Month end close is performed to finalise a snap shot of transactional activity for a period. Most processes run at month end are also run on a daily and/or weekly basis. For month end closing, these processes are performed for the last time for a particular month to ensure that all transactions are posted and reflected on reports. The month is officially closed when all of the month end processes are complete (including posting). For year end closing, same logic as above, but the closing is performed on a yearly basis, this is to save cost and improve the efficiency of accounts closing.

Types of company can be established in Hong Kong, except listed companies, are:

• a non-private company limited by guarantee
• a private company limited by guarantee
• a non-private unlimited company
• a private unlimited company

Company secretarial services normally include the following services:

All local companies incorporated in Hong Kong under the Companies Ordinance are required to file an annual return manually signed by a director or the secretary of the company once in every year. However, a private company which is deemed to be a dormant company is exempt from filing annual returns.

There are several local authorities in Hong Kong to govern the business registration of a newly set up company:

• Company Registry - All local limited companies or non-Hong Kong companies which have established a place of business in Hong Kong must first be registered with the Companies Registry.
• Inland Revenue Department (“IRD”) - The Inland Revenue Department is committed to providing an efficient business registration service to enable business operators to comply with their legal obligations with ease and to facilitate members of the public to obtain business information conveniently. Business registration is, however, not for regulating business activities. Neither is it a licence to trade. The Business Registration Ordinance requires every person who carries on a business in Hong Kong to apply for business registration within 1 month from the date of commencement of the business, and to display a valid Business Registration Certificate at the place of business. If the registered particulars of the business have changed, the business operator has to notify the IRD in writing within 1 month of the change.

We should consider the following factors before the formation of a new company:

• Nature of business for the new company
• No. of owner(s)/ partner(s)
• Legal form of the company
• No. of employees
• How the new company source its funding?

To choose whether the company may have either month end or year end closing for the accounting services, you should consider:

• Size of the company
• No. of owner(s)/ partner(s)
• No. of employees
• Complexity of business operations
• Complexity of transactions
• Complexity of the management structure
• Complexity of the company structure
• Location of the major business unit(s)

An accounting firm can normally provide the following information (for an operating company with either month end or year end closing):

• Management accounts (balance sheet & profit and loss account)
• Books of accounts (i.e. Ledgers)
• Sales analysis report
• Aging report for debtors and creditors (if any)
• Fixed assets register (if any)
• Inventory list (if any)
• Any other necessary breakdowns

As mentioned in above FQAs, corporate taxpayers should have to file the profits tax returns on time and audited accounts should be submitted with the returns, therefore, the timing for preparation of audited accounts is crucial for the tax returns filing in this respect.

Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders/members, management, and the board of directors. Other stakeholders include labor (employees), customers, creditors (e.g., banks, bond holders), suppliers, regulators, and the community at large.

An important theme of corporate governance is to ensure the accountability of certain individuals in an organisation through mechanisms that try to reduce or eliminate the principal-agent problem. A related but separate thread of discussions focuses on the impact of a corporate governance system in economic efficiency, with a strong emphasis shareholders' welfare. There are yet other aspects to the corporate governance subject, such as the stakeholder view and the corporate governance models around the world.

Internal control is defined as a process effected by an organisation's structure, work and authority flows, people and management information systems, designed to help the organization accomplish specific goals or objectives.

At the organisational level, internal control objectives relate to the reliability of financial reporting, timely feedback on the achievement of operational or strategic goals, and compliance with laws and regulations. At the specific transaction level, internal control refers to the actions taken to achieve a specific objective (e.g., how to ensure the organisation's payments to third parties are for valid services rendered). Internal control procedures reduce process variation, leading to more predictable outcomes. Internal controls within business entities are called also business controls.

An enterprise can easily perform management controls using computerised accounting system to generate management reports and analysis. Those management reports can also be used for all kinds of management decision in an effective and efficient way.

An external auditor is an audit professional who performs an audit on the financial statements of a company, government, individual, or any other legal entity or organization, and who is independent of the entity being audited. Users of these entities' financial information, such as investors, government agencies, and the general public, rely on the external auditor to present an unbiased and independent evaluation on such entities.

In accordance with “Advice on Completion of Profits Tax Returns” from Inland Revenue Department, all items in the Profits Tax Return must be completed fully and properly. Return should be filed on time, together with required documents (collectively called "Supporting Documents") listed on the "Notes and Instructions" to the Profits Tax Returns. E.g. For corporations, a certified copy of Balance Sheet, Auditor's Report where required by Hong Kong or foreign Law or has otherwise been prepared and Profit and Loss Account in respect of the basis period.

For corporations, audited accounts should be submitted with the returns in all cases except:-

• for small corporations as defined in the "Notes and Instructions" to return;
• for dormant companies within the terms of the Companies Ordinance;
• for companies incorporated in a jurisdiction whose laws do not require accounts to be audited; and
• for Hong Kong branch of a foreign company provided that the following information is supplied together with the return:-
  1. (i) the place of incorporation of the foreign company,
  2. (ii) whether the laws of that country require a statutory audit of the world-wide accounts of the company,
  3. (iii) whether that audit has been conducted, and
  4. (iv) a brief summary of the financial and accounting records maintained by the Hong Kong branch.

However, the Inland Revenue Department does not require a person to engage a practising accountant in completing the Return Form. If a person has any difficulty in completing it, he/she should prepare such statement of account, as he/she is able to and explain how it has been constructed. He/she should also complete the return to the best of his/her ability.

If you carry on a trade, profession or business in the form of a corporation, partnership business or if a non-resident person is chargeable to profits tax in your name, you must complete all items in the profits tax returns to report the profits tax liability, usually when the return is received by the taxpayer (usually once a year or sometimes once for few years). In all cases if you cannot lodge a tax return by the due date or the extended due date, estimated assessment will be issued and you may be required to pay more tax. You may also be subject to penalty proceedings which include payment of penalty, or even prosecuted.