Hong Kong’s Accounting and Financial Reporting Council (AFRC) has fined Forvis Mazars (Mazars) and Grant Thornton Hong Kong for breaching audit file archiving regulations.
In disciplinary decisions announced by the regulator, the shrines were publicly reprimanded and ordered to pay a fine of HK$1.4 million ($179,297).
In addition, the company has also been directed to bear the costs and expenses of the AFRC investigation.
Grant Thornton received a higher financial sanction, with a HK$2.32 million fine imposed, along with an order to cover the costs and expenses of the regulator’s investigation with the AFRC.
The AFRC said both companies had gross violations of the 60-day archiving requirement and had deficiencies in their quality control and management systems.
According to the organizer, Mazar 96 engagements remained unarchived for more than a year. At Grant Thornton, 303 engagements were unarchived for more than a year, including 44 that remained unarchived for more than three years.
In addition, Grant Thornton provided false information about the breach, including responding to AFRC’s legal requests to confirm and reconcile it. The AFRC said this unnecessarily prolonged the investigation, so it applied only a 10% reduction in the penalty.
Mazar and Grant Thornton Hong Kong have acknowledged the error and fully accepted the AFRC’s disciplinary action.
AFRC Director of Audit and Compliance Dennis Cheng and AFRC Discipline Director Hester Leung said: “These cases are serious and of grave concern. Timely archiving of audit documents is a fundamental duty of auditors and an essential element of audit quality.
“Companies must establish and maintain robust systems of quality management and controls, supported by adequate and appropriate resources, to ensure proper compliance with audit standards.
“Otherwise, it seriously undermines the company’s credibility and erodes public confidence in the profession.”
“AFRC fines Mazars, Grant Thornton for violating archival rules” was originally created and published by Accountable, a brand owned by Global Data.
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