Deloitte China asks court to dismiss US SEC audit case

DELOITTE’S CHINESE ARM has requested that courts dismiss attempts made by US regulators to obtain audit work papers, citing a recent deal between China and the US watchdog allowing the documents to be released.

Deloitte Touche Tohmatsu’s legal team argue that the Securities Exchange Commission (SEC) has “alternative means” of acquiring the documents. The SEC claims it requires the papers as part of a fraud investigation into the Big Four firm’s client Longtop Financial Technologies, Reuters reports.

The Longtop case has been running since 2011, when the company was charged by the SEC for failing to file timely financial reports, with the body suspecting it of committing fraud.

In September of that year, the SEC told the federal district court in DC to enforce a subpoena against Deloitte in connection with its audit work carried out for Longtop. The action was postponed as the SEC negotiated with the Chinese authorities.

The dismissal request made by Deloitte comes days after the US’s Public Company Accounting Oversight Board (PCAOB) and Chinese regulators reached a deal, having been at stalemate for two years, effectively blocking American officials from investigating accounting irregularities at several Chinese businesses listed on the US stock exchange.

The deal is limited, however, and will only allow document sharing to take place in cases against auditors who transgress rules.