American regulators on Monday charged the Chinese affiliates of five top accounting firms with violating securities laws, alleging they refused to produce audit documents in connection with accounting fraud investigations into Chinese companies.
The firms violated laws that require foreign public accounting firms to provide audit work papers involving any company trading on U.S. markets, the SEC said.
An administrative law judge will schedule a hearing to determine potential sanctions against the firms, the SEC said.
The SEC has been examining several China-based companies listed in the United States for accounting irregularities, but the inquiries have stalled amid difficulties in obtaining audit documents from China.
Last year the agency took Deloitte to federal court to try to force the firm to turn over documents in connection with an investigation into Longtop Financial Technologies Ltd, but in July sought to delay that legal battle, citing ongoing negotiations with Chinese regulators.
The accounting firms have resisted turning over materials citing Chinese secrecy laws.
Reuters reported last month that talks between the two countries over access to audit documents are expected by year-end.
In a statement, Deloitte said: “While it is unfortunate that the two countries have not yet been able to find common ground on these issues, we remain hopeful that a diplomatic agreement can be reached, and we stand ready to assist that effort in any way we can.”
Ernst & Young’s China affiliate, Ernst & Young Hua Ming, said in a statement it hoped U.S. and Chinese regulators can reach agreement.
The other firms did not immediately respond to requests for comment.Source: Fox Business “SEC charges China affiliates of top accounting firms”
- US charges accountants over China (bbc.co.uk)
- Chinese units of 5 big US audit firms charged (miamiherald.com)
- China orders “Big Four” auditors to restructure (chinadailymail.com)
Categories: Finance & Economy