Need Second Opinion on Audit Report Created by Another Auditor

# Job Title Hong Kong CPA / Tax Accountant Needed: Review Provisional Profits Tax Treatment, Adjusted Loss, and Help Respond to Auditor # Budget Fixed price: USD 300 Suggested milestone: * Milestone 1: USD 200 (will be paid immediately after opinion and draft response) Review documents, form a written opinion on the correct accounting and tax treatment, share the opinion with me, and draft a response to the auditor’s original treatment * Milestone 2: USD 100 (will be paid after answering any follow-up questions (up to 2 follow-up rounds) from the auditor or max 2 weeks since milestone 1 completion) Reply to the auditor’s questions or comments on our response (up to 2 follow-up rounds) # Job Description I need a Hong Kong CPA, tax accountant, or auditor with experience in Hong Kong profits tax, IRD Profits Tax Returns, and small private company accounts. This is not a full audit or full tax filing. I need a second opinion and response support on one specific accounting/tax presentation issue before signing audited financial statements. # Background * Hong Kong private limited company * Financial year ended 31 December 2025 * Company had no service revenue in FY2025 and made a loss * IRD issued provisional profits tax of HKD 5,681 based on the prior year’s 2024/25 tax computation * Auditor has recorded the HKD 5,681 as: Dr Provision for Income Tax Cr Income Tax Payable * The amount is shown under General and Administrative Expenses in the Profit and Loss Account * The balance sheet also shows Income Tax Payable * I want to understand whether this HKD 5,681 should instead be treated as tax payable / tax prepayment / tax recoverable on the balance sheet, rather than as a P&L expense # Key Questions I need your opinion on the following: 1. Should HKD 5,681 provisional profits tax demanded by IRD be recorded as a P&L expense, or should it be treated as a balance sheet tax balance? 2. Is it appropriate to classify provisional profits tax under General and Administrative Expenses in the Profit and Loss Account? 3. If IRD issued the demand before year-end and the amount was unpaid at year-end, what is the correct journal entry? 4. What is the correct balance sheet presentation? For example, should it be shown as: * Income tax payable; * tax recoverable; * tax prepayment; * net current tax payable/recoverable; or * some other presentation? 5. If the provisional tax is later refunded or offset by IRD, how should that refund/offset be recorded? 6. Does the fact that the company made a tax loss in FY2025 affect the treatment? # Adjusted Loss / IRD Profits Tax Return Question I also need specific advice on the adjusted loss figure to be filed in the IRD Profits Tax Return. The key issue is whether “Provision for Income Tax” should be included in the adjusted loss or added back in the tax computation. Please advise the correct adjusted loss figure under both scenarios: ## Scenario A If HKD 5,681 remains recorded in the P&L as “Provision for Income Tax” / General and Administrative Expense: * Should this provision be included in the adjusted loss? * Or should it be added back in the tax computation as a non-deductible tax provision? * What adjusted loss should be shown in the IRD Profits Tax Return? ## Scenario B If HKD 5,681 is removed from the P&L and reclassified as a balance sheet tax payable / tax recoverable / tax prepayment item: * What should the net loss per accounts be? * What should the adjusted loss be? * What should be shown in the IRD Profits Tax Return? There is currently a mismatch I want reviewed: * The IRD Profits Tax Return appears to show HKD 18,432 as both “net loss per accounts” and “adjusted loss”. * The tax computation / annexure appears to add back HKD 5,681 provision for income tax and exclude HKD 133 bank interest income, resulting in adjusted loss of HKD 13,017. I need you to confirm which figures are correct and whether the IRD return and tax computation need to be amended so that they reconcile. # Scope of Work Please: 1. Review the draft financial statements, detailed income statement, balance sheet, tax computation / annexure, and IRD Profits Tax Return figures. 2. Provide a short written opinion on the correct accounting and tax treatment. 3. Comment specifically on whether provisional profits tax should be recorded as: * P&L expense; * tax payable; * tax recoverable / prepayment; * net current tax balance; or * something else. 4. Provide the recommended journal entry. 5. Provide the recommended balance sheet and P&L presentation. 6. Confirm the correct adjusted loss treatment for the IRD Profits Tax Return. 7. Help me draft a clear and professional response to the auditor. 8. Reply to the auditor’s questions or comments on our response (up to 2 follow-ups). # Deliverables Please provide: 1. A short written opinion, ideally 1–2 pages. 2. Suggested journal entry. 3. Suggested P&L and balance sheet presentation. 4. Suggested adjusted loss / IRD Profits Tax Return treatment. 5. Draft response to auditor. 6. Up to 2 follow-up replies to the auditor’s questions or comments. # Required Expertise Please apply only if you have experience with: * Hong Kong profits tax; * IRD Profits Tax Returns; * provisional profits tax; * tax computations and adjusted loss; * HKFRS, SME-FRF, or SME-FRS accounts; * small Hong Kong private companies; * audit/tax filing review. # Documents I Can Provide I can provide: * Draft audited financial statements; * Detailed income statement; * Statement of financial position; * Tax computation / annexure; * IRD Profits Tax Return draft; * Auditor’s explanation of their treatment; * My internal bookkeeping schedule for context. # Screening Questions 1. Have you worked on Hong Kong profits tax returns and tax computations before? 2. In Hong Kong, if IRD demands provisional profits tax based on a prior-year assessment, and the company expects it to be offset or refunded, how would you generally treat it: P&L expense, tax payable, tax recoverable/prepayment, or net current tax balance? Please briefly explain. 3. If a company records “Provision for Income Tax” in the P&L, should that amount be included in adjusted loss on the IRD Profits Tax Return, or should it be added back in the tax computation? Please briefly explain. 4. Are you familiar with HKFRS / SME-FRF / SME-FRS presentation for small private companies? 5. Do you understand the two milestones set and do you agree with proposed structure?