- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Aaron Nicodemus2022-12-15T18:06:00
The Public Company Accounting Oversight Board (PCAOB) announced Thursday it received “complete access to inspect and investigate” audit firms in China and Hong Kong, potentially averting the delisting of hundreds of Chinese public companies from U.S. exchanges.
The PCAOB said it vacated two 2021 determinations that it had not been able to access audit papers of companies based in China and Hong Kong, according to a new determination report.
“This historic and unprecedented access was only possible because of the leverage Congress created by passing the Holding Foreign Companies Accountable Act (HFCAA). Congress sent a clear message with that legislation that access to U.S. capital markets is a privilege and not a right, and China received that message loud and clear,” said PCAOB Chair Erica Williams in a press release.
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The Public Company Accounting Oversight Board imposed $7 million in total penalties against two PwC affiliates under its first settlements with mainland Chinese and Hong Kong firms since the passage of the Holding Foreign Companies Accountable Act.
The Public Company Accounting Oversight Board found seven of eight audit engagements it reviewed in China and Hong Kong contained “unacceptable rates” of deficiencies.
U.S.-based audit firms seeking new public company clients in China should ensure they have full access to previous audits and work papers before taking the job or risk potential enforcement, the acting chief accountant at the Securities and Exchange Commission warned.
Chinese authorities banned PwC’s Chinese unit from performing audits in the country for six months, labeling the subsidiary’s flawed audit work as complicit in the failure of giant property developer Evergrande.
Erica Williams was reappointed to a second term as chair of the Public Company Accounting Oversight Board after an ambitious first three years in the role that have seen the agency work to update many of its standards deemed outdated.
Software company Autodesk said it won’t restate several years of financial statements following an audit committee investigation into potential accounting misconduct.
