Hong Kong Penalises CPA for Accounting Fraud

by CFO Innovation Asia Staff, 31 May 2012

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Accounting and Regulations

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auditing fraud Hong Kong Institute of Certified Public Accountants

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Michael Young Chi Shin, a CPA, has been penalised for participating in a conspiracy to falsify his employers's accounting records and in a scheme to deceive the auditors.

A Disciplinary Committee of the Hong Kong Institute of Certified Public Accountants has ordered that the name of Young Chi Shan, Michael, be removed from the register of certified public accountants for a period of five years with effect from 14 June 2012.

In addition, Young was ordered to pay a penalty of HK$100,000 and HK$30,000 towards the costs of the disciplinary proceedings.

Between 2003 and 2007, Young assisted the Independent Commission Against Corruption in a criminal case and acted as the main witness who gave evidence under immunity for the prosecution at trial.

Young joined an undisclosed company as the financial controller at the time when it was preparing for a listing application with the Hong Kong stock exchange. He was the central liaison between the company and its auditors.

According to the evidence available, he participated in a conspiracy to falsify the company's accounting records and in a scheme to deceive the auditors. Relevant criminal proceedings were concluded in 2010.

Various individuals, including some members of the company's management, were found guilty of conspiring with others including Young to defraud the stock exchange, shareholders and other parties by falsifying financial records.

Young also falsified documents to inflate the turnover and profit figures shown in the company's listing prospectus and published financial statements after the company's listing.

Young also applied for letters of credit when there were no underlying commercial transactions in order to defraud banks to pay under the letters of credit. He also helped the company's founder steal from its bank accounts.

The Disciplinary Committee found, on evidence submitted and Young's admission, that the complaint against him was proven. Having taken into account the circumstances of the case, the Disciplinary Committee made the order against Young under section 35(1) of the Professional Accountants Ordinance.

Under the ordinance, if Young is aggrieved by the order, he may give notice of an appeal to the Court of Appeal within 30 days after he is served the order.

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