The Strategist

KPMG is being sued for substandard auditing in Hong Kong

09/07/2022 - 11:14

China Medical Technologies' liquidator has accused audit and consulting firm KPMG of conducting a "poor" audit. The Hong Kong Supreme Court commenced hearing the case.

Håkan Dahlström
Håkan Dahlström
In 2012, China Medical declared bankruptcy. Since then, the business has been the subject of multiple lawsuits in various nations, and the American government has issued a list of wanted persons for several of its top executives. The liquidation claims that KPMG missed $400 million in fraudulent reporting by China Medical because the audit was of inadequate quality and did not uncover errors by asking "obvious" questions.

The case specifically refers to a $176 million purchase of a diagnostic company when the actual worth was only $155,000. Additionally, China Medical raised $426 million from international investors just before it was liquidated.

KPMG is now being requested to pay $830 million in compensation, of which $454 million is restitution for monies that were wrongfully used and dividends that were paid during the flawed audit, and the remaining $376 million is interest on that sum. All of the accusations are refuted by KPMG, which claims China Medical gave it inaccurate data.