SEC orders Baker Tilly to disgorge US$75,000 in audit fees for failure to detect fraud
US regulator fines Hong Kong-based accounting firm US$75,000 over audit failures tied to mainland company China North East Petroleum
A Hong Kong-based accounting firm has been fined US$75,000 and temporarily barred from accepting new clients trading in the US after the American market regulator imposed sanctions on the firm over audit failures tied to a mainland company suspected of fraud.
The US Securities and Exchange Commission said Baker Tilly Hong Kong director Andrew Ross and former director Helena Kwok "ignored red flags" of US$59 million in related-party transactions reflected in accounting records for China North East Petroleum.
The firm could be investigated in Hong Kong under Hong Kong Institute of Certified Public Accountants rules, HKICPA president Dennis Ho Chiu-ping told the South China Morning Post.
"It is a Hong Kong accounting firm and the accountants involved are members of the HKICPA. As such, the HKICPA will definitely look into it and follow up to check if a formal investigation is needed," said Ho.
"Our focus is to check if the Hong Kong accounting firm and the accountants followed all the auditing procedures and standards. We'll check if the firm and the accountants have done their duty as the auditor."
The SEC said Baker Tilly would pay US$75,000 it had earned from auditing the Chinese firm and cease to accept new US company clients until it undergoes a compliance review by an independent consultant.
Ross and Kwok also agreed to pay penalties of US$20,000 and US$10,000, respectively, and face a three-year bar from practising as accountants before the SEC.