Global Accounting/Auditing Firms Running Into Trouble Overseas

The global auditing firms are running into difficulties navigating their U.S. regulatory requirements with local requirements for their affiliates in China.

The difficulties relate to SEC requests to review the firms’ work on audits of companies located in China that are U. S. public filers. According to a WSJ article ( ), the accouting firms Chinese affiliates are not permitted to make their local audit work papers available to non-China based regulatory organizations.  Of course, absent an agreement between the Chinese regulatory authorities and the related U.S. regulatory authorities, the auditing firms are unable to comply with the SEC’s request.

Enter the Public Company Accounting Oversight Board (“PCAOB”), the U.S. accounting firm regulatory agency.  As noted in a NY Times article (, currently, the PCAOB is working with their China-based counterparts to enter into an arrangement allowing cooperation with respect to accounting firm regulation, particularly regarding access to auditing firm working papers and related supporting documents.

With possible SEC enforcement actions in process against some or all the major global auditing firms (mainly the four largest accounting firms commonly referred to as the “Big Four”), the firms leaders are hoping for a resolution between the U.S. and China-based regulatory organizations that will permit compliance with the SEC requests.

Stay tuned.


About docjonz

I am an Associate Professor of accounting at Hofstra University in Hempstead, NY. Additionally, I have more than 30 years of professional accounting experience in various capacities including auditing, accounting standard setting and corporate accounting policy.
This entry was posted in Auditing and Auditor Reporting, Corporate Governance and tagged , . Bookmark the permalink.

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