Securities Regulation Daily Wrap Up, ACCOUNTING AND AUDITING—PCAOB: Hong Kong firm and owner violated standards in China audits, (Jul 25, 2025)
Organizations Mentioned:Greenpro, Inc.
The respondent violated PCAOB standards in audits of three public companies and subsidiaries located in China.
The PCAOB announced a settled disciplinary order sanctioning a Hong Kong-based firm and its owner for multiple violations. The Board found that the respondents violated PCAOB rules and auditing and quality control standards in its audits of three companies, or their subsidiaries, headquartered or operating in China. The Board revoked the registration of the firm, barred its owner from association, and imposed a $75,000 civil penalty (Centurion ZD CPA & Co., Release No. 105-2025-032, (PCAOB July 22, 2025)).
Respondent Centurion ZD CPA & Co. was, during the period at issue, a public accounting firm located in Hong Kong and was owned by Chan Kam Fuk. Centurion was registered with the PCAOB, and Chan, the managing partner and sole equity partner, was an associated person under the relevant rules.
Luckin. The Board first found that Centurion failed to properly assess risk and obtain sufficient audit evidence in the audit of Luckin Coffee, Inc., a Cayman Islands corporation headquartered in China. Luckin retained Centurion after it had settled accounting fraud charges brought by the SEC for conduct occurring in 2019. Centurion however, in conducting an audit of Luckin’s 2021 consolidated financial statements, failed to use information about this fraud in the audit to identify and assess risks of material misstatement or to design audit procedures to address fraud risks, the PCAOB said. Centurion further failed to exercise due professional care, including professional skepticism in other aspects of the audit work.
Greenpro. In audit work for Greenpro Capital Corp., a corporation headquartered in Malaysia, the PCAOB found that Centurion failed to properly assess risk and obtain sufficient audit evidence. Here, Centurion was engaged to perform financial statement audit procedures for Greenpro subsidiaries. The Board found that the respondents failed to exercise due professional care by failing to inquire who might reasonably be expected to have key information as to the identification and assessment of risks of material misstatement, including fraud risks. As a result, Centurion failed to exercise due professional care in properly planning and performing risk assessment for the audit work, and in other parts of the audit, and also failed to exercise professional skepticism.
Moxian. Finally, Centurion failed to identify and assess the risks of material misstatement due to fraud in an audit of China-headquartered Moxian (BVI) Inc. The Board found that Centurion failed to exercise due professional care, including professional skepticism, in its risk assessment, obtaining sufficient appropriate audit evidence, and in identifying the risk of management override of controls.
Reporting violations. The Board also found that Centurion violated audit standards in how it reported the audits of Luckin and Moxian. The respondents additionally failed to timely file multiple required forms to disclose information about engagement partners and other accounting firms participating in the audits; Chan directly contributed to these reporting violations. Centurion also violated PCAOB quality control standards because its engagement personnel lacked an appropriate understanding of the relevant standards.
Sanctions. The Board censured Centurion and Chan and imposed a joint and several $75,000 civil money penalty. In addition, Centurion’s registration was revoked, and Chan was barred from association with any PCAOB-registered public accounting firm.
The release is No. 105-2025-032.
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