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While this report largely focuses on the financial sector, the audit industry is itself essential to a well-functioning system. And, in recent past years, audit firms globally have suffered from similar culture and conduct concerns as financial institutions. As such, it is helpful to look at relevant developments in Hong Kong. In September, for example, KPMG was sued for $830 million USD in Hong Kong over its allegedly “appalling” audit of China Medical Technologies, which had allowed the biotechnology firm to commit a $400 million accounting fraud. The liquidator of the company, which collapsed in 2012, said KPMG failed to ask basic questions which would have exposed the fraud. This includes not questioning a $176 million acquisition of a diagnostics business objectively worth only $155 thousand.1

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