• Register
Return to: Home > News > Mid Tier > PCAOB sanctions and censures Crowe Horwath Hong Kong

PCAOB sanctions and censures Crowe Horwath Hong Kong

The Public Company Accounting Oversight Board (PCAOB) has sanctioned a disciplinary order against Hong Kong-based audit firm Crowe Horwath (CHHK) CPA Limited for refusing to cooperate with a Board investigation of the firm’s audits.

The Hong Kong member firm was recently asked to turn over certain audit work papers regarding an audit of a Chinese-based company whose shares trade in the USA, Crowe Horwath Hong Kong admitted to the findings and violations, consenting to the sanction. The firm was censured and its registration was revoked, with a right to reapply after three years.

PCAOB chairman James Doty said: "The Sarbanes-Oxley Act authorizes the Board to impose significant sanctions on any registered firm that refuses to produce requested information in Board investigations. This is an important tool to protect investors, and we will not hesitate to use it to ensure compliance with PCAOB rules and USA law."

Crowe Horwath International CEO Kevin McGrath told International Accounting Bulletin that the firm has been caught between compliance with the laws and regulations of the Chinese government and their desire to comply with the request of the PCAOB.

“CHHK was prohibited by Chinese law from handing over documents to a foreign regulator without approval from the Chinese government, and on that basis the PCAOB revoked the firm’s authority to audit companies whose shares trade in the USA,” he said.

McGrath added that this matter is a profession-wide issue and not one specific to Crowe Horwath.

However, Paul Gillis, professor of practice and co-director of the IMBA program at Peking University's Guanghua School of Management and writer of China Accounting Blog said: “Crowe Horwath argued that Chinese regulators forbid it from providing these documents directly to the PCAOB. The PCAOB had reached an agreement in 2013 with Chinese regulators for document production in the case of enforcement actions, but no agreement has been reached with respect to inspections.”

The Big Four Chinese firms settlement can be found here.

Comment on the settlement can be found here.


Amended 31/07/2017: This article was amended as Crowe Horwath International CEO Kevin McGrath's quote was incomplete in the original version of the article. McGrath full quote to International Accounting Bulletin was: "Our member firm in Hong Kong, Crowe Horwath Hong Kong (CHHK), was recently asked by the PCAOB to turn over certain audit work papers with regards to an audit the firm conducted of a Chinese-based company whose shares trade in the U.S. CHHK was prohibited by Chinese law from handing over documents to a foreign regulator without approval from the Chinese government, and on that basis the PCAOB revoked the firm’s authority to audit companies whose shares trade in the U.S. CHHK has been caught between compliance with the laws and regulations of the Chinese government and their desire to comply with the request of the PCAOB.  It is important to note that this matter is a profession-wide issue and not one specific to Crowe Horwath."

Top Content

    Time pressure: Facing up to mental health

    In an ‘always on’ culture, it is becoming increasingly difficult to manage a healthy work-life balance. While companies are beginning to address this problem by introducing different support systems, Joe Pickard finds more could be done to ensure the wellbeing of the professions workforce.

    read more

    Venezuela: the race for the dollar

    With a new currency following hyperinflation, large sections of the population emigrating to neighbouring countries, an economy on the brink of collapse and no apparent solution coming from the government, Jonathan Minter finds a profession struggling to stay afloat in Venezuela.

    read more

    Brazil: transparency and control

    Brazilian accountants have an optimistic view of the impact of more-regular reporting and the implications of audit controversies for the profession. Paul Golden reports.

    read more

    Argentina: looking for a clearer view

    The Argentine accounting profession continues to grapple with the impacts of a weak economy and a culture of financial corruption. Paul Golden takes a closer look.

    read more

    Blockchain: adapting to disruptive tech

    In the relatively few years since digital currencies first began using blockchain technology, the array of potential applications has grown significantly – and continues to expand. Dan Balla, Matthew Schell and Dave Uhryniak from Crowe look at how it impacts accountancy.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.