Global Accounting Firms Caught in the Crossfire as SEC Fails to Reach Agreement with Chinese Regulators on Document Sharing
The China affiliates of the biggest accounting firms in the world have been placed in real jeopardy due to the stalled negotiations between U.S. and Chinese regulators over document sharing. On December 3, the U.S. Securities and Exchange Commission brought an administrative proceeding against BDO China Dahua CPA Co., Ltd., Deloitte Touche Tohmatsu Certified Public Accountants Ltd., Ernst & Young Hua Ming LLP, KPMG Huazhen (Special General Partnership), and PricewaterhouseCoopers Zhong Tian CPAs Limited based on their refusal to produce audit work papers and other documents relating to Chinese companies under investigation by the SEC. The accounting firms claim that their hands are tied because their Chinese regulators have refused to authorize the document production. A decision in favor of the SEC could result in these Chinese affiliates being denied the ability to appear and practice before the Commission, rendering it difficult for Chinese companies who rely on their services to list on American exchanges, and ultimately hindering the competitiveness of U.S. markets.