SEC bans accountancy firm over failed Chinese company audits

SEC bans accountancy firm over failed Chinese company audits

Sherb & Co audits of three US-listed Chinese companies were "riddled with failures" SEC investigation finds

NEW YORK-based accountancy firm Sherb & Co has been barred from performing audit work after US regulators found its audit of three US-listed Chinese companies were “riddled with failures”.

A Securities and Exchange Commission investigation found that the firm and its auditors falsely represented in audit reports that they had conducted the audits in accordance with US auditing standards when it fact they were “riddled with failures and improper professional conduct”.

One of the companies they audited – China Sky One Medical Inc. – has since been charged by the SEC with financial fraud.

To settle the SEC’s charges, the firm and the four auditors agreed to be barred from practicing as accountants on behalf of any publicly traded company or other entity regulated by the SEC. The firm agreed to pay a $75,000 penalty.

“Auditors are critical gatekeepers in the financial reporting process, but Sherb & Co and its auditors failed to live up to their professional obligations in multiple audits during a five-year period,” said Andrew Ceresney, co-director of the SEC’s division of enforcement.

According to the SEC’s order instituting settled administrative proceedings, the flawed audits involved China Sky One Medical, China Education Alliance, and Wowjoint Holdings.

Whitepaper

The Future of Finance is in the CFO's Hands

Business The Future of Finance is in the CFO's Hands

3m
Save a Week a Month Consolidating Accounts

Accounting Software Save a Week a Month Consolidating Accounts

4m
Mitigating Risk Through Internal Control

Legal Mitigating Risk Through Internal Control

4m
Could tax season have run more efficiently?

Corporate Tax Could tax season have run more efficiently?

5m

Related Articles

KPMG slapped with $50m fine over past audit work

Audit KPMG slapped with $50m fine over past audit work

4w Tom Lemmon
Former KPMG partners charged over PCAOB data leaks

Audit Former KPMG partners charged over PCAOB data leaks

1y Alia Shoaib, Reporter
KPMG fined £4.8m over Miller Energy audit

Audit KPMG fined £4.8m over Miller Energy audit

2y Alia Shoaib, Reporter
AICPA proposes plan to improve audit performance

Accounting Standards AICPA proposes plan to improve audit performance

4y Chris Warmoll, Writer
PwC faces $1bn lawsuit over bad MF Global advice

Accounting Firms PwC faces $1bn lawsuit over bad MF Global advice

5y Richard Crump, Writer
Deloitte dismisses HP claim plans as 'utterly without merit'

Accounting Firms Deloitte dismisses HP claim plans as 'utterly without merit'

5y Richard Crump, Writer
US and China commit to cross-border audit inspections

Audit US and China commit to cross-border audit inspections

5y Richard Crump, Writer
SEC suspends ex-Deloitte risk officer over audit work

Accounting Firms SEC suspends ex-Deloitte risk officer over audit work

5y Richard Crump, Writer