethical standards and related requirements in Hong Kong Special Administrative Region (S.A.R.). Under the oversight of the AFRC, the Hong Kong Institute of Certified Public Accountants (HKICPA) continues to set ethical requirements for professional accountants. The latest Statement of Protocol on the oversight arrangements between the AFRC and HKICPA was signed in August 2022.

HKICPA has established a Code of Ethics for Professional Accountants that is aligned with the 2025 edition of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants. The Code is updated on an ongoing basis to incorporate new and revised ethical requirements issued internationally.

In addition to the provisions aligned with the international Code, HKICPA includes supplementary local chapters and guidance to address jurisdiction-specific matters, including insolvency, liquidation, anti-money laundering, and other professional practice considerations applicable in Hong Kong S.A.R.

Accordingly, the International Code of Ethics in effect as of the time of the assessment is adopted for all professional accountants in the jurisdiction.

Current Status: Adopted

Under the Public Finance Ordinance (Cap. 2), public sector entities in Hong Kong Special Administrative Region (S.A.R.) apply national public sector accounting requirements on both a cash and accrual basis.

The Government’s annual accounts are prepared on a cash basis, while annual consolidated whole of government financial statements that include government-controlled entities are prepared on an accrual basis. These accrual-based consolidated accounts are issued in accordance with national accounting policies established by the Government and are published annually.

Public sector entities that are listed on the Stock Exchange of Hong Kong prepare financial statements in accordance with Hong Kong Financial Reporting Standards.

Accrual-basis International Public Sector Accounting Standards (IPSAS) have not been adopted in their entirety for application by public sector entities in the jurisdiction, and no formal plans for adoption have been identified at the time of the assessment.

Current Status: Not Adopted

Under the Accounting and Financial Reporting Council Ordinance (Cap. 588), the Accounting and Financial Reporting Council (AFRC) is responsible for investigation and disciplinary procedures for professional accountants in Hong Kong Special Administrative Region (S.A.R.), including Certified Public Accountants, Certified Public Accountants (Practising), and practice units.

The AFRC’s investigative and disciplinary framework is operational and incorporates both complaints-based and information-based approaches, including matters arising from inspection and quality assurance review findings. The framework provides for independent investigation, disciplinary decision-making, and appeal mechanisms, as well as the imposition of a range of sanctions and regulatory actions where appropriate.

Following the expansion of its statutory powers under the 2021 reforms, the AFRC is responsible for conducting investigation and disciplinary procedures across the profession, including auditors of public interest entities and non-public interest entities.

Accordingly, the investigative and disciplinary system in Hong Kong S.A.R. is established and operational for all professional accountants and is aligned with the requirements of SMO 6.

Current Status: Adopted

Under the Accounting and Financial Reporting Council Ordinance (Cap. 588), the Accounting and Financial Reporting Council (AFRC) is responsible for overseeing the setting of financial reporting standards in Hong Kong Special Administrative Region (S.A.R.). Under the oversight of the AFRC, the Hong Kong Institute of Certified Public Accountants (HKICPA) continues to set financial reporting standards. The latest Statement of Protocol on the oversight arrangements between the AFRC and HKICPA was signed in August 2022.

HKICPA develops and issues Hong Kong Financial Reporting Standards (HKFRS), which have been converged with International Financial Reporting Standards (IFRS) Accounting Standards since 2005. According to the IFRS Foundation’s jurisdictional profile, HKFRS contain wording identical to the equivalent IFRS Accounting Standards, except for transitional provisions that applied at the time of initial convergence and which have since aligned with IFRS effective dates and transition requirements.

Listed companies, banks, insurance companies, and other publicly accountable entities are required to apply HKFRS. Companies incorporated outside Hong Kong and listed on the Stock Exchange of Hong Kong may use HKFRS or IFRS Accounting Standards as issued by the International Accounting Standards Board. Mainland Chinese companies listed in Hong Kong may use either HKFRS or China Accounting Standards for Business Enterprises.

Entities that are not publicly accountable may apply the HKFRS for Private Entities, which is substantially aligned with the IFRS for Small and Medium-sized Entities. Eligible entities meeting the reporting exemption criteria under the Companies Ordinance may also apply the Small and Medium-sized Entity Financial Reporting Framework and Financial Reporting Standard (SME-FRF & SME-FRS).

Accordingly, IFRS Accounting Standards in effect as of the time of the assessment are adopted and applied by all domestic publicly accountable entities in the jurisdiction.

Current Status: Adopted

Relevant Organizations

• HYPERLINK "https://www.afrc.org.hk"Accounting and Financial Reporting Council (AFRC)
• Hong Kong Institute of Certified Public Accountants (HKICPA)

Relevant Legislation

• Accounting and Financial Reporting Council Ordinance, (Cap 588)
• Companies Ordinance (Cap 622)
• Professional Accountants Ordinance, (Cap 50)
• Public Finance Ordinance (Cap. 2)
• Securities and Futures Ordinance, (Cap 571)

Relevant Publications

• HKICPA, SMO Action Plan, 2023.
• HKICPA, Code of Ethics for Professional Accountants / Ethics Standards
• HKICPA Members’ Handbook
• IFRS Foundation, “IFRS Application Around the World?Jurisdictional Profile: Hong Kong”, Nov 2023