- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Aaron Nicodemus2023-05-10T16:36:00
The Public Company Accounting Oversight Board (PCAOB) found seven of eight audit engagements it reviewed in China and Hong Kong contained “unacceptable rates” of deficiencies. PCAOB Chair Erica Williams called the landmark inspections “a powerful first step toward accountability.”
Inspection reports for KPMG Huazhen (China) and PwC (Hong Kong) dated March 28 but publicly released Wednesday included deficiencies observed in all four of KPMG’s audits reviewed and three of four PwC audits, the PCAOB announced in a press release.
At KPMG, the deficiencies consisted of unsupported opinions by the firm in financial statement and internal control over financial reporting audits regarding revenue, unearned revenue, certain liabilities, long-lived assets, and journal entries. At PwC, weaknesses were noted regarding revenue and related accounts, a significant account, and significant transactions.
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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.
A steady increase in the rate of deficiencies observed by the Public Company Accounting Oversight Board during audit inspections the past three years has the head of the agency calling on firms to “make changes to turn things around.”
The Public Company Accounting Oversight Board announced 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.
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after an ambitious first three years in the role that have seen the agency work to update many of its standards deemed outdated.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.
