The Public Company Accounting Oversight Board (PCAOB) imposed collective fines totaling $150,000 against three partners at KPMG China for violations of standards related to their audit work at education service provider Tarena International.
Choi Chung Chuen, Ma Hong Chao, and Dong Chang Ling agreed to be censured and pay penalties of $75,000, $50,000, and $25,000, respectively, the PCAOB announced in a press release Wednesday.
Choi and Ma will be barred from working at a registered public accounting firm for a year, at which point they can petition the board to return after completing continuing professional education. Dong will be limited from acting in certain roles on issuer audits for a year and be required to complete continuing professional education.
The details: In 2019, Tarena restated its 2017 financial statements for intentional revenue inflation and improper charges against accounts receivable, among other issues, an independent audit investigation at the company found.
Choi, the engagement partner on the audit, and Ma, a second partner, failed to obtain sufficient appropriate audit evidence to support Tarena’s reported revenue for its 2017 financial statements, the PCAOB alleged in its disciplinary order.
The duo improperly relied on Tarena’s information technology (IT)-related controls that had numerous, unremediated deficiencies, per the order.
The PCAOB further alleged Choi and Ma failed to exercise due care, professional skepticism, obtain sufficient appropriate audit evidence, and that Dong failed to conduct proper supervision related to his responsibilities for IT.
KPMG China did not respond to a request for comment. Choi, Ma, and Dong settled without admitting or denying the PCAOB’s findings.
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