BUD Fund Audit Requirements: The Accounting Side

At a glance

Parameters are as published in the Guide to Application issued by the Trade and Industry Department and the Hong Kong Productivity Council (the implementation agent).

BUD in one section

The BUD Fund supports non-listed Hong Kong enterprises in developing branding, upgrading and sales across 48 economies, including the mainland and ASEAN. Fundable measures include exhibitions, advertising, trademark and patent registration, website and app development, and setting up online sales platforms. For applications from 14 March 2025 the matching ratio tightened from half-and-half to 1:3 (government at most 25%); from 1 July 2026 the EMF merged into BUD, so exhibition and export marketing activities formerly funded under EMF now run through Easy BUD (capped at HK$150,000 per application, one application every three months, results normally within 30 working days).

This article is not another generic application walkthrough. It covers the part an accounting firm actually gets asked about: the money and the books.

The audit question starts at application, not completion

Many applicants assume audit is a completion-stage matter. In fact it is the first gate.

Eligibility requires “substantive business operations in Hong Kong”, and under the current guide the documentary proof includes the latest audited accounts, together with MPF records of employees or sales invoices/receipts. Which means:

• If the company’s statutory audit has been left outstanding, there are no recent audited accounts to submit
• A newly formed shell with no operating track record will not clear the substantive-operations test in the first place

If you plan to apply next year, the practical preparation is to get this year’s accounts and audit in order now. Keeping the documents your accountant needs tidy year-round makes this painless.

During the project: keep a separate set of books

Once approved, treat the project as accounts-within-accounts:

1. Separate records. Project expenditure must be clearly separable from day-to-day expenses — in practice, a dedicated category in your books with each item mapped to the approved budget lines.

2. Expenditure must fall within the project period. Project accounts are prepared on an accrual basis, and expenditure counts only where the goods or services were received and delivered within the project duration. Amounts committed before commencement or incurred after completion do not count.

3. Complete documentation. Invoices, receipts, contracts and payment proof for every item — and the payer must be the applicant enterprise itself.

4. Fundable vs non-fundable. Only the specified measures in the approved budget qualify; ordinary operating costs (rent, regular payroll) are not project expenditure. Whether an expense is deductible for tax is a separate question — see what expenses are tax deductible in Hong Kong.

On completion: no audited accounts, no payout

This is the heart of the mechanism: payment is tied to the project audit.

After completion, the enterprise submits a final report plus the income and expenditure accounts of the project from commencement to completion date, audited by an independent auditor (a Hong Kong practising CPA). Under Easy BUD the guide states there is no initial payment — everything is reimbursed only once the final report and audited accounts are accepted. For general applications, the current arrangement is an initial payment of around 20% of the approved funding, with the balance likewise paid after acceptance on completion. The final report is generally due within two months of project completion (per the prevailing guide).

The good news: the audit fee itself is claimable as project expenditure — up to HK$10,000 per audit for general applications and HK$5,000 for Easy BUD, subject to the same 1:3 ratio.

Where projects go wrong — usually in the books

In practice, when expenditure is disallowed or funding is reduced or withheld, the causes are almost always bookkeeping ones:

• Expenditure dated outside the project period — disallowed in full
• Missing documentation, or invoices that do not match the approved budget lines
• Payments made from a director’s personal account or a related company — the payer is not the applicant
• Large cash payments that are hard to evidence
• Project and daily expenses mixed together, impossible to split cleanly at audit

Most of these are unfixable if discovered at completion — which is why the separate books must start on day one.

Timing: plan the project audit alongside the statutory audit

The project audit and the company’s statutory annual audit are two different audits, but they can be arranged intelligently:

• Same auditor for both: an auditor who already knows your books runs the project audit with fewer queries and lower cost
• Stagger the timing: if project completion lands in audit peak season, running both at once delays the payout — factor that in when setting the project period
• Track your headroom: the cumulative ceiling is HK$7,000,000 and 70 projects per enterprise, and the total approved funding of all ongoing projects must not exceed HK$800,000 at any one time — so back-to-back applications depend on closing projects properly, audit included

Want the books sorted before you apply?

Whether it is catching up on the audit needed for eligibility, setting up separate project bookkeeping, or arranging the completion audit — we can plan the whole sequence in one go.

Talk to us first, or get started.

This article is general information and does not constitute professional advice. The BUD Fund’s ratios, ceilings, eligibility and audit requirements are as published in the latest Guide to Application by the Trade and Industry Department and the Hong Kong Productivity Council.