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The AFRC has sanctioned Deloitte Touche Tohmatsu (Deloitte), Mr Wong Tin Chak Samuel (Wong) and Mr Mak Chi Lung (Mak) for multiple audit deficiencies related to revenue recognition and other breaches involving two companies formerly listed in Hong Kong.  These deficiencies resulted in failures to obtain sufficient appropriate audit evidence and indicated a lack of professional skepticism to address the assessed risk of material misstatement of revenue.

The three regulatees accepted their breaches and proactively engaged in settlement negotiation and reached an early settlement with the AFRC.  The AFRC has issued a public reprimand to each of Deloitte, Wong and Mak, and imposed pecuniary penalties totalling HK$1,912,000, comprising penalties of HK$1,160,000 for Deloitte, HK$416,000 for Wong and HK$336,000 for Mak.

This is the first batch of completed disciplinary cases involving Mainland audit working papers obtained through cross-boundary regulatory collaboration with the support of the Ministry of Finance of the People’s Republic of China.

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