The Securities and Exchange Commission (SEC) has charged audit firm Patrizio & Zhao LLC (P&Z) and one of its founding partners, Xinggeng (John) Zhao, for their roles in the botched audits of a China-based company that failed to disclose related party transactions by its CEO and others. An SEC investigation found that P&Z and Zhao failed to comply with U.S. auditing standards and exercise appropriate professional care and skepticism in conducting audits and interim reviews for Keyuan Petrochemicals. Keyuan was charged with accounting and disclosure violations by the SEC earlier this year.

P&Z and Zhao will be prohibited from practicing as an accountant on behalf of any publicly traded company or other entity regulated by the SEC, and P&Z is required to pay a $30,000 penalty.