PCAOB Sanctions Hong Kong Audit Firm for Refusing to Cooperate with Board Investigation
Firm admits to the facts, findings, and violations
The Public Company Accounting Oversight Board today announced a settled disciplinary order against Hong Kong-based audit firm Crowe Horwath (HK) CPA Limited for refusing to cooperate with a Board investigation of the firm's audits of a China-based issuer.
The firm consented to the sanctions and admitted to the facts, findings, and violations in the order. Crowe Horwath HK's registration was revoked with a right to reapply after three years. The firm also was censured.
"The Sarbanes-Oxley Act authorizes the Board to impose significant sanctions on any registered firm that refuses to produce requested information in Board investigations," said James R. Doty, PCAOB Chairman. "This is an important tool in our work to protect investors, and we will not hesitate to use it when a firm refuses to provide our enforcement staff with work papers and related information necessary to ensure compliance with PCAOB rules and U.S. law."
Crowe Horwath HK, a partnership based in the Hong Kong Special Administrative Region of the People's Republic of China, failed to cooperate with a Board investigation by refusing to produce documents in response to a formal demand for documents, including audit work papers, as part of a Board investigation.
"Regardless of their location, the PCAOB is prepared to bring disciplinary proceedings against registered audit firms that fail to comply with their obligations under U.S. law to provide information requested by the PCAOB," said Claudius B. Modesti, Director of PCAOB Enforcement and Investigations. "These firms are gatekeepers to protect investors in U.S. capital markets."
The investigation was conducted by PCAOB enforcement staff members Alan Lo Re, R. Davis Taylor, Stefan Hagerup, and Hazel Mak and was supervised by Kyra Armstrong and Raymond Hamm.
The PCAOB oversees auditors' compliance with the Sarbanes-Oxley Act, federal securities laws, professional standards, and PCAOB and SEC rules, including independence rules. Further information about the PCAOB Division of Enforcement and Investigations may be found on the PCAOB website. Suspected misconduct by auditors can be reported to the PCAOB Tip and Referral Center.