AFRC Imposes Penalties On Deloitte For Deficient Audits Of Former Listed Firms

Hong Kong’s Accounting and Financial Reporting Council (AFRC) has imposed a fine of HKD 1.9 million (USD 245,000) on Deloitte Touche Tohmatsu and reprimanded the firm along with two partners for audit deficiencies.

The penalties relate to audits of two former listed companies between 2011 and 2013. Partner Samuel Wong Tin-chak was fined HKD 416,000, and Mak Chi-lung HKD 336,000. The AFRC, supported by China’s Ministry of Finance, identified shortcomings in revenue recognition and audit evidence in the financial reporting of Tianhe Group, a fine chemical manufacturer, and Sound Global Group, a water and wastewater treatment company. Deloitte and the partners involved accepted their breaches and reached an early settlement with the regulator. AFRC CEO Janey Lai said the cases highlight cooperation under a 2019 Memorandum of Understanding (MoU) with the Ministry of Finance to enhance confidence in financial reporting.