The US Securities and Exchange Commission (SEC) has granted the petition for review issued by the Big Four, whereby the accounting firms aim to overturn the six-month ban prohibiting them from providing services to US-listed Chinese companies.
A judge of the SEC’s Division of Enforcement ruled that the Big Four’s member firms in China refused to provide the SEC with audit work papers of China-based companies, therefore contravening the Sarbanes-Oxley Act and SEC regulations.
According to US law, foreign public accounting firms must provide the SEC with audit work papers involving any company trading on US markets upon request.
This year Ernst & Young Hua Ming, KPMG Huazhen, Deloitte Touche Tohmatsu, and PwC Zhong Tian filed a petition for review, claiming they were willing to produce the requested work papers, but Chinese law prevented them from doing so directly.
The SEC also granted the Big Four firm’s petition to submit additional material evidence that it was not possible to produce at an earlier stage of the proceedings.
The SEC ordered that the Big Four firms should file a single consolidated brief by 23 June.
Approached by the International Accounting Bulletin, none of the Big Four firms were able to comment on the case.