PCAOB permanently revokes Hong Kong company's registration over audit violations
The action is related to their audit work for companies operating in China, including Luckin Coffee.
Centurion ZD CPA & Co and Chan have been sanctioned with a $75,000 civil penalty for failing to perform adequate risk assessments and obtain sufficient audit evidence in audits for three companies.
According to the PCAOB, these failures were evident in the 2021 audit of Luckin Coffee, following a 2020 investigation revealing fabricated transactions by Luckin.
Despite Luckin Coffee's previous settlement of accounting fraud charges with the US Securities and Exchange Commission, Centurion ZD CPA & Co did not adequately address fraud risks in subsequent audits, the organisation said.
The PCAOB's sanctions include a permanent revocation of the company's registration and a permanent bar against Chan.
The company and Chan's violations extended to audits of a second Chinese company and audit procedures for subsidiaries of a Malaysian company.
It said that they failed to obtain sufficient audit evidence and did not make required communications to audit committees, violating PCAOB standards.
The PCAOB found further violations in how the company reported audits of two Chinese public companies, failing to comply with PCAOB rules in filing necessary forms.
Chan was held directly responsible for these audit reporting violations.
The company's numerous violations indicate a lack of quality control, and failing to ensure personnel had the required technical proficiency and that professional standards were met.
Without admitting or denying the findings, Chan and the company consented to the PCAOB's order.
Recently, the PCAOB imposed sanctions on PWR CPA over violations of its rules during the 2022 audit of Ainos.
Additionally, the company faced repercussions for consistently failing to meet reporting requirements in audits of four other issuers.
"PCAOB permanently revokes Hong Kong company's registration over audit violations " was originally created and published by International Accounting Bulletin, a GlobalData owned brand.
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