Posted on December 4, 2012
Published: 04 December, 2012, 13:56
Ernst & Young
US regulators have charged China-based affiliates of the ‘Big Four’ audit firms, Deloitte, Ernst & Young, KPMG and PwC, with security law violations, saying they refused to cooperate with investigators in a fraud probe.
The US Securities and Exchange Commission claims that the four firms as well as another account firm BDO China Dahua have refused to provide Chinese audit papers to investigators that are probing nine companies publicly traded in the US over fraud. There has been a two year investigation of Chinese based companies listed in the US suspected of failing to provide accurate financial reports to investors.
“Only with access to work papers of foreign public accounting firms can the SEC test the quality of the underlying audits and protect investors from the dangers of accounting fraud,” SEC Enforcement Director Robert Khuzami said in a statement. “Firms that conduct audits knowing they cannot comply with laws requiring access to these work papers face serious sanctions.”
US accounting regulator the Public Company Accounting Oversight Board (PCAOB) has agreed with most major economies aside from China on getting access to foreign auditors of US-listed companies. PCAOB has discussed the issue with Chinese regulators in Washington in the last week of November, but no agreement has been reached.
It’s not the first time the ‘Big Four’ auditors have come under fire over withdrawing papers from financial regulators. Ernst & Young will have to pay a $117 million fine to settle a probe in Canada against Chinese firm Sino-Forest for alleged manipulation of financial information.
Thanks to: http://jhaines6.wordpress.com