HKICPA Imposes Sanctions on CPAs for Audit Fraud

Two certified public accountants in Hong Kong have been subjected to disciplinary actions by the Hong Kong Institute of Certified Public Accountants for falsifying documents, professional misconduct and dishonourable conduct.


According to the institute, the disciplinary committee on 29 July 2009 found charges of falsifying documents, professional misconduct and dishonourable conduct against Yip Chun Fai, Alex (membership number A19191) and  Ho Suk Yin (membership number A13692) to be true.


Yip and Ho were previously employed as members of the audit staff of a firm of certified public accountants. The firm discovered that they had falsified, or had caused to be falsified, certain audit working papers during an audit they conducted, and referred the matter to the HKICPA for action. After considering the information available, the Institute lodged complaints against Yip and Ho under section 34(1A) of the Professional Accountants Ordinance.


On the evidence against Yip and on Ho's admission, the disciplinary committee found that they: falsified, or caused to be falsified, documents in breach of section 34(1)(a)(iii)(A) of the  ordinance; were guilty of professional misconduct in breach of section 34(1)(a)(viii) of the ordinance; and were guilty of dishonourable conduct as a professional accountant in breach of section 34(1)(a)(x) of the ordinance.


As a result of the findings, the committee has ordered that Yip's name be removed from the register of CPAs for a period of 18 months up to 18 February 2011, and that he shall pay to the institute part of the costs of the disciplinary proceedings totalling HK$435,000.


Meanwhile, Ho will be reprimanded and is required to pay to the institute part of the costs of the disciplinary proceedings totalling HK$100,000.


According to the institute, disciplinary proceedings are conducted in accordance with Part V of the ordinance by five-member disciplinary committees. The majority (three members) of each committee, including the chairman, are non-accountants chosen from a panel of lay persons appointed by the Chief Executive of the HKSAR, and the other two members are CPAs.


Disciplinary hearings are held in public unless the disciplinary committee directs otherwise in the interests of justice. A CPA who is aggrieved by an order made by a disciplinary committee may appeal to the Court of Appeal, which may confirm, vary or reverse the order.


The disciplinary committees have the power to sanction members, member practices and registered students. Sanctions include temporary or permanent removal from membership or a practising certificate, a reprimand, a penalty of no more than $500,000, and payment of costs and expenses of the proceedings.


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