backOn July 21, 2026, the PCAOB issued a settled disciplinary order sanctioning the Hong Kong audit firm Zhen Hui Certified Public Accountants and its managing partner for violations of PCAOB rules and standards in connection with six audits for three unidentified Nevada-formed issuers based in Hong Kong and China. The respondents settled the matter without admitting or denying the PCAOB’s findings.
The PCAOB found that the respondents (1) failed to obtain sufficient appropriate audit evidence in connection with testing revenue in three of the issuer audits; (2) failed to evaluate whether disclosures in the financial statements were in conformity with ASC 606, Revenue from Contracts with Customers, in two audits; (3) failed to adequately evaluate the significant assumptions used to estimate the fair value of goodwill in one audit; (4) failed to document who performed and reviewed the audit work for any of the workpapers in one audit; (5) failed to make required audit committee communications in three audits; and (6) failed to obtain engagement quality reviews in all six audits.
In addition, the PCAOB found that the firm violated PCAOB quality control rules and standards by failing to establish and implement sufficient policies and procedures providing reasonable assurance that (1) the firm would comply with PCAOB standards requiring EQRs for all issuer audits, (2) the firm and its associated persons would obtain sufficient appropriate audit evidence when testing revenue; and (3) the firm and its associated persons would comply with audit committee communication requirements. The PCAOB also found that the firm lacked any process to monitor its quality control system and that the firm’s written quality control policies were addressed exclusively to Hong Kong auditing regulations and requirements and contained no provisions that were tailored to PCAOB standards. Finally, the PCAOB found that the managing partner directly and substantially contributed to the firm’s quality control violations by failing to create appropriate policies and procedures around EQRs and revenue testing and by failing to design or implement appropriate monitoring procedures.
The PCAOB (1) censured the firm and the partner; (2) imposed a civil monetary penalty of $60,000, jointly and severally, on the firm and the partner; (3) revoked the firm’s registration, with the right to reapply after two years and after undertaking remedial actions to improve its system of quality control; and (4) barred the partner from being associated with a registered public accounting firm, with the right to petition the Board to terminate the bar after two years and after completing 40 additional hours of continuing professional education.
The PCAOB settled order is located here.