Accounting giant EY and two partners fined for auditing failures during Hong Kong listing procedures 20 years ago

Accounting giant EY and two partners have been fined a combined HK$700,000 (US$89,171) and legal costs of HK$1.5 million in Hong Kong for audit failures during the listing of three companies two decades ago.

The decision by Hong Kong’s accountancy industry watchdog brought to a close a case that has taken 16 years to resolve – one of the longest on record in the city for audit failures surrounding stock flotations.

The Hong Kong Institute of Certified Public Accountants (HKICPA) reprimanded and fined EY HK$400,000, Kwok Chee Tack HK$200,000 and Kelvin Wong Kam-man HK$100,000 for their failures in acting as the auditors for the three companies, which collapsed soon after their listings at the turn of the century.

EY, Kwok and Wong will also have to pay legal costs for the proceedings at a combined HK$1.53 million, the accounting body said.

The three companies involved were the now defunct household-products manufacturer Gold Wo International Holdings, electronic circuit-board maker Fu Cheong International Holdings and digital-camera maker Yue Fung International Group Holding. Yue Fung holds 20 per cent of Gold Wo and indirectly holds 14 per cent of Fu Cheong.

The HKICPA said EY, formerly Ernest &Young, was the auditor for the flotations of these companies between 1997 and 2002. Wong was the “engagement partner” of Gold Wo and Kwok the engagement partner of Fu Cheong and Yue Fung.