A Disciplinary Committee of the Hong Kong Institute of Certified Public Accountants reprimanded Pan-China (H.K.) CPA Limited (corporate practice number M268), Tsang Chiu Keung (membership number A25104) and Chan Kin Wai (membership number A24477) on 17 May 2017 for their failure or neglect to observe, maintain or otherwise apply professional standards issued by the institute.
The committee further ordered Pan-China to pay a penalty of HK$80,000, Tsang to pay a penalty of HK$50,000 and Chan to pay a penalty of HK$60,000. In addition, the three respondents were ordered to pay costs and expenses of disciplinary proceedings of the Institute and the Financial Reporting Council in the total sum of HK$125,385.30, to be shared equally by them.
Pan-China audited the financial statements of a Hong Kong listed company and its subsidiaries for the years ended 31 December 2010 and 31 December 2011 and expressed an unmodified auditor's opinion for each of the two years.
Tsang was an engagement director who signed the audit reports and Chan was the engagement quality control reviewer for the 2011 audit.
The institute received a referral from the FRC about non-compliance with professional standards in the audit work conducted by Pan-China concerning impairment assessment of the company's interests in two natural resource extraction and mining projects included in the financial statements.
After considering the information available, the Institute lodged complaints under section 34(1)(a)(vi) of the Professional Accountants Ordinance (Cap 50).