FIVE ACCOUNTING firms have become caught up in a regulatory spat between the US and China after the US Securities and Exchange Commission charged their Chinese affiliates of violating securities laws.
On Monday, the SEC accused the Chinese affiliates of the Big Four – PwC, Deloitte, KPMG and Ernst and Young – and BDO of breaking securities laws by refusing to produce documents related to their audits of several China-based clients under investigation for fraud.
The actions by the S.E.C. stem from a broader inquiry into Chinese companies listed on American exchanges.
The SEC actions, which stem from a wider inquiry into Chinese companies listed on American exchanges, leaves the firms on the horns of a dilemma. The US has ordered they share audit documents from foreign jurisdictions, a practice that is barred in China.
Yo Guofu, a lawyer with Beijing Shengfeng law firm, told the Financial Times that a China-US auditing framework should have been worked out years ago.
“This is an issue that should have been dealt with before they were listed, so that it didn’t get to a point where auditing firms can’t do anything about it,” he says.
Given the events of the past week as we enter new territory our SMEs now more than ever need the support of their accountants, writes Bobby Lane
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