The Big Four firms have called for prompt diplomatic solution to the dispute between the US Securities and Exchange Commission (SEC) and Chinese authorities over the inspections of Chinese companies listed on the US stock exchange.
Yesterday the SEC began administrative procedures against all Big Four firms in China, as well as BDO China, for refusing to produce audit work papers and other documents related to China-based companies under investigation by the SEC for potential accounting fraud against US investors.
PwC China said the action by the SEC is the result of conflicting laws between the US and China.
The firm emphasised its obligation to comply with its legal obligations under China law.
“This action involves an issue that needs to be resolved between the US and China regulators as it impacts all audit firms in China serving clients who are registered with the SEC. PwC China hopes for continuing dialogue between those two parties to resolve the matter.”
KPMG said in a statement that it remains hopeful that the on-going discussions between US and Chinese regulators will result in a positive diplomatic resolution.
Deloitte’s and E&Y’s statement were in the same vain calling for an agreement on mutual oversight.
The issue between the regulators has been a pressing matter for some time as the SEC said it is looking to investigate potential wrongdoings by nine China-based companies whose securities are publicly traded in the US and the audit firms are said to have refused to cooperate in the investigations.
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Chinese accounting firms have been quoting Chinese secrecy laws as the reason for not being able to comply with the SEC’s requests, which is making them violate the SEC and the Sarbanes-Oxley Act, according to SEC.