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Hong Kong's Court of Appeal on November 30, 2010 dismissed an appeal lodged by Ng Kay Lam (membership number A02682) against an order made by a disciplinary committee of the Hong Kong Institute of Certified Public Accountants.

The disciplinary committee made the order on 24 December 2009, reprimanding Ng and ordering him to pay to the Institute a penalty of HK$50,000 due to his failure or neglect to observe, maintain or otherwise apply a professional standard issued by the Institute. The Disciplinary Committee further ordered Ng to pay to the Institute HK$140,000 toward the costs of the disciplinary proceedings.

Ng is the sole proprietor of a firm of certified public accountants, K.L. Ng & Company. The institute received information indicating that, in the firm's audit of the financial statements of a private company, Linfoot (Asia Pacific) Limited, the audit work was carried out by Ng's part-time employee who also prepared those financial statements and acted as the company secretary of the company. This seriously compromised the independence of the audit. After considering the information available, the institute lodged a complaint against Ng under section 34(1A) of the Professional Accountants Ordinance and a disciplinary committee was constituted to deal with the complaint in June 2008.

The disciplinary committee found on the evidence that Ng failed or neglected to observe, maintain or otherwise apply the Institute’s Statement 1.203 "Professional Ethics – Integrity, Objectivity and Independence." Having taken into account the circumstances of the case, the Disciplinary Committee made the above order against Ng under section 35(1) of the Professional Accountants Ordinance. Ng appealed against the order to the Court of Appeal in January 2010 and the matter was heard by the Court on 17 November 2010.

In dismissing the appeal, the Court of Appeal stressed the importance of independence in an audit conducted in compliance of the Companies Ordinance. The Court noted that, in this case where the person conducting the audit had himself prepared the financial statements that were the subject matter of the audit, the perceived conflict of interest is obvious.

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