The Securities and Exchange Commission Friday announced sanctions against China-based members of the so-called Big Four accounting firms for failing to produce required documents for a fraud probe.
The settlement order censures the firms, fines them each $500,000 and requires an admission that they failed to provide documents until a legal proceeding began against them in 2012.
An administrative law judge issued a final decision in January 2014 finding fault by Deloitte Touche Tohmatsu Certified Public Accountants Limited, Ernst & Young Hua Ming LLP, KPMG Huazhen (Special General Partnership), and PricewaterhouseCoopers Zhong Tian CPAs Limited Company.
The four are registered with the Public Company Accounting Oversight Board, and as such are required to play by the same rules as U.S.-based auditors. The judge held they refused to hand over documents in connection with audit work done for nine China-based companies that had securities registered in the United States,
“As we repeatedly have stated throughout this litigation, obtaining an audit firm’s work papers is critical to enforcement staff’s ability adequately to protect investors from the dangers of accounting fraud,” Andrew Ceresney, the SEC’s director of enforcement, said in a statement. “This settlement recognizes the SEC’s substantial recent progress in obtaining those documents from registered firms in China.”
Added Antonia Chion, the division’s associate director, “The settlement is an important milestone in the SEC’s ability to obtain documents from China.”
The SEC noted that a proceeding continues against a fifth China-based accounting firm, Dahua CPA Ltd.
Comments