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June 14, 2017

BDO China banned for the second time in six months

By Vincent Huck

BDO China has been banned from auditing public companies for two months by the Chinese regulators. This is the firm second suspension in six month, following a similar ban in January of this year.

Contacted by International Accounting Bulletin, BDO International declined to comment.

In a blog post, Paul Gillis professor of practice at Peking University’s Guanghua School of Management, wrote that on one hand these action where a good thing reflecting that China is taking audit quality seriously.

But on the other hand, Gillis wrote that the issue encountered at the audit firm are inherent to a section of the market which was created to allow small private companies access to capital and where accounting fraud is common and often “tolerated by regulators”.

“The CPA firms need to respond to these actions by focusing on quality instead of growth,” Gillis wrote. “Client acceptance processes need to be tightened, and internal quality review processes strengthened. The culture of the firms needs to change, shifting the focus from winning new clients and growing quickly to doing a better job auditing and managing risk.”

Gillis full blog is available here: Chinese audit regulators get tough

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