The Public Company Accounting Oversight Board (PCAOB) revoked the registration of Hong Kong-based Zhen Hui Certified Public Accountants and barred its managing partner, Man Kit Horace Ho, from associating with a registered public accounting firm, citing violations of PCAOB rules and auditing standards across six issuer audits.
The PCAOB also censured the firm and Ho, imposed a $60,000 penalty jointly and severally, and required remedial actions before the firm may apply for registration again, according to an order issued July 21, 2026.
The firm did not immediately respond to a request for comment.
First enforcement action under new leadership
This was not publicized with a press release. But the order is the PCAOB’s first publicly posted enforcement action on its website since January 13, 2026, when the previous board announced settled disciplinary orders against Zwick CPA PLLC and Jack Zwick and Jeffrey Hoskow. There are five termination of bars between January and now.
It also is the first such order since the Securities and Exchange Commission (SEC) appointed a new PCAOB chair and new board members in January 2026. Chairman Paul Atkins of the SEC, which oversees the PCAOB, said at the time that the new board would bring “a new day at the PCAOB—one of sensible, efficient oversight of auditors.”
Atkins, who was nominated by President Donald Trump and sworn in as SEC chief in April 2025, has described a different approach to securities enforcement than the one pursued under prior leadership. In May 2026 remarks, Atkins said the SEC had previously used enforcement “more like a sledgehammer than a scalpel,” and said the agency would pursue cases that provide “meaningful investor protection and strengthen market integrity.”
The shift follows a period in which the PCAOB, under former Chair Erica Williams, announced record penalties and brought cases involving a range of alleged violations, including audit failures, quality-control deficiencies, and Form AP reporting violations. Some of the Form AP violations had no investor harm.
Hong Kong firm sanctions
The PCAOB said that it imposed the sanctions against Zhen Hui and Ho because they violated board rules and audit standards in performing six issuer audits and violated quality control standards.
Zhen Hui may reapply for registration after two years from the date of the order. Ho may petition the PCAOB for consent to associate with a registered firm after two years but must first complete 40 hours of continuing professional education related to PCAOB auditing standards, in addition to any CPE required for his professional license.
The PCAOB said the matter concerned audits of three issuers, identified in the order as Issuers A, B, and C. It also follows 100% audit work deficiency rate in the September 2025 inspection report.
According to the disciplinary order, Issuer A is a provider of customer-centric technology solutions for the retail industry in Hong Kong, parts of China, and the Philippines. Issuer B is an automobile aftermarket products wholesaler and auto detailing store consultancy company. Issuer C is a logistics service provider.
The PCAOB found that Zhen Hui failed to obtain engagement quality reviews for all six issuer audits. PCAOB standards require an engagement quality review for all audit engagements, and an audit firm may allow a client to use an engagement report only after the engagement quality reviewer gives concurring approval of issuance.
Ho, as managing partner, was responsible for resource allocation for the issuer audits and failed to engage or assign an accountant to serve as engagement quality reviewer. As engagement partner, he authorized issuance of the engagement reports without first obtaining concurring approval from an engagement quality reviewer, according to the order.
The order also found that the firm and Ho failed to obtain sufficient appropriate audit evidence in connection with revenue testing in three audits.
In those audits, revenue was a significant account and the firm assessed a risk of material misstatement related to improper revenue recognition. The order said the respondents selected samples of revenue transactions from internal sales ledger summaries and traced the revenue amounts to company-generated invoices.
However, the PCAOB said they failed to obtain evidence showing that the issuers had actually performed the services described in the invoices, that the recorded revenue amounts were accurate, or that the amounts were collected or collectible.
The PCAOB also found deficiencies related to revenue disclosures.
Further, the PCAOB said the auditors failed to adequately test the valuation of goodwill in an audit of Issuer B.
Issuer B’s reported goodwill represented about 50% of total assets as of fiscal year 2023, and the company used a discounted cash flow method to assess whether its reported goodwill was impaired. But the board said Zhen Hui obtained the company-prepared discounted cash flow analysis, mathematically recalculated it using the same method and assumptions as Issuer B, and compared the results. They failed to perform procedures to identify and evaluate the reasonableness of significant assumptions used in the valuation, including revenue growth rates and the discount rate.
The PCAOB further found that the firm failed to comply with audit documentation requirements in an audit of Issuer A. The documentation did not include who performed the audit work, who reviewed it, or the date of review in any of the work papers.
The order also cited failures to make required audit committee communications in three audits.
In addition, the order said Zhen Hui violated PCAOB quality control standards by failing to establish and implement an appropriate system of quality control.
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