On June 22, 2023, without admitting or denying the findings, Eddie Wong (“Wong”) and Neil W. Ehrenkrantz (“Ehrenkrantz”) consented to a disciplinary order for violations of PCAOB rules and standards in connection with Friedman LLP’s 2016, 2017, and 2018 audits of Kingold Jewelry, Inc. (“Kingold”), a Delaware corporation headquartered in the People’s Republic of China. The PCAOB determined that Wong had “failed to exercise due professional care and skepticism” in part by failing to obtain confirmation of Kingold’s gold inventories that had been pledged as collateral to secure loans from banks and financial institutions and failing to identify or evaluate certain transactions—specifically faulting Wong for relying on “uncorroborated management representations.” The PCAOB alleges that Ehrenkatz had violated AS 1220, Engagement Quality Review, by approving the audit reports “without appropriately evaluating the engagement team’s assessment of and responses to significant risks with due professional care.” The settled order bars both Wong, who served as the engagement partner, and Ehrenkrantz, who performed the engagement quality review of the audits, from being an associated person of a registered public accounting firm, with leave to reapply after two years and one year (respectively). The settled order additionally imposes a $100,000 civil money penalty on Wong and $25,000 civil money penalty on Ehrenkantz.

The PCAOB press release is here and the PCAOB settled order is here.