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Auditing Public Relations Services: Key Issues, Procedures and Evidence for Hong Kong Auditors
Industry-specific audit considerations, tailored procedures, and evidence points for Hong Kong audit teams.
Industry Overview
Last updated: 16 September 2026
Public relations (PR) businesses commonly combine retained advisory work, campaign delivery, media relations, content production, event coordination and pass-through spending on behalf of clients. Their contracts can be short, renewable or highly bespoke, so the audit team should understand the underlying service promises, commercial terms, project workflow and how those features are reflected in the accounting records.
This article is general technical education for Hong Kong auditors. It highlights risk areas, procedures and evidence that may be relevant when applying professional judgment under current HKFRS and HKSA requirements; the nature, timing and extent of work should remain responsive to the facts, assessed risks and controls of each engagement.
Key Audit Issues
Revenue recognition for mixed PR service arrangements
A single engagement may include strategy, campaign management, media outreach, creative content, events and reporting. Under the HKFRS 15 model, consider whether the contract exists, which promised services are distinct performance obligations, how consideration is allocated and whether revenue is recognised over time or at a point in time as each obligation is satisfied.
Variable fees, discounts and scope changes
Success fees, volume rebates, cancellation charges, client-approved change orders and negotiated credits can affect the transaction price and cut-off. The risk increases where commercial teams agree changes informally or where estimated consideration depends on future campaign results or client acceptance.
Principal–agent assessment for third-party media and suppliers
PR firms may arrange advertising placements, influencer activity, production, venues or other services provided by third parties. The accounting may depend on the entity’s specified promise and whether it controls the relevant good or service before transfer to the client; a gross-versus-net presentation conclusion should be supported by the contractual and operational facts.
Project cut-off, work in progress and contract balances
Year-end campaigns may be partly delivered, billed in advance or completed shortly after the reporting date. Auditors should focus on whether the entity has transferred the promised service, whether an unbilled balance is appropriately classified, and whether deferred income or accrued costs capture work not yet completed.
Receivables, recoverability and management bias
Client disputes over deliverables, late campaign approvals, economic pressure on customers and concentration in a small client base can affect expected cash collection. These conditions may also create incentives to accelerate revenue or defer credits, requiring a fraud-aware risk assessment and attention to the estimate for expected credit losses.
Tailored Audit Procedures
Walk through the contract-to-cash process
Select representative retainer, project and event-management engagements and trace them from signed proposal or contract through project setup, delivery records, billing, general-ledger posting and cash receipt. Identify the systems, personnel, approvals and information used to recognise revenue and record related contract balances.
Test contract terms and the revenue conclusion
For selected contracts, inspect the scope, pricing, acceptance, cancellation, change-order and third-party supplier terms. Reperform management’s identification of performance obligations, transaction price and allocation where applicable, and assess whether the stated timing of revenue recognition is consistent with the documented service promise.
Substantiate service delivery and progress
For sampled revenue, inspect evidence tailored to the work performed, such as approved strategy papers, campaign calendars, media placement reports, published content, client approvals, event run sheets, post-campaign reports and project-manager time or milestone records. Corroborate internally generated evidence with client correspondence or third-party records where appropriate.
Perform focused cut-off testing
Test revenue recorded immediately before and after year-end to underlying contracts, deliverables, invoices, credit notes and subsequent client communications. Review incomplete campaign schedules and post-year-end activity for indicators that revenue was recognised before the relevant obligation was satisfied or that a refund, credit or deferral was required.
Evaluate third-party pass-through expenditure
For selected media, production, influencer or event costs, inspect supplier agreements, purchase orders, invoices and evidence of delivery. Compare the entity’s role and exposure under the arrangements with its gross-or-net revenue presentation, and test whether accrued liabilities and recharges are complete and recorded in the appropriate period.
Test receivables and estimates using external and subsequent evidence
Where relevant, seek direct confirmation of selected client balances or key contract terms; for non-responses, inspect subsequent cash receipts, invoices, correspondence and other alternative evidence. Analyse aged balances, disputes, credit notes and post-year-end collections when evaluating recoverability and management’s expected-credit-loss estimate.
Controls and Evidence to Consider
Approved contract and change-management record
A central repository should retain authorised contracts, pricing schedules, amendments, client approvals and cancellation terms, with access and approval controls. This supports completeness of the contract population and provides evidence for the service scope, consideration and rights used in the revenue assessment.
Project milestone and delivery sign-off
Project teams should maintain timely, reviewable records of campaign milestones, deliverables, client acceptance and outstanding work. These records can support the recognition date or measure of progress and help distinguish earned revenue from amounts billed in advance.
Independent billing and revenue review
A finance reviewer independent of sales or project delivery should reconcile billing and revenue schedules to authorised contracts, approved changes and delivery evidence, and investigate exceptions. Retained reconciliation files, review sign-offs and documented follow-up provide evidence of the control’s operation.
Third-party spend and receivables monitoring
Periodic review of supplier commitments, unbilled or accrued campaign costs, aged receivables, disputes, credit notes and subsequent collections should be documented and escalated where necessary. Review packs, ageing analyses, supplier statements and cash-receipt reconciliations can support completeness, classification and recoverability assessments.
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