Disciplinary Orders

Failure or neglect to observe, maintain or otherwise apply Hong Kong Standard on Auditing (HKSA) 240 The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements; HKSA 250 (Revised) Consideration of Laws and Regulations in an Audit of Financial Statements; HKSA 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement; HKSA 500 Audit Evidence; HKSA 505 External Confirmations; Hong Kong Standard on Assurance Engagements 3000 (Revised) Assurance Engagements Other than Audits or Reviews of Historical Financial Information; Hong Kong Standard on Quality Control 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements; Practice Note 810.1 (Revised) Licensed Insurance Broker Companies – Compliance with the Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules; Practice Note 820 (Revised) The Audit of Licensed Corporations and Associated Entities of Intermediaries; and the fundamental principle of professional competence and due care in section R113.1 under Chapter A of the Code of Ethics for Professional Accountants, and being guilty of professional misconduct.

The respondent is practising in his own name with no staff. His practice was selected for its first practice review in November 2019. The reviewer identified various significant deficiencies in the practice’s quality control system and its completed audit and compliance reporting engagements. The respondent was responsible for the quality control system and the quality of his audit and compliance reporting engagements.

Yip Wai Wing

Press release:
(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply the fundamental principle of integrity in sections 100.5(a), 110.1 and 110.2 (later amended as section 110.1A1(a) and subsections R111.1-2 of Chapter A) of the Code of Ethics for Professional Accountants (Code of Ethics), the fundamental principle of professional competence and due care in sections 100.5(c) and 130 (later amended as section 110.1A1(c) and subsection 113 of Chapter A) of the Code of Ethics, Hong Kong Standard on Quality Control 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, Hong Kong Standard on Auditing (HKSA) 500 Audit Evidence, and HKSA 505 External Confirmations.

The respondent was the sole proprietor of a firm. In 2020, the Institute’s practice review on the firm found that the respondent reported false information in the self-assessment questionnaire, created working papers in reaction to the practice review, and issued audit reports in a large number of audit engagements in which he performed no or minimal audit work. In addition, the practice review found significant inadequacies in the firm’s quality controls over human resources, engagement performance and compliance with ethical requirements. Furthermore, the reviewers found significant deficiencies in two audit engagements of the firm that were selected for review.

1.  Jimmy Siu 
2.  Yip Kai Yin
3.  Elite Partners CPA 

Limited

Press release:
(ENG)
(CHI)

Failure or neglect by the 1^st and the 3^rd respondents to observe, maintain or otherwise apply Hong Kong Standard on Auditing (HKSA) 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Hong Kong Standards on Auditing, HKSA 500 Audit Evidence, and HKSA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures. Failure or neglect by the 2^nd respondent to observe, maintain or otherwise apply HKSA 220 Quality Control for an Audit of Financial Statements.

The 3^rd respondent expressed an unmodified auditor’s opinion on the consolidated financial statements of a Hong Kong listed company and its subsidiaries for the year ended 31 March 2017. The 1^st respondent was the engagement director and the 2^nd respondent was the engagement quality control reviewer of the audit.

Costs:
HK$258,871.65

 1.   Cheng Hong Cheung
 2.   Chan Shek Chi

 3.   Cheng & Cheng   

       Limited

The 3^rd respondent expressed an unmodified auditor’s opinion on the consolidated financial statements of a Hong Kong listed company and its subsidiaries (collectively Group) for the year ended 31 December 2014. The 1^st respondent was the engagement director and the 2^nd respondent was the engagement quality control reviewer of the audit.

The Group acquired a business during the year and settled part of the purchase consideration by issuing the Company’s shares. Some of those shares were held in escrow and would be released to the vendors upon an agreed profit target being met. The Group recognised certain software and customer relationships acquired as intangible assets.

In the audit, the respondents failed to identify the Group’s incorrect accounting for the shares held in escrow as equity, when they should have been accounted for as a liability under Hong Kong Accounting Standard 32 Financial Instruments: Presentation. Furthermore, the Respondents failed to perform sufficient audit procedures to assess sales forecasts and certain other assumptions that supported the valuing of the shares and intangible assets.

Costs:
HK$805,616

A follow-up practice review visit on the Respondent's practice found that he failed to address deficiencies identified in the initial practice review. The audit deficiencies related to obtaining evidence for a number of material items in the financial statements, obtaining management's representation letter and preparing documentation.

Reprimand

Cancellation of practising certificate with no issuance of a practising certificate for 12 months effective 18 May 2022

 
Penalty:

HK$50,000

 
Cost:
HK$55,000

Order and Reasons For Decision

7 April 2022

1.   Zenith CPA Limited

2.   Cheng Po Yuen

3.   Yam Wai Man

Failure or neglect by the 1^st and the 2^nd respondents to observe, maintain or otherwise apply Hong Kong Standard on Auditing (HKSA) 200 (Clarified) Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Hong Kong Standards on Auditing, HKSA 260 (Clarified) Communication with Those Charged with Governance; and HKSA 500 Audit Evidence. Failure or neglect by the 3^rd respondent to observe, maintain or otherwise apply HKSA 220 (Clarified) Quality Control for an Audit of Financial Statements. 

The 1^st respondent expressed unmodified auditor’s opinions on the consolidated financial statements of a Hong Kong listed company, and its subsidiaries for the financial years ended 30 April 2014 and 2015.  The 2^nd respondent was the engagement director and the 3^rd respondent was the engagement quality control reviewer of the audits.

Costs:
HK$397,815

1.  Chan Wai Dune,         

     Charles

2.  Teh Delores Eng-Hua

3.  Yau Hok Hung

4.  CCIF CPA Limited

Press release:
(ENG)
(CHI)

The 4^th respondent expressed unmodified auditor’s opinions on the consolidated financial statements of a Hong Kong listed company and its subsidiaries for each of the years ended 31 December 2005, 2006 and 2007. The 1^st, 2^nd and 3^rd respondents were the

engagement directors of the 2005, 2006 and 2007 audits, respectively.

There were deficiencies found in one or more of the audits, which included failures to carry out audit planning and risk assessment on revenue, to properly evaluate evidence of revenue obtained from certain parties who had apparently acted only as agents for ultimate customers, and to assess the impact of the main customer’s recurring non-response to audit confirmation requests sent to it. In addition, the audit team failed to ensure the completeness of population of revenue from which samples were drawn for testing, and to adequately document certain audit procedures performed.

Reprimand

Penalty:
1^st respondent
HK$200,000

2^nd respondent
HK$150,000

3^rd respondent 
HK$150,000

4^th respondent
HK$300,000

Costs:
HK$493,881

(including FRC costs)

Decision

Decision and Order on Sanctions and Costs

Failure or neglect to observe, maintain or otherwise apply
Hong Kong Standard on Quality Control 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, the fundamental principle of professional competence and due care in sections 100.5(c) and 130.1 of the Code of Ethics for Professional Accountants, and guilty of professional misconduct.

The respondent operates a part-time practice in her own name. A first practice review of the practice in February 2018 identified multiple deficiencies in its quality control system, and the respondent’s adoption of a flawed audit methodology which demonstrated her lack of professional competence and due care.

Order:
Cancellation of  practising certificate with no issuance of a practising certificate for 36 months effective 8 April 2022
 
Penalty:
-

Costs:
HK$150,000

Reasons for Decision

Decision on Sanctions and Costs

Failure or neglect to observe, maintain or otherwise apply the fundamental principle of integrity in section 100.5(a) and as elaborated under section 110 of the Code of Ethics for Professional Accountants (Code of Ethics), the fundamental principle of professional competence and due care in section 100.5(c) and as elaborated under section 130 of the Code of Ethics, Hong Kong Standard on Quality Control 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, Hong Kong Standard on Auditing (HKSA) 220 Quality Control for an Audit of Financial Statements, HKSA 230 Audit Documentation, HKSA 240 The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, HKSA 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment; HKSA 330 The Auditor’s Responses to Assessed Risks and HKSA 500 Audit Evidence, and being guilty of professional misconduct.

The respondent practices in his own name. An initial practice review in 2018 found deficiencies in the practice’s audit engagements and quality control system. In 2019, a follow-up practice review was conducted to evaluate if the respondent had appropriately addressed the findings. During that review, the reviewer found significant deficiencies in the practice’s audit engagements and monitoring review procedures in its quality control system again. Furthermore, the reviewer found that the respondent provided, as he had done in the initial practice review, an incomplete client list and false and misleading answers in the electronic self-assessment questionnaire.

 1.  Ang Wing Fung

 2.  Chan Kam Wah

Press release:
(ENG)
(CHI)

W. Falcon Asset Management (Asia) Limited (Falcon) was a licenced corporation under the Securities and Futures Ordinance, which carried out regulated activities. In 2019, the Securities and Futures Commission (SFC) revoked the licence of Falcon due to its window-dressing of liquid capital and other failures, including providing the SFC with false or misleading information in its licence application and monthly financial returns.

Permanent removal from the register of CPAs  with effect from 12 April 2022

The respondent was the Chairman, Chief Executive Officer, and an Executive Director of a Hong Kong listed company. At the relevant times, he was entrusted with the management of the company’s securities investment business and was authorized to operate its securities account.

Order:
Reprimand

Cancellation of practising certificate, with no issuance of a practising certificate to him for 12 months with effect from 3 February 2022

Penalty:
HK$100,000

Costs:
HK$43,285

Order and Reasons for Decision

The respondent is the sole proprietor of a firm which audited the financial statements of a private company for the two years ended 31 March 2010 and 2011. He failed to:

 
(i)  obtain sufficient evidence to justify his concurrence with the 
     company’s adoption of the exemptions under section 141D of the
     then Companies Ordinance and the financial reporting standard
     for small and medium-sized entities as a basis of financial
     statement preparation, when the company’s holding of a
     subsidiary at the time would have disqualified it from the
     exemptions;

(ii) qualify his auditor’s opinion for a limitation of audit scope over
      provision for impairment loss on an investment;

(iii) obtain sufficient appropriate evidence to support his acceptance
       of the company’s a breach of statutory disclosure requirements
       applicable to a charge over the company’s assets that was made
       to secure banking facilities granted to a director-controlled
       entity;

(iv) segregate funds transferred to him by a shareholder (who was
       also a director) of the company, and make adequate enquiries to
       ensure the transfer complied with relevant laws and regulations;
       and

(v)  maintain professional knowledge and skill at the level required
      to ensure the company received competent professional service.

Failure or neglect by the 1^st respondent to observe, maintain or otherwise apply Hong Kong Standard Auditing (HKSA) 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Hong Kong Standards on Auditing, HKSA 230 Audit Documentation, HKSA 500 Audit Evidence, and HKSA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures. Failure or neglect by the 2^nd respondent to observe, maintain or otherwise apply HKSA 220 Quality Control for an Audit of Financial Statements.

A practice review of the respondents’ practice identified significant deficiencies in its audit of a Hong Kong listed company and its subsidiaries for the year ended 31 December 2018. The 1^st respondent was the engagement director and the 2^nd respondent was the engagement quality control reviewer in the audit.

The deficiencies were in respect of audit procedures carried out on impairment assessment of intangible assets, which comprised technological know-how, a distribution vending system, and deferred development costs for patents.

Order:
Reprimand
 
Penalty:
1^strespondent
HK$100,000

Hui Mei Sum, Virginia Ann

Press release:
(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply the Hong Kong Standard on Quality Control 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, Hong Kong Standard on Auditing (HKSA) 230 Audit Documentation, HKSA 500 Audit Evidence, HKSA 700 Forming an Opinion and Reporting on Financial Statements, HKSA 705 Modifications to the Opinion in the Independent Auditor’s Report, the fundamental principle of professional competence and due care in sections 100.5(c) and 130.1 of the Code of Ethics for Professional Accountants, and being guilty of professional misconduct.

The respondent is the sole director of a practice. An initial practice review conducted on the practice revealed a number of significant deficiencies in its quality control system, and in three audit engagements in which inadequate procedures were performed on sponsorship income, construction contracts and sales and administration expenses. The respondent also failed to deal with the implications of  a limitation of audit scope. Furthermore, the respondent was negligent in supervising her staff and managing the practice’s engagements, resulting in multiple submissions of inaccurate client lists of the practice during the practice review.

Order:
Reprimand

Mok Ching Ho

Press release:
(ENG)
(CHI)

The Institute received referrals from the Financial Reporting Council (FRC) about deficiencies in the audits. For both years, the audit team failed to perform sufficient audit procedures and prepare adequate documentation in relation to provision for inventories and revenue from sales of goods. Further, the audit team failed in the 2011 audit to obtain sufficient evidence and prepare adequate documentation on revenue from contract variations and claims and relevant expenses, and on share-based payments made to the Group’s personnel.

Costs:
HK$3,635,673.70

1.  KPMG

2.  Yu Yuk Ping, June

3.  Yu Wai Sum

(i) Failure or neglect by the 1^st  and 2^nd respondents to observe, maintain or otherwise apply Hong Kong Standard on Auditing (HKSA) 200 Objective and General Principles Governing an Audit of Financial Statements, HKSA 230 Audit Documentation, HKSA 240 The Auditor’s Responsibilities to Consider Fraud in an Audit of Financial Statements, HKSA 500 Audit Evidence, HKSA 505 External Confirmations, HKSA 520 Analytical Procedures and HKSA 530 Audit Sampling and Other Means of Testing; (ii) Failure or neglect by the 1^st and 3^rd respondents to observe, maintain or otherwise apply HKSA 500 Audit Evidence, HKSA 505 External Confirmations and HKSA 530 Audit Sampling and Other Means of Testing.

The 1^st respondent was the reporting accountant for a company in 2009, and in that capacity, audited the financial information of the company and its subsidiaries (together Group) for the years ended 31 December 2006, 2007, 2008 and the six months ended 30 June 2009 (IPO Engagement).  The 1st Respondent also audited the Group’s financial statements for the year ended 31 December 2009 (2009 Audit). The 2^nd and 3^rd respondents were the engagement partners for the IPO Engagement and the 2009 Audit respectively. The Group was engaged in purchasing and planting forests and related businesses.

The Institute received a referral from the Financial Reporting Council (FRC) about irregularities in the IPO Engagement and 2009 Audit. There were deficiencies in the evidence obtained and documentation compiled in the IPO Engagement in respect of the reliability of logging permits, existence of certain customers, completeness of sales, occurrence and completeness of expenses for logging activities, existence and ownership of plantation assets, and effectiveness of the Group’s controls over cash and cash equivalents. For the 2009 audit, deficiencies were found in the evidence obtained on the completeness of sales, and existence and ownership of plantation assets.

Order:
Reprimand

Practising certificate be cancelled and no practising certificate shall be issued for 10 months

Penalty:
-
 
Costs:
HK$111,134

Order and Reasons for Decision

Corrigendum

Failure or neglect to observe, maintain or otherwise apply the fundamental principle of integrity under sections 110.1 A1(a), R110.2, and R111.2 under Chapter A of the Code of Ethics for Professional Accountants.

The respondent provided copies of two medical certificates purportedly issued by a hospital in support of her sick leave applications to her employer. The employer subsequently discovered that the medical certificates were not issued by the hospital and the respondent had not attended the hospital or any of its polyclinics. The employer referred the matter to the Institute. The respondent was not very cooperative with the Institute during its investigation.

Ng Ka Hong

Failure or neglect to observe, maintain or otherwise apply Hong Kong Standard on Auditing 220 Quality Control for an Audit of Financial Statements.

The respondent was the engagement quality control reviewer (EQCR) for the audit of the consolidated financial statements of a Hong Kong listed company and its subsidiaries for the year ended 31 December 2014, and the audit of the company’s balance sheet as at that date.

There were audit deficiencies in the impairment review of significant amounts due by certain subsidiaries and on two convertible bonds issued by the listed group to settle certain existing liabilities. As EQCR, the respondent failed to adequately evaluate the audit team’s judgements and conclusions reached in those areas.

Order:
Reprimand

Penalty:
HK$150,000
 
Costs:
HK$100,222

1. KPMG

2. Fung Kwong Ming

3. Wong Sau Ling

4. Tse Hau Yin, Aloysius

Failure or neglect to observe, maintain or otherwise apply Statement of Auditing Standards (SAS) 100 Objective and General Principles Governing an Audit of Financial Statements, SAS 230 Audit Documentation, SAS 300 Audit Risk Assessments and Accounting and Internal Control Systems, SAS 400 Audit Evidence, SAS 440 Representations by Management and SAS 460 Related Parties.

The 1^st respondent expressed unqualified auditor’s opinions on the financial statements of a Hong Kong listed company and its subsidiaries for the three years ended 31 March 1999, 2000 and 2001. The 2^nd respondent was the engagement partner in the 1999 audit and the 3^rd respondent was the engagement partner in the 2000 and 2001 audits. The 4^th respondent was the concurring review partner in the audits for the three years.

Audit deficiencies were found in the areas of the listed group’s prepayment of subcontracting charges, trade receivables, other receivables and PRC tax exposures.

Penalty:

1^st respondent
HK$400,000

2^nd respondent
HK$100,000

1.  Hsu Yuk King, Mercedes

2.  Kwong Kam Kwan, Alex

Press release:
(ENG)
(CHI)

Costs:
1^st Respondent
HK$63,141

The respondent is the sole proprietor of a practice. The first practice review conducted on the practice identified significant deficiencies in its system of quality control and in a number of its audit engagements. In addition, the respondent was found to have provided untrue answers in the self-assessment questionnaire, made false representations to the practice reviewer and retrospectively created documents in an attempt to support his false representations.

Guilty of professional misconduct and dishonourable conduct.

The respondent was a CPA practising full-time in her own name. The Institute was unable to carry out a practice review on her due to her continuous non-cooperation and failure to submit documents required for the review. Copies of a Practice Review Committee direction mailed to her registered addresses were all returned unclaimed. The respondent’s failure to maintain a valid registered office address as required under section 31(1) of the Professional Accountants Ordinance would amount to a criminal offence. 

Order:

Reprimand

Removal from the register of CPAs for three years with effect from 27 April 2021

Penalty:
-
 
Costs:
HK$66,051.50

Order and Reasons for Decision

Chui Yiu Hang

The respondent was convicted in the Magistrates’ Court in June 2019 of the offence of committing an act outraging public decency. He was sentenced to imprisonment.

Chung Chi Hang

Press release:
(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply Hong Kong Standard on Auditing (HKSA) 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Hong Kong Standards on Auditing, HKSA 230 Audit Documentation, HKSA 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment, HKSA 330 The Auditor’s Responses to Assessed Risks, HKSA 500 Audit Evidence, HKSA 505 External Confirmations and the fundamental principle of Professional Competence and Due Care in sections 100.5(c) and 130 of the Code of Ethics for Professional Accountants.

The respondent audited the financial statements of five private companies for the year/period ended 31 December 2017 and expressed an unmodified auditor’s opinion in each of those audits. Deficiencies were found in the audit procedures performed in verifying revenue and costs, accepting bank confirmations, and following up on a lack of response to confirmation requests sent to the companies’ customers and suppliers.

Reprimand

No practising certificate shall be issued for 12 months

Penalty:
-

Costs:
HK$107,443

Extract of Reasons and Order

Corrigendum

The respondent is the sole proprietor of a practice. He is responsible for the practice‘s quality control system and the quality of its audit engagements. In 2015, the practice was subject to an initial practice review which identified deficiencies in its quality control system and an audit engagement selected for review.

A follow-up practice review carried out in 2017 found a number of deficiencies, some of which were the same as or similar to those found at the initial review. The deficiencies concerned audit procedures performed on turnover, expenses and accounts receivable, and the respondent’s failure to evaluate the impact of a repeated audit scope limitation on the practice's acceptance of reappointment as auditor. In addition, the respondent failed to establish and maintain an adequate system of quality control to address effective monitoring, independence threats arising from the practice’s provision of accounting services to audit clients, client acceptance and continuance, and engagement performance. Further, in the self-assessment questionnaire that the respondent submitted for the practice review, he provided false or misleading answers on the quality control policies and procedures of the practice.

Reprimand

Practising certificate be cancelled and no practising certificate shall be issued for 20 months

Penalty:
HK$50,000
 
Costs:
HK$164,448

Reasons for Decision

Decision on Sanctions and Costs

1. Zenith CPA Limited

2. Cheng Po Yuen

3. Keung Yee Man

The Institute received referrals from the Financial Reporting Council about deficiencies in the audit. The audit team failed to perform sufficient audit procedures and prepare adequate documentation in relation to the classification, recognition and measurement of certain convertible bonds and notes, convertible cumulative preference shares and share options. There were also deficiencies in audit procedures and documentation regarding the accounting treatment of a subsidiary in which the company’s equity interest was below 50%, the preferred shares issued by the subsidiary and the related cumulative dividends.  In addition, the audit procedures and documentation on assessing the Group’s ability to continue as a going concern were inadequate.

Reprimand

Penalty:
1^st Respondent

HK$150,000

2^nd Respondent
HK$150,000

Kwok Kam Piu

Press release:
(ENG)
(CHI)

The respondent audited a private company’s financial statements for two consecutive years. He failed to obtain sufficient appropriate evidence, perform adequate risk assessment and prepare adequate documentation in a number of audit areas.  Those areas were the company’s balances with its directors and shareholders, management fee expense, related party transactions, and a material amount of dividends paid. The audit deficiencies demonstrated the respondent’s failure to exercise adequate professional skepticism, maintain the required level of professional knowledge and skill, and act diligently and in accordance with applicable professional standards.

Reprimand

Penalty:
HK$50,000

Costs:

HK$116,962

Extract of Reasons and Order

Failure or neglect to observe, maintain or otherwise apply Hong Kong Standard on Auditing (HKSA) 230 Audit Documentation, HKSA 500 Audit Evidence, HKSA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures; and the fundamental principle of professional competence and due care in sections 100.5(c) and 130.1 of the Code of Ethics for Professional Accountants.

In April 2019, the Institute completed a practice review on a corporate practice that is now de-registered. The review covered the practice’s audit of the 2017 consolidated financial statements of a Hong Kong listed company and its subsidiaries. Wong was the engagement director of the audit.  The practice review found significant audit deficiencies relating to the valuations of an investment in an associate acquired, convertible notes issued as consideration for the acquisition, and certain share options granted by the company.

Order:
Reprimand

Penalty:
HK$80,000

Costs:
HK$89,386
 
Extract of Reasons and Order

The Institute completed a practice review on a corporate practice that is now de-registered. The review covered the practice’s audit of the 2017 consolidated financial statements of a Hong Kong listed company and its subsidiaries. Ng was the engagement quality control reviewer of the audit.

The practice review found significant audit deficiencies relating to the valuations of an investment in an associate acquired and convertible notes issued as consideration for the acquisition.  Ng failed to adequately evaluate the audit team’s judgements and conclusions in those areas and review selected audit documentation, as required under Hong Kong Standard on Auditing 220 Quality Control for an Audit of Financial Statements.

Order:
Reprimand

Penalty:
HK$120,000

Costs:
HK$39,004

Extract of Reasons and Order

1. Wong On Yee

2. CWC CPA Limited

Press release:
(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply Hong Kong Standard on Auditing (HKSA) 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Hong Kong Standards on Auditing, HKSA 230 Audit Documentation, HKSA 500 Audit Evidence, HKSA 560 Subsequent Events and Hong Kong Standard on Assurance Engagements 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information. Refusal or neglect to comply with the Corporate Practices (Registration) Rules. Further, the respondents have been guilty of professional misconduct.

The respondents were the auditor of a licensed corporation under the Securities and Futures Ordinance for each of the three years ended 31 March 2015 to 2017. The 2^nd respondent expressed unmodified auditor’s opinions on the company’s financial statements for each of the three years, and unqualified conclusions on the compliance reports on the company for each of the three years. The 1^st respondent was the engagement director in those audit and compliance reporting engagements.

There were various deficiencies identified in the audit and compliance reporting engagements throughout the three years in question.

Reprimand

1^st Respondent

Practising certificate be cancelled and no practising certificate shall be issued for 12 months

Penalty:

HK$200,000 (paid by the two respondents jointly)

Costs:

HK$73,428 (paid by the two respondents jointly)

Extract of Reasons and Order

Order:
Removal from the register of CPAs for one year with effect from 5 October 2020 

Penalty:
-

Cost:
HK$64,012

Extract of Reasons and Order

Failure or neglect to observe, maintain or otherwise apply the fundamental principle of professional competence and due care in sections 100.5 (c) and 130 of the Code of Ethics for Professional Accountants, and Hong Kong Standard on Quality Control 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements.

Ng was the sole practising director of a CPA practice and was responsible for its quality control system. The practice was selected by the Institute for practice review in 2016.

Multiple breaches of auditing standards were found in two audit engagements selected for the review. The breaches show that Ng did not carry out the audits with the level of professional competence and due care expected of him.  In addition, the breaches show that the practice failed to have an adequate system of quality control to ensure that it had appropriate human resources to uphold audit quality and that it performed audit engagements in accordance with professional standards.

Reprimand

Practising certificate be cancelled and no practising certificate shall be issued for 16 months 

Decision

1. Fung Pui Cheung

2. Lee Ping Kai

3. Pan-China (H.K.) CPA Limited

The 3^rd respondent audited the consolidated financial statements of a Hong Kong listed company and its subsidiaries for the years ended 31 March 2011 and 2012. The 1^st respondent was the engagement director in 2011 and the 2^nd respondent was the engagement director in 2012.

Reprimand

Penalty:

1^st Respondent
HK$220,000

2^nd Respondent
HK$150,000

Hong Kong Standard on Quality Control 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, Hong Kong Standard on Auditing (HKSA) 500 Audit Evidence, HKSA 705 Modifications to the Opinion in the Independent Auditor’s Report,section 410.52 of the Code of Ethics for Professional Accountants (Code of Ethics), and the fundamental principle of professional competence and due care in sections 100.5(c) and 130.1 of the Code of Ethics.

The Institute conducted a follow-up practice review on the respondent’s sole proprietor practice. The review revealed that a number of deficiencies identified in the initial practice review had not been appropriately addressed. It also identified new significant audit deficiencies. The findings reflected the respondent’s failure to maintain an adequate quality control system for the practice, and raised concerns about the quality of the practice’s audit engagements and the professional competence of the respondent.

Order:
Reprimand

1. Yip Kai Yin

2. Ng Man Chung, Siman

3. Elite Partners CPA Limited

Failure or neglect by the 1^st and 3^rd respondents to observe, maintain or otherwise apply Hong Kong Standard on Auditing (HKSA) 500 Audit Evidence, HKSA 510 Initial Audit Engagements – Opening Balances, HKSA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures and HKSA 710 Comparative Information – Corresponding Figures and Comparative Financial Statements. Failure or neglect by the 2^nd respondent to observe, maintain or otherwise apply HKSA 220 Quality Control for an Audit of Financial Statements. Further, the Respondents were guilty of professional misconduct.

The 3^rd respondent was newly appointed as auditor which expressed an unmodified auditor’s opinion on the consolidated financial statements of a listed group for the year ended 30 June 2012. The 1^st respondent was the engagement director and the 2^nd respondent was the engagement quality control reviewer.

Reprimand

1^st Respondent
Practising certificate be cancelled and no practising certificate shall be issued for nine months

2^nd Respondent
Practising certificate be cancelled and no practising certificate shall be issued for six months

Penalty:
1^st Respondent
HK$50,000

2^nd Respondent
HK$50,000

3^rd Respondent
HK$100,000

Costs:
HK$247,577.10
(including FRC costs)(jointly paid by the respondents) 
 
Extract of Reasons and Order

Costs order

1. Yuen Suk Ching

2. Leung Tai Keung

The respondents were partners of a deregistered firm which audited the consolidated financial statements of a Hong Kong listed group for the years ended 30 June 2008 to 2010. The 1^st respondent was the engagement partner and the 2^nd respondent was the engagement quality control reviewer.

1^st Respondent
Practising certificate be cancelled and no practising certificate shall be issued for 36 months

2^nd Respondent
Reprimand

Payment of penalty of HK$100,000

Costs:
HK$350,000
(including FRC costs) paid by the two respondents jointly
 
Reasons for Decision

the fundamental principles of integrity, and professional competence and due care in sections 100.5(a), 100.5(c), 110.2 and 130.1 of the Code of Ethics for Professional Accountants; Hong Kong Standard on Assurance Engagements 3000 (Revised) Assurance Engagements Other than Audits or Reviews of Historical Financial Information and Related Conforming Amendments; Hong Kong Standard on Auditing (“HKSA”) 500 Audit Evidence, HKSA 600 Special Consideration - Audits of Group Financial Statements (Including the Work of Component Auditors), HKSA 700 Forming an Opinion and Reporting on Financial Statements; and Hong Kong Standard on Quality Control 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements.

The respondent was the former managing director of the practice and responsible for its quality control system. A practice review of the practice found that the respondent colluded with a client to backdate an auditor’s report in order to mislead the Inland Revenue Department.

Reprimand

Law Kwong Wah

The Institute completed a practice review on a practice of which the respondent was the sole proprietor. The review identified significant deficiencies in the practice’s quality control system and two audit engagements reviewed by the practice reviewer.

Reprimand

Hu Chiu Lun, Alan

The respondent was practising in his own name and was responsible for his practice’s quality control system and the quality of its audit engagements.

In a follow-up practice review, the reviewer found that the practice failed to rectify the deficiencies previously identified in the first practice review. Significant deficiencies were also found in procedures conducted on revenue recognition, external confirmations and forming the auditor’s opinion in the practice’s audit of a private company. In addition, the respondent knowingly misrepresented to the reviewer that certain working papers were prepared, and documented procedures performed, before the auditor’s report was issued.

Reprimand

Reprimand

2. Ho Yiu Hang, Ricky

3. Asian Alliance (HK) CPA Limited

The 3^rd respondent audited the consolidated financial statements of a listed Group for the years ended 30 June 2011 and 2012. The 1^st respondent was the engagement director and the 2^nd respondent was the engagement quality control reviewer.

The respondents failed to identify incorrect classification and measurement of a contingent consideration payable by the Group in one of its acquisitions. In addition, the Respondents failed to perform sufficient audit procedures and prepare adequate documentation in respect of assessing impairment of goodwill and intangible assets arising from the Group’s acquisitions.

Reprimand

Ng Tsz Wing

Press release:

(ENG)

(CHI) 

Order:
Practising certificate be cancelled and no practising certificate shall be issued for four months

Penalty:
-
 
Costs:
HK$55,477

Extract of Reasons and Order

The 2^nd respondent audited the consolidated financial statements of a listed group for the year ended 31 December 2015. The 1st respondent was the engagement director.

The 2^nd respondent undertook a review of the listed group’s preliminary announcement of its final results for the financial year. The published announcement contained an incorrect statement that the auditor had agreed the financial figures included in the announcement with those in the listed group’s consolidated financial statements.

Reprimand

Penalty:

1^st respondent

HK$35,000

2^nd respondent

HK$50,000

Costs:

All respondents

HK$93,078

The 1^st respondent expressed unmodified auditor’s opinions on the consolidated financial statements of a Hong Kong listed company and its subsidiaries for the nine months ended 31 December 2002 and for the year ended 31 December 2003. The 2^nd respondent was the engagement partner of the audits.

Reprimand

Penalty:

1^st respondent

HK$350,000

2^nd respondent

HK$100,000

Costs:

All respondents jointly

HK$184,690

1. Ho Pak Tat

2. Yuen Suk Ching
3. HLM CPA Limited

Press release:

(ENG)

(CHI)

The 3^rd respondent expressed an unmodified auditor’s opinion on the consolidated financial statements of a Hong Kong listed company and its subsidiaries for the year ended 31 March 2015. The 1^st respondent was the engagement director and the 2^nd respondent was the engagement quality control reviewer.

Order:

Reprimand

Penalty:

1^st respondent

HK$50,000

2^nd respondent

HK$100,000

3^rd respondent

HK$100,000

Costs:

All respondents

HK$99,269

Extract of Reasons and Order

The respondent was the sole practising director of a corporate practice (now de-registered). The corporate practice expressed an unmodified auditor’s opinion on the consolidated financial statements of a Hong Kong listed company and its subsidiaries for the year ended 31 December 2014.

The group failed to correctly account for a deferred payment arrangement in a prior-year sale and this affected the opening balances and comparative information in the 2014 financial statements.

Reprimand

Penalty:

HK$100,000

Costs:

HK$59,374.20 (including FRC costs)

2. Leung Ka Fai
3. Yip Leung & Co.

Press release:

Failure or neglect by the 3^rd respondent to observe, maintain or otherwise apply Hong Kong Standard on Quality Control 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements.

The 3^rd respondent was the auditor of a private company from 2009 to 2016. The 1^st respondent was the engagement partner from 2009 to 2013. The 2^nd respondent was the engagement partner from 2014 to 2016 while the 1^st respondent acted as the engagement quality control reviewer in those audits.

Reprimand

Penalty:

1^st respondent

HK$120,000

2^nd respondent

HK$120,000

3^rd respondent

HK$100,000

Costs:

All respondents jointly

HK$44,866

2. Chan Wai Ling

Failure or neglect by the 1^st and 2^nd respondents to observe, maintain or otherwise apply HKSA 220 Quality Control for an Audit of Financial Statements and the fundamental principle of Professional Competence and Due Care in sections 100.5(c) and 130.1 of the Code of Ethics for Professional Accountants.

The 1^st respondent was the sole proprietor of a firm (now de-registered) which audited the consolidated financial statements of a Hong Kong listed company and its subsidiaries for the year ended 31 December 2013 and expressed an unmodified auditor’s opinion. The 2^nd respondent was the engagement quality control reviewer (EQCR) of the audit.

The listed group entered into a sale transaction which allowed the buyer to settle the payment by interest-free instalments over 10 years. The Group did not correctly account for the arrangement as a financing transaction under Hong Kong Accounting Standard 18 Revenue.

Order:

Reprimand

1^st respondent

No practising certificate shall be issued for two years

Penalty:

2^nd respondent

HK$50,000

Costs:

1^st respondent

HK$80,568.50

2^nd respondent

HK$25,648.50

1^st and 2^nd respondents equally

HK$20,095.60 (being costs of FRC)

Reasons for decision

2. Ho Yiu Hang, Ricky

Failure or neglect by the 2^nd respondent to observe, maintain or otherwise apply HKSA 220 Quality Control for an Audit of Financial Statements.

Failure or neglect by the 1^st and 2^nd respondents to observe, maintain or otherwise apply sections 100.5(c) and 130.1 of the Code of Ethics for Professional Accountants.

The 3^rd respondent audited the consolidated financial statements of a Hong Kong listed company and its subsidiaries for the year ended 31 May 2011. The 1^st respondent was the engagement director and the 2^nd respondent was the engagement quality control reviewer of the audit.

The listed group held interests in a company which had acquired several dairy farms in New Zealand. The request for the local authority’s retrospective consent to the acquisition of the dairy farms was refused, and hence the farms were subject to a risk of compulsory disposal by court order. In their audit, the respondents failed to address the potential impact of the matter on the investment, and failed to evaluate whether proper disclosures about the matter had been made in the financial statements.

Order:

Reprimand
 
Penalty:
HK$150,000 (paid by the three respondents jointly)

Costs:
HK$221,501
(including FRC costs) (paid by the three respondents jointly) 

Extract of Reasons and Order

1.HLB Hodgson Impey Cheng Limited
2.Yu Chi Fat

3.Shek Lui

Press release:
(ENG)
(CHI)

 

The 1st respondent audited the consolidated financial statements of a Hong Kong listed company and its subsidiaries for the year ended 30 June 2013. The 2nd respondent was the engagement director and the 3rd respondent was the engagement quality control reviewer of the audit.

Penalty:
HK$60,000 (paid by the three respondents jointly)

Wong Yuk Ming, Aaron

Press release:

(ENG)

(CHI)

Failure or neglect to observe, maintain or otherwise apply sections 100.5(a), 100.5(c), 110.1 and 130.1 of the Code of Ethics for Professional Accountants, HKSQC 1 and being guilty of professional misconduct.

The respondent was the sole proprietor of a firm which was selected by the Institute for its first practice review in August 2017.

Reprimand

Practising certificate (PC) be cancelled and no PC shall be issued to him for 18 months

Penalty:
HK$50,000

Costs:
HK$47,642

Extract of Reasons and Order

Failure or neglect to observe, maintain or otherwise apply Hong Kong Standard on Auditing 220.

The respondent was the engagement quality control reviewer in an audit of the consolidated financial statements of a listed company and its subsidiaries. A practice review identified significant audit deficiencies in the areas of impairment assessment of investment property and prepayments of production expenses. The respondent failed to perform an effective engagement quality control review to evaluate the significant judgements made and conclusions reached by the audit team.

Order:
Reprimand

Mo Kong Fung

The respondent is the sole proprietor of his practice. He was responsible for the practice's quality control system and the quality of its audit engagements.

Reprimand

No practising certificate shall be issued to him for 2 years

The 1st respondent is the sole proprietor of the 2nd respondent which issued an unmodified auditor's opinion on the consolidated financial statements of a Hong Kong listed company and its subsidiaries for the year ended 30 June 2015.

The company’s financial statements disclosed basic and diluted loss per share that incorrectly included profits attributable to non-controlling interests. In addition, the diluted loss per share wrongly took into account potential ordinary shares which had an anti-dilutive effect. As a result of the errors, there was non-compliance with Hong Kong Accounting Standard 33 Earnings Per Share. In their audit, the respondents failed to identify the incorrect amounts of loss per share disclosed in the financial statements.

The respondent was the financial controller, company secretary and compliance officer of a Hong Kong listed company. In those positions, the respondent had a statutory obligation to ensure that the company complied with the relevant disclosure requirements under the Securities and Futures Ordinance (Cap. 571) (SFO).

In August 2012, the company announced its interim results and stated that it expected significant growth and increasing profitability in the second half of the year. However, the company's full year results announcement in March 2013 revealed that performance had in fact deteriorated significantly. The company had therefore breached the relevant disclosure requirements by not issuing any profit warning announcement in the intervening period.

The Market Misconduct Tribunal found that the respondent was reckless in failing to ensure the company's timely disclosure, and that he failed to put in place a system to enable the timely identification and disclosure of price sensitive information. The Tribunal found the respondent had breached sections 307G(2)(a) and 307G(2)(b) of the SFO and issued sanctions against him. They also recommended referring the findings to the Institute.

Failure or neglect to observe, maintain or otherwise apply the fundamental principles of (i) integrity under sections 100.5(a) and 110.2 of the Code of Ethics for Professional Accountants and (ii) professional behaviour under sections 100.5(e) and 150.1 of the Code; and being guilty of professional misconduct.

The respondent was appointed as the Chairman, and later re- designated as a non-executive director of a Hong Kong listed company.

In 2012, the Securities and Futures Commission filed a court action against the respondent and others for their breach of director's duties to the company. The breach concerned falsely putting forward a non-existent agreement between the company and a third party for the distribution of dividends in connection with an acquisition undertaken by the company. This caused the company to wrongly pay a dividend of RMB18,692,000 to the third party.The Court found the respondent breached his duties as a director under the GEM Listing Rules and common law, and disqualified him from being a director or involved in the management of any listed or unlisted corporation in Hong Kong for four years.

Wong Suet Fan

The Institute's practice reviewers attempted to contact the respondent through her registered contact addresses in 2016 to arrange for a practice review, but they were unable to obtain her response. However, the respondent was able to receive the Institute's documents for registration renewal which were sent to those same addresses, and successfully renewed her membership and practising certificate for 2017.

In May 2017, the Practice Review Committee of the Institute issued a direction to the respondent in respect of practice review. The respondent failed to comply with the direction and did not respond to the Institute's communications concerning the matter. 

1.Wong Wang

  Hei
2.Tsang Yiu       

  Chung

3.Lui Chi Wang

4.Deloitte

 Touche

 Tohmatsu

Press release:

(ENG)

(CHI)

Order:
Reprimand
 
Penalty:

1^st & 2^nd respondents
 HK$60,000 for each

3^rd respondent
HK$80,000

4^th respondent
HK$150,000

Costs:
HK$121,867.70
(including FRC costs) jointly paid by the respondents

Extract of Reasons and Order

 1. Chan Chant Fai
 2. Fairyield CPA 

     Limited  

Press release:
(ENG)
(CHI) 

The 2^nd Respondent audited the financial statements of a private company for the period / years ended from 31 March from 2005 to 2012. The 1^st Respondent was the engagement director.

At the time of the audits, an immediate family member of the 1^st Respondent was a director of the client company. The 1^st Respondent failed to withdraw from the audit team, resulting in a significant compromise of the independence of the audits.

Reprimand

Penalty:
HK$200,000
 
Costs:
HK$35,134
 
Extract of Reasons and Order
           

The 1st Respondent issued an unmodified auditor's opinion on the financial statements of a Hong Kong listed company for the year ended 31 December 2010. The 2nd Respondent was the engagement director and the 3rd Respondent was the engagement quality control reviewer of the audit.

Penalty:
1st Respondent
HK$250,000

2nd Respondent
HK$50,000

3rd Respondent
HK$50,000

Costs:
HK$124,914.10
(including FRC costs)

Press release:

(ENG)

(CHI)

The respondent controlled a group of companies in Hong Kong which provided trust and tax advisory services. The subject matter of the complaints included the use of trust monies dishonestly and for unauthorised purposes, failing to separate client funds from funds of the practices, the use offorged documents or making misleading statements to clients regarding the integrity or application of their funds, and the theft of client funds. The respondent also made disparaging remarks about the services of another CPA who was her former employee.

Permanent removal from the register of CPAs

 
Costs:
HK$760,997.35

Reasons for decision

Decision on sanctions and costs

Costs order

Breach by the 3^rd Respondent of Hong Kong Standard on Auditing ("HKSA") 700 and HKSA 230, and breach by the 1^st and 2^nd Respondents of the fundamental principle of Professional Competence and Due Care in the Code of Ethics for Professional Accountants.

The 3^rd Respondent issued an unmodified auditor's opinion on the 2009 financial statements of a Hong Kong listed company. The 1^st Respondent was the engagement director and the 2^nd Respondent was the engagement quality control reviewer ('EQCR").

1. Leung Kin Sun, Sunny
2. Sunny Leung & company

The 1^st Respondent is the sole proprietor of the 2^nd Respondent which expressed an unmodified auditor's opinion on the financial statements of an approved charitable institution for the year ended 31 March 2009. The audit procedures contained deficiencies relating to audit materiality, related party transactions, bank confirmations and certain income and expenditure items. The respondents also failed to adequately document communication with those charged with governance on some audit issues.

Reprimand

Chin Oi Lin, Irene

Press release:

The Respondent's practice was selected for practice review. The Respondent failed to respond to Institute's repeated requests to submit information required in relation to the practice review, including a direction issued by the Practice Review Committee. As a result, the practice review could not be carried out.

Reprimand

Cancellation of the practicing certificate issued in 2018

2. Pan-China    (H.K.) CPA Limited

Failure or neglect to observe, maintain or otherwise apply the fundamental principle of Professional Competence and Due Care in sections 100.5(c) and 130 of the Code of Ethics for Professional Accountants.

The 2^nd Respondent issued unmodified auditor's opinions on the financial statements of a Hong Kong listed company which contained misstatements of earnings per share, contrary to Hong Kong Accounting Standard 33. The 1^st Respondent was the EQCR and he reviewed the earnings per share calculation, but neither he nor the audit team identified the errors.

Order:
Reprimand

Penalty:

1^st Respondent
HK$60,000

2^nd Respondent
HK$90,000

1. Lam Pik Wah

2. BDO Limited

Press release:

The 2^nd Respondent audited the financial statements of a listed company and its subsidiaries for the year ended 31 March 2012 and issued an unmodified auditor's opinion with an emphasis of matter paragraph. The 1^st Respondent was the audit engagement director.

The company acquired a target group in 2012, and a major shareholder of the Company had injected a sum of RMB200 million into the acquired group prior to the acquisition.  The respondents did not perform additional audit procedures to resolve an apparent inconsistency between certain evidence showing the injected sum as equity of the acquired group and other evidence suggesting that the sum was a liability of the acquired group. 

Penalty:
HK$100,000
 
Cost:
HK$134,394.60(including FRC costs)

11 September

2018

Li Kwok Cheung, George

Press release:

(ENG)

(CHI)

The Respondent was an executive director of a financial service company which acted as financial adviser to a Hong Kong listed company. He advised or assisted the company in preparing written responses to enquiries by the Stock Exchange of Hong Kong about a fictitious project of the company and drafting a public announcement by the company. He also acted with certain other individuals to devise a purported sale of the project by the company which was in reality a sham involving a circular fund flow.

Order:

(a)Reprimand; and
(b) Removal from the register of CPAs permanently with effect from 21 October 2018

Penalty:
HK$375,000

Costs:
HK$221,039.20

Extract of Reasons and Order

Chang Wai Hang, Alab

Press release:

(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply the fundamental principle of Professional Behavior in the Code of Ethics for Professional Accountants and being guilty of dishonourable conduct.

The Respondent was convicted in the District Court of two counts of dealing with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance (Cap. 455). He was sentenced to imprisonment for four years and six months.

Cheung Yiu Hung

Press release:

(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply HKSQC 1, HKSA 500 and HKSA 230.

The complaint arose from findings of a follow-up practice review visit on the Respondent's Practice.  The Respondent was found to have failed to implement necessary improvements to ensure an adequate system of quality control and address audit deficiencies identified from the first practice review.
 
The Respondent appealed the Disciplinary Committee's decision. On 31 July 2018, the Court of Appeal handed down its judgment dismissing Respondent's appeal.

Failure or neglect to observe, maintain or otherwise apply Statement of Auditing Standards 100, 200, 230 and 400, Statement 1.200 Professional Ethics - Explanatory Foreword and Statement 3.340 Auditing Guideline - Prospectuses and the reporting accountant.

The 3rd Respondent was the reporting accountant and auditor of three listed companies in Hong Kong. The 1st and 2nd Respondents were the engagement partners.

Deficiencies were found in the respondents' audit work in the areas of sales and receipts for sales, purchases and related cash disbursements, long-term investments, preceding auditors' work review and analytical procedures.

Order:
Reprimand for all three respondents

Penalty:
1st Respondent
HK$200,000
2nd Respondent
HK$100,000
3rd Respondent
HK$400,000

Costs:
HK$1,527,416

Extract of Reasons and Order

Failure or neglect to observe, maintain or otherwise apply sections 100.5(c) and 130.1 of the Code of Ethics for Professional Accountants.

The 1st respondent was the sole proprietor of the 2nd respondent which expressed unmodified auditor's opinions on the financial statements of a private company for each of the years 2010 to 2015.

There was non-compliance with accounting standards in the accounting of property, plant and equipment in the 2010 to 2015 financial statements, and income tax in the 2014 and 2015 financial statements. Further, there were numerous casting errors, incorrect and missing cross-references, incomplete disclosures and inconsistencies in the financial statements, auditor's reports and other information attached.

Order:

Reprimand

Penalty: 

HK$70,000

Costs:

HK$49,746

Corrigendum

Extract of Reasons and Order

1. Seto Man Fai

2. Lo Hung Yan

Press release:

(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply professional standards issued by the Institute.

The respondents were the directors of Parker Randall CF (H.K.) CPA Limited ("Practice"), which is now de-registered. The results of a practice review revealed that the Practice failed to implement an effective system of quality control. Additionally, the practice reviewer found significant deficiencies in the audit of a Hong Kong listed company by the 1st Respondent and the compliance audit of a regulated company by the 2nd Respondent.  

Order:
Reprimand

1st Respondent
No practising certificate shall be issued to him for 18 months, of which 9 months will run concurrently with a previous disciplinary order issued against him in January 2018 and the remaining 9 months is to be consecutive to the said order.

2nd Respondent
Cancellation of practising certificate with effect from 21 August 2018 and no practising certificate shall be issued to him for 9 months.

Penalty:
-
 
Costs:
1st Respondent
HK$91,127

2nd Respondent
HK$54,721

Extract of Reasons and Order

The respondent was the Executive Director, Chief Executive Officer and the Compliance Officer of a Hong Kong listed company. He was found by the Court of First Instance in a court action filed by Securities and Futures Commission to have breached his director's duties to the company by falsely putting forward a non-existent agreement, causing the company to wrongly pay a dividend of RMB18.69 million. The respondent was ordered to be disqualified from being a director or involved in the management of any listed or unlisted corporation in Hong Kong for five years.

The respondent was found to have not complied with the Code of Ethics for Professional Accountants and was guilty of professional misconduct.

Order:
Removal from the register of CPAs for 3 years with effect from 12 August 2018

Penalty:
-

Costs:
HK$35,857

Extract of Reasons and Order

Seto Man Fai

Press release:

(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply professional standards issued by the Institute and being guilty of professional misconduct.

The respondent was a former practising certified public accountant whose name was removed from the register for 5 years with effect from 22 March 2018 pursuant to an earlier disciplinary order. He was previously a director of a corporate practice, which has now been de-registered. The corporate practice audited the consolidated financial statements of a Hong Kong listed company for the year ended 31 March 2011 and the period ended 31 December 2011 and expressed unmodified auditor's opinions. The respondent was the engagement director of those audits.

There were significant deficiencies in the accounting treatment of certain acquisition transactions, convertible bonds issued and share options and warrants granted which were included in the financial statements. The respondent claimed that relevant audit procedures were carried out on those items but he failed to provide any working papers, claiming that they were withheld by a third party.

Order:
No practising certificate shall be issued to the respondent for 12 months from 21 March 2023.

Penalty:
-

Costs:
HK$277,705.60
(including FRC costs)

Extract of Reasons and Order

1. Andrew David Ross
2. Fok Wai Ming
3. Baker Tilly Hong Kong Limited

Press release:

Failure or neglect to observe, maintain or otherwise apply professional standards issued by the Institute.

The 3rd Respondent was a newly appointed auditor who audited the consolidated financial statements of a Hong Kong listed company and its subsidiaries for the year ended 31 March 2012. The 1st Respondent was a director of the corporate practice who issued the auditor's report. The 2nd Respondent was a director of the corporate practice who was substantially involved in the audit.

The group's financial statements in previous years included errors in the accounting treatment of a substantial acquisition. Those errors affected the 2012 financial statements. Deficiencies were found in the audit procedures conducted by the respondents on the balances pertaining to the acquisition. Further, the 3rd Respondent did not have adequate policies and procedures for clear designation of engagement director and appointment of an engagement quality control reviewer in the subject audit.

Order:
Reprimand

Penalty:
1st Respondent
HK$100,000
2nd Respondent
HK$100,000
3rd Respondent
HK$250,000

Costs:
HK$117,372.20
(including FRC costs)

Extract of Reasons and Order

1. Baker Tilly Hong Kong Limited
2. Au Yiu Kwan

Press release:

(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply professional standards issued by the Institute.

The 1st Respondent was in breach of a number of auditing standards and HKSQC1. The 2nd Respondent failed to act diligently in accordance with sections 100.4(c) and 130.1 of the Code of Ethics for Professional Accountants.

The 1st Respondent audited the financial statements of a Hong Kong listed company and its subsidiaries for the year ended 31 May 2006  The 2nd Respondent was the director who had substantial involvement in the audit.

Order:
Reprimand

Penalty:
1st Respondent
HK$250,000
 
2nd Respondent
HK$100,000

Costs:
HK$156,669.90
(including FRC costs)

Extract of Reasons and Order

1. Tang Wai Hung

 2. Chow Chi Kit

3. W.H. Tang & Partners CPA Limited

Press release:

(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply professional standards issued by the Institute.

The 3rd respondent issued an unqualified auditor's opinion on the 2012 financial statements of a Hong Kong listed company, and its subsidiaries. The 1st respondent was the engagement director and the 2nd respondent was the engagement quality control reviewer of the audit. There were non-compliance with financial reporting standards and auditing irregularities in relation to an acquisition recorded in the financial statements.

Order:
Reprimand

1st Respondent
Cancellation of practising certificate with effect from 24 June 2018 and no practising certificate shall be issued to him for 2 years.

2nd Respondent
Cancellation of practising certificate with effect from 24 June 2018 and no practising certificate shall be issued to him for 18 months.

Penalty:
1st Respondent
HK$100,000

2nd Respondent
HK$75,000

3rd Respondent
HK$150,000
 
Costs:
All Respondents jointly
HK$103,483.20(including FRC costs)
 
 Extract of Reasons and Order

Yan Kwok Ting, Sunny

Press release:

(ENG)
(CHI)

Guilty of dishonourable conduct.

The respondent was a licensed person under the Securities and Futures Ordinance and an employee of a company which sponsored a listing on the Growth Enterprise Market board. The Securities and Futures Commission investigated into the company's submissions to the Stock Exchange of Hong Kong about due diligence work it carried out as the sponsor.  The Commission found the respondent guilty of providing false and misleading information during the investigation, and prohibited him from re-entering the industry for 4 years.  The Securities and Futures Appeals Tribunal subsequently dismissed the respondent's appeal and upheld the Commission's finding and decision.

Yeung, Tat Kwong

Press release:
(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply professional standards issued by the Institute.

The Respondent issued Accountant's Reports on a firm of solicitors for three years, in which he failed to report the firm's breaches of the Solicitors' Accounts Rules . The firm did not prepare client account reconciliations, client ledgers and office ledgers. During the Institute's enquiry, the Respondent was unable to provide copies of his working papers, claiming that the hardcopies were misplaced and his computer hard disk had failed.

Order:
Reprimand

Penalty:
HK$100,000

Costs:
HK$49,335

Extract of Reasons and Order

Chan Kin Cheong

Press release:
(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply professional standards issued by the Institute.

The respondent is the sole proprietor of two practices. He is responsible for the practices' quality control system and the quality of the practices' audit engagements. When carrying out a practice review, the reviewer found that the practices failed to implement an adequate system of quality control. Also, a number of significant deficiencies were found in an audit engagement. In addition, the respondent was found to have provided false and/or misleading information during the practice review and in the electronic self–assessment questionnaire which was submitted to the reviewer.

Order:
Reprimand

Penalty:
HK$60,000
 
Cost:
HK$34,175
 
Extract of Reasons and Order

1. HLB Hodgson Impey Cheng

2. Cheng Chung Ching, Raymond

3. Lai Tak Shing, Jonathan

Press release:

(ENG)

(CHI)

 Failure or neglect by the 1st and 2nd Respondents to observe, maintain or otherwise apply Standard on Assurance Engagements 200 "High Level Assurance Engagements" (SAE 200). Failure or neglect by the 1st and 3rd Respondents to observe, maintain or otherwise apply SAE 200 and Hong Kong Standard on Assurance Engagements 3000 "Assurance Engagements Other Than Audits or Reviews of Historical Financial Information".

The 1st Respondent issued compliance reports on a corporation engaged in securities dealing under the Securities and Futures Ordinance (Cap. 571) and the preceding Securities Ordinance (Cap. 333) for three years. The 2nd Respondent was the engagement partner in the first year. The 3rd Respondent was the engagement partner in the second and third years.

The complaints against the three Respondents relate to breaches of the standards of assurance practices and sufficiency of documentation in the work undertaken by the Respondents for the securities firm for three relevant fiscal years.

Order:

Reprimand for all three respondents

Penalty:

1st Respondent

HK$400,000

2nd Respondent

HK$300,000

3rd Respondent

HK$300,000

Costs:

HK$3,000,000

Decision

Decision on sanctions and costs

1. Lau Shiu Wai, Franklin
2. Au Yeung Tin Wah
3. Lau & Au Yeung

   C.P.A   Limited

 Press release:
(ENG)
(CHI)

 Failure or neglect by the 3rd respondent to observe, maintain or otherwise apply Hong Kong Standard on Auditing ("HKSA") 230 and HKSA 500.  Failure or neglect by the 1st respondent to act diligently in accordance with section 100.5 (c) as elaborated in section 130.1 of the Code of Ethics for Professional Accountants ("COE").

Failure or neglect by the 2nd respondent to act diligently in accordance with section 100.5 (c) as elaborated in section 130.1 of the COE for failure to carry out an objective engagement quality control review under HKSA 220.

The 3rd respondent audited the financial statements of a Hong Kong listed company and its subsidiaries for the years ended 30 June 2011 and 2012. The 1st respondent was the engagement director who issued the auditor's reports on behalf of the 3rd respondent and the 2nd respondent was the engagement quality control reviewer.

Order:
Reprimand
 
Penalty:
1st & 2nd  Respondent
HK$100,000 each

3rd Respondent
HK$180,000
 
Costs:
All Respondents
HK$154,567.90(including FRC costs)
 
Extract of Reasons and Order

Lam Kin Choi

Press release:
(ENG)
(CHI)

 Failure or neglect to observe, maintain or otherwise apply (i) HKSQC 1 "Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements"; (ii) HKSA 500 "Audit Evidence"; and (iii) HKSAE 3000 "Assurance Engagements Other Than Audits or Reviews of Historical Financial Information".

The complaint arose from findings of a practice review visit on the Respondent's practice. The Respondent was found to have failed to implement an adequate system of quality control. In addition, a number of significant deficiencies were identified in the Practice's audits and assurance engagements.

The Respondent's appeal against the Disciplinary Committee's decision was struck out by the Court of Appeal on 6 April 2018.

Order:
Cancellation of practising certificate with effect from 13 February 2018 and no practising certificate shall be issued to the Respondent for 12 months.

Penalty:
HK$20,000
 
Costs:
HK$46,827

Extract of Reasons and Order

1.Lam Kwan, Anthony
2. Charles H. C. Cheung  

    & CPA Limited

Press release:

(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply auditing standards issued by the Institute.

The 2nd respondent audited the financial statements of a renovation project of a residential building. The 1st respondent was the engagement director.

The respondents failed to understand the scope of the audit engagement and plan it accordingly. They also failed to obtain sufficient evidence and adequately document audit procedures. The complaint was made under section 34(1AAA) of the Professional Accountants Ordinance.

Order:
Reprimand

Penalty:
HK$35,000
 
Costs:
HK$ 10,000
 
Extract of Reasons and Order

1.Wong Tak Man, Stephen

2. RSM Hong Kong (formerly RSM Nelson Wheeler)

Press release:

(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply professional standards issued by the Institute.

The Respondents audited the financial statements of a Hong Kong listed company and its subsidiaries and were found to have failed to properly interpret Hong Kong Accounting Standard ("HKAS") 39 Financial Instruments: Recognition and Measurement, which requires an entity to recognize an impairment loss in profit or loss for an available-for-sale financial asset when objective evidence of impairment exists.

The Respondents' appeal against the Disciplinary Committee's decision was dismissed by the Court of Final Appeal on 22 December 2017 (FACV10/2017).

On 30 September 2020, the High Court quashed the non-publicity order imposed by the Disciplinary Committee at paragraphs 6.2(d) and 6.6 of the Reasons for Decision, on the basis that it had erred in principle in making it and that it was in any event irrational (HCAL 187/2016).

Yu Oi Kee

Press release:

(ENG)
(CHI)

Convicted of an offence involving dishonesty.

The respondent was convicted in the District Court in August 2014 of one count of conspiring as an agent to use a document with intent to deceive her principal, and one count of accepting an advantage as an agent.

The respondent was a director of a subsidiary of a Hong Kong listed company. She conspired with another director to make a false statement in the board meeting minutes to conceal the interests of that director in a material disposal transaction entered into by the company. Accordingly, the transaction was incorrectly announced as an unconnected transaction and was not reported to the Stock Exchange of Hong Kong as a connected transaction. As a reward for her part in processing the transaction, she privately accepted the listed company's shares given to her by the other director. She later sold the shares in the market and received about HK$317,000.

Seto Man Fai

Press release:

(ENG)
(CHI)

The respondent was the managing director of a corporate practice, Parker Randall CF (H.K.) CPA Limited, which is now de-registered. The corporate practice audited the consolidated financial statements of three Hong Kong listed companies for financial periods ended in 2010 and 2011. The respondent was the engagement director.

The Financial Reporting Council (FRC) enquired into breaches of auditing standards in the audits. The respondent failed to provide the working papers and repeatedly gave inconsistent and unbelievable explanations to the FRC as to why the working papers were unavailable. There were irregularities in the audits in relation to accounting for an acquisition, use of the going concern basis and failure to appoint an engagement quality control reviewer.

The respondent was found to have breached a number of HKSAs, the Code of Ethics for Professional Accountants Ordinance and was guilty of professional misconduct.

Order:
Removal from the register of CPAs for 5 years with effect from 22 March 2018
 
Penalty:
-
 
Costs:
HK$523,697.20
(including FRC costs)
 
Extract of Reasons and Order

Mak Wai Man

Press release:

(ENG)
(CHI)

The respondent was convicted of offences involving dishonesty. She was also in breach of the fundamental principle of Integrity under sections 100.5(a) and 110.2 of the Code of Ethics for Professional Accountants.

The respondent was convicted of three counts of offences under section 9 of the Theft Ordinance (Cap 210) after she forged the signature one of her employer's directors and drew a cheque in her own favour. As a result, the company dismissed her. Subsequently, she provided false information about her professional qualifications and work experience to another employer.  That employer unknowingly submitted the false information in an Application Proof to the Hong Kong Stock Exchange for listing purposes. The respondent failed to declare to the Institute that she had  criminal convictions in the Institute's annual membership renewal.

Order:
Removal from the register of CPAs for 5 years with effect from 11 March 2018
 
Penalty:
-
 
Costs:
HK$72,446
 
Extract of Reasons and Order

Tso Yin Yee

Press release:

(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply professional standards issued by the Institute and being guilty of professional misconduct.

The respondent is the sole proprietor of a Practice and is responsible for the Practice's quality control system and the quality of its assurance engagements.  When carrying out a practice review, the reviewer found that the Practice failed to established and maintain an effective system of quality control. In addition, the reviewer found significant deficiencies in the Practice's audit and assurance engagements.

1) Tam Tak Kuen, Alfred
2) Alfred T.K. Tam & Co

Press release:

(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply the fundamental principle of Professional Behavior of the Code of Ethics for Professional Accountants.

The 1st Respondent was the sole proprietor of the 2nd Respondent, a firm which is now de-registered. The Respondents breached their employer's obligation to make provident fund contributions for employees under the Mandatory Provident Fund Schemes Ordinance on three occasions.  They were fined by the relevant authorities for the breaches.

1) Andrew David Ross
2) Fok Wai Ming
3) Baker Tilly Hong Kong Limited

Press release:

(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply professional standards issued by the Institute.

The 3rd Respondent was in breach of a number of auditing standards and HKSQC1.  The 1st and 2nd Respondents failed to act diligently in accordance with section 100.4 (c), as elaborated in sections 130.1 of the Code of Ethics for Professional Accountants.  In addition, the 1st Respondent was in breach of HKSA220.

The 3rd Respondent audited the financial statements of a Hong Kong listed company and its subsidiaries for the years ended 31 December 2008 and 2009.  The 1st Respondent was the director who issued the auditor's reports on behalf of the 3rd Respondent and the 2nd Respondent, as a senior audit team member, was substantially involved in the audits of the financial statement.

Order:
Reprimand

Penalty:
1st & 2nd  Respondent
HK$100,000

3rd Respondent
HK$250,000
 
Costs:
2nd Respondent
HK$14,912

All Respondents
HK$124,448.3 (including FRC costs)

Extract of Reasons and Order

Chan Hoi Shing

Press release:

(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply a number of professional standards and being guilty of professional misconduct.

The complaint arose from findings of a practice review visit on the Respondent's practice. The Respondent was found to have failed to establish and maintain an effective system of quality control and have misused qualified opinions to circumvent necessary audit procedures.

1) Baker Tilly Hong Kong 

    Limited

2) Andrew David Ross

3) Kwok Lai Ha, Helena

Press release:

(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply professional standards, namely, the fundamental principle of Professional Competence and Due Care in the Code of Ethics for Professional Accountants.

The Securities and Exchange Commission had imposed sanctions on the respondents for breaches of PCAOB auditing standards in their audit of a U.S. listed company.  The respondents failed to identify material related party transactions and revise the audit planning regarding fraud risks in light of those transactions.

The 2nd respondent was the engagement director, and the 3rd respondent was the director-in-charge.

Tam Tak Kuen, Alfred

Press release:

(ENG)
(CHI)

Failure or neglect to observe, maintain or otherwise apply HKSQC 1 and the fundamental principle of integrity under paragraphs 100.5(a) and 110.2 of the Code of Ethics for Professional Accountants, and guilty of professional misconduct.

The complaint arose from findings of a practice review visit on the Respondent's Practice. The Respondent was found to have failed to establish, maintain and document an effective system of quality control and provided false or misleading answers and/or furnished information recklessly in the electronic practice review self-assessment questionnaire.

Order:
Reprimand; and cancellation of practising certificate with effect from 21 November 2017 and no practising certificate shall be issued to the Respondent for 2 years

Penalty:
HK$50,000
 
Costs:
HK$51,628

Extract of Reasons and Order

Tse Lap Fu, Lawrence

Press release:
(ENG)

(CHI)

Failure or neglect to observe, maintain or otherwise apply professional standards issued by the Institute and being guilty of professional misconduct.

There were deficiencies in the audits of the financial statements of five private companies carried out by Tse's firm. The audit areas involved were related party transactions, deferred tax, inventory and evaluation of whether the financial statements were prepared in accordance with the applicable financial reporting framework.  In addition, Tse's firm acted as auditor of one of the companies when it had a close business relationship with that company.

Order:
Reprimand; and cancellation of practising certificate with effect from 15 October 2017 and no practising certificate shall be issued to the Respondent for 6 months

Penalty:
HK$50,000
 
Costs:
HK$123,108

Corrigendum

Extract of Reasons and Order

So Kwok Keung, Keith

Press release:

(ENG)

(CHI)

Failure or neglect to observe, maintain or otherwise apply (i) Hong Kong Standard on Auditing ("HKSA") 230 "Audit Documentation"; and (ii) HKSA 500 "Audit Evidence".

So is a practising director of a corporate practice. The practice was selected for a practice review and significant deficiencies were found in the Practice's audit engagement of a Hong Kong listed company. So was the engagement director for the audit engagement.

Order:
Reprimand

Penalty:
HK$60,000
 
Costs:
HK$33,004

Extract of Reasons and

Order

Poon Wai Kit

Press release:
(ENG)

(CHI)

Poon was convicted of theft in the District Court in July 2016.  He also falsified or caused to be falsified documents.

Poon misappropriated a total sum of about HK$12 million during his employments with two companies.  He falsified certain documents to cover up his acts.