Disciplinary Orders

1. Chan Ho Yin Graham

2. Chan Suk King

Reprimand

Penalty:

1^st respondent

HK$150,000

2^nd respondent

HK$50,000

Costs:
1^st respondent

HK$78,555

2^nd respondent

HK$45,233

Failure or neglected to observe, maintain or otherwise apply the  fundamental principle of integrity in sections R111.1 and R111.2 under Chapter A of the Code of Ethics for Professional Accountants (“COE”); the fundamental principle of professional competence and due care in section R113.1 under Chapter A of the COE; 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; and being guilty of professional misconduct.

The respondent is the sole proprietor of a firm (the “Practice”). He is responsible for the Practice’s quality control system and the quality of its audit and compliance engagements. The Practice was subject to a second full scope practice review which was concluded in February 2022. At the time of the practice review, the Practice reported that it had engaged subcontractors to perform its audit work.

Reprimand

Removal from the register of CPAs for 4 years and cancellation of practising certificate with effect from 19 December 2023

Penalty:

HK$100,000

As the sole practising director of a corporate practice (“Practice”), the respondent was responsible for operating the Practice, including its compliance with relevant laws and regulations, as well as for the Practice’s quality control system and the quality of its audit engagements. The Practice was subject to a first-time practice review in March 2016 and a follow-up practice review which was concluded in Jun 2019 (“Review”). During the Review, the practice review team (“Reviewer”) found that the Practice had amended the audit working papers pertaining to a client’s audit. The Reviewer also noted that the Practice did not adopt audit programmes in a number of audit engagements, and the Practice did not have adequate policies and procedures to address potential threats to auditor’s independence caused by its provision of accounting services to certain audit clients. Further, the Reviewer identified specific deficiencies in two of the Practice’s clients’ audits.

In communicating with the respondent/the Practice during the course of handling the complaint, the Institute found that the Practice had failed to notify the Registrar of a change in the address of its registered office in accordance with the pre-amended Professional Accountants Ordinance (Cap. 50). Alternatively, the respondent intentionally or recklessly failed to cooperate with the Institute pertaining to the handling of the subject PRC complaint. This indicates improper conduct on the part of the respondent.

Order:
Reprimand

Removal from the register of CPAs for two years and cancellation of practising certificate for 24 months with effect from 22 November 2023

Penalty:

-

Costs:
HK$101,446

Reasons for Decision

Decision on Sanctions and Costs

Chan Yui Hang

Press release:

(ENG)
(CHI) 

The respondent was the sole liquidator of a Hong Kong private company which went into voluntary liquidation in December 2012. In conducting the liquidation, the respondent breached the requirements of the Companies (Winding-Up and Miscellaneous Provisions) Ordinance and Companies (Winding-Up) Rules by failing to convene valid annual creditors’ meetings for four consecutive years and to file his liquidator’s statements of account for six periods with the Companies Registry within the prescribed time. The respondent also failed to retain overall control of the liquidation when he delegated some of the liquidation work to a third party. In addition, the respondent made payments of liquidators’ fees to himself out of the company’s funds without obtaining proper approval from the creditors of the company.

Reprimand

Cancellation of practising certificate for 12 months with effect from 19 October 2023

Penalty:
HK$100,000

Costs:
HK$215,187

Decision

Ng Kay Lam

Press release:
(ENG)
(CHI) 

The respondent was a sole proprietor of his practice. The Institute scheduled a follow-up practice review of his practice in 2017. This did not take place due to the respondent’s refusal to cooperate. As a result, the PRC issued a direction requiring the respondent to accommodate the practice review visit in 2018 and provide certain information for the review. The respondent failed to comply with the PRC’s direction.

Reprimand

Cancellation of practising certificate for 24 months with effect from 25 October 2023

Penalty:
 -

Costs:
HK$174,866

Reasons for Decision

Failure or neglect to observe, maintain or otherwise apply the fundamental principle of professional competence and due care in sections R110.2 and R113.1 under Chapter A of the Code of Ethics for Professional Accountants; 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 520 Analytical Procedures; HKSA 700 (Revised) Forming an Opinion and Reporting on Financial Statements; and HKSA 705 Modifications to the Opinion in the Independent Auditor’s Report.

Order:
Reprimand

Removal from the register of CPAs for 2 years and cancellation of practising certificate with effect from 20 July 2023

Penalty:

-

Leung Kam Man, Victor

Press release:
(ENG)
(CHI)

The respondent was a sole proprietor of two practices (collectively the "Practices"). He was responsible for the Practices' quality control systems and the quality of the Practices' engagements.  A previous practice review on one of the Practices and the respondent’s own name practice was conducted concurrently in 2013/2014 (“Previous Practice Review”). The Practices were subject to the present practice review which was concluded in August 2020.

In the present practice review, the reviewer found a number of significant deficiencies in the Practices' quality control systems and in the performance of a certain number of audit engagements, some of which were the same or similar deficiencies as identified in the Previous Practice Review.

Reprimand

Cancellation of practising certificate for 6 months with effect from 20 June 2023

Penalty:

HK$75,000

Costs:
HK$140,265

Order and Reasons for Decision

Failure or neglect to observe, maintain or otherwise apply the fundamental principle of integrity under section 110.1 A1(a) and subsections R111.1 and R111.2 under Chapter A of the Code of Ethics for Professional Accountants (“COE”); the fundamental principle of professional competence and due care under section 110.1 A1(c) and subsection R113.1 of the COE; 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; and HKSA 500 Audit Evidence and being guilty of professional misconduct. 

The respondent was the sole practicing director of JTBC CPA Limited (“Practice”) which was registered in February 2015. The Practice was subject to an initial practice review (“Review”) by the Quality Assurance Department which was concluded in October 2020.  The Review identified significant findings which led to concerns over the respondent’s lack of integrity and professional competence and due care, demonstrated by (i) his conduct in response to the Review, in particular, the creation of working papers, and provision of false or misleading information / representations; (ii) deficient quality control system of the Practice; and (iii) the lack of audit quality in the Practice’s audit engagements. 

Order:
Reprimand

Removal from the register of CPAs for 18 months and cancellation of practising certificate with effect from

31 March 2023

Penalty:

HK$200,000

The respondent carried on his practice both as the sole proprietor of a firm and as one of the two practising directors of a Corporate Practice. On the renewal of his membership with the Institute and for the issuance of a practising certificate (“PC”), he filed an annual return (“Return”) for the year of 2021 in February 2021, declaring that he was not a bankrupt, nor had he become bankrupt. Acting on the representation, including the aforesaid declaration made by the respondent in the Return, his membership was renewed and a PC was issued to him.

It was subsequently discovered that a bankruptcy order (“BO”) was issued against the respondent by the High court in August 2020.

Reprimand

Removal from the register of CPAs for 18 months with effect from 3 February 2023

Penalty:

 -

1. Tang Chung Wah

The respondents were joint and several liquidators of a private company. At the relevant time, they were also partners of a firm of certified public accountants that was later de-registered. In 2015, court orders were issued requiring the respondents to produce certain documents pertaining to the liquidation. Following the Respondents’ failure to comply with the orders in full, the court found them guilty of contempt of court in 2016. While the contempt was subsequently purged by the respondents, they were sentenced to pay a fine totalling HK$500,000 and a substantial portion of costs on an indemnity basis.

The 1^st respondent appealed against the Disciplinary Committee’s decision. On 22 September 2022, the Court of Appeal handed down its judgement dismissing his appeal.

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