backOn July 22, 2025, the PCAOB announced a settled disciplinary order against Centurion ZD CPA & Co, a Hong Kong-based audit firm (the “Firm”), and its owner Chan Kam Fuk (“Chan”), for multiple violations of PCAOB rules and standards in connection with FY 2021 audits of three China-based issuers, Luckin Coffee Inc., Greenpro Capital Corp., and Moxian (BVI) Inc. The Board found that the Firm and Chan failed to properly conduct risk assessments and did not obtain sufficient appropriate audit evidence when testing multiple significant risk areas. Notably, according to the Board, the Firm and Chan did not use Luckin Coffee Inc.’s prior-year SEC fraud settlement to “identify and assess risks of material misstatement or to design audit procedures responsive to those fraud risks.” The Board also found that: (i) the Firm and Chan failed to properly communicate with Luckin and Moxian’s audit committees; (ii) the Firm failed to timely file accurate Form APs for both the Luckin and Moxian’s audits; and (iii), the Firm failed to establish and maintain a quality control system that would reasonably ensure work was assigned to personnel with the necessary technical proficiency and that audit work met applicable professional and regulatory standards. Chan, who was the engagement partner for the above-mentioned audits and the person responsible for ensuring the Firm’s compliance with the PCAOB standards, was held liable under PCAOB Rule 3502 for “knowingly or recklessly, and directly and substantially, contributing to the Firm’s audit reporting violations.”
Without admitting or denying the Board’s findings, the Firm and Chan consented to the Order which permanently revoked the Firm’s registration and permanently barred Chan from associating with any registered public accounting firm. Additionally, the Order imposed a civil penalty of $75,000 on the Firm and Chan.
The settled order is available here.