Hong Kong’s Accounting and Financial Reporting Council (AFRC) has issued disciplinary decisions in three cases concerning breaches of statutory registration obligations and failures to meet auditor independence standards.
In the first case, the AFRC acted against Jon Gepsom and two practitioners linked to the firm, Wong Ka Bo, Jimmy (Wong) and Lo Ka Ki (Lo), over their work on the audit of a Hong Kong-listed company’s consolidated financial statements.
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The regulator identified breaches of mandatory registration provisions and shortcomings in maintaining auditor independence in the case.
The second case is connected to the same audit engagement and centres on practitioner Tang Wai Leung (Tang). According to the regulator, Tang acted as an external Engagement Quality Control Reviewer (EQCR) for that audit without holding the required registration.
The AFRC also concluded that Tang failed to comply with the independence rules while performing the EQCR role.
The third matter involves Yeung Chi Fai (Yeung), a certified public accountant practicing under his own name.
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By GlobalDataThe AFRC found that Yeung signed audit reports for 15 private companies without a valid practising certificate, contrary to statutory registration requirements.
Yeung also audited the financial statements of six private companies for which he was serving as company secretary, which the regulator determined to be a breach of independence provisions.
Financial penalties across the three matters amount to HK$546,000.
In the first case, the AFRC imposed fines totalling HK$315,000 (around $40,259), while Tang in the second case received a penalty of HK$70,000.
Yeung was ordered to pay HK$161,000.
Tang and Yeung were additionally directed to reimburse the AFRC’s investigation costs and related expenses.
AFRC Investigation and Compliance head Denis Cheng said: “Independence is one of the fundamental ethical principles for professional accountants.
“Auditors must remain vigilant and take proper steps to identify, evaluate and address self-interest and self-review threats, including threats which arise from relationships of individuals at the firm and network firms.”
Recently, the AFRC fined Forvis Mazars (Mazars) and Grant Thornton Hong Kong for violating audit file archiving requirements.
