SEC orders Baker Tilly to disgorge US$75,000 in audit fees for failure to detect fraud

A Hong Kong-based accounting firm will disgorge auditing fees and temporarily cease accepting new American clients after US regulators imposed sanctions on the firm on Wednesday over audit failures tied to a company suspected of fraud.

The US Securities and Exchange Commission said Baker Tilly Hong Kong, director Andrew Ross and former director Helena Kwok “ignored red flags” of US$59 million in related-party transactions reflected in accounting records for China North East Petroleum.

The SEC said Baker Tilly will disgorge US$75,000 in audit fees, plus cease accepting new US company clients until it undergoes a compliance review by an independent consultant.