The US Securities and Exchange Commission (SEC) has granted the judge preceding over its administrative case against the Big Four and BDO’s China operations with regards a violation of regulatory requirements to hand over audit documents of Chinese clients listed in the US, a seven month extension to issue its ruling.
The SEC, which is bringing the administrative proceedings against the firms as it violates the Sarbanes-Oxley Act and SEC Act, has granted the request and a final decision is now expected on 11 October 2013. Chief Judge Brenda Murray, who was previously expected to give her verdict on the case today, requested the extension from the SEC due to more accounting firms having been added to the motion at the end of 2012.
The initial motion was aimed solely at Deloitte China (Deloitte Touche Tohmatsu Certified Public Accountants), however, after negotiations between the SEC and Chinese regulators collapsed, the US regulator added Ernst & Young Hua Ming, KPMG Huazhen (Special General Partnership), PricewaterhouseCoopers Zhong Tian CPAs and BDO China Dahua to the case.
Both the Sarbanes-Oxley Act and SEC Act require foreign public accounting firms to provide the regulator with audit work papers involving any company trading on US markets upon request. However, all the firms motioned in the case claim that such demands are in violation of Chinese secrecy laws and have called for a diplomatic solution to the dispute.
SEC steps up China audit work paper dispute
Securities and Exchange Commission