What future holds for PCAOB post China crackdowns

In November, the Public Company Accounting Oversight Board announced penalties for violations of U.S. securities laws and PCAOB rules and standards under its first enforcement settlements with mainland China and Hong Kong firms since the passage of the Holding Foreign Companies Accountable Act.

Two affiliates within PwC’s global network, PwC Hong Kong and PwC China, were fined $4 million and $3 million, respectively, for allegedly failing to detect or prevent their employees’ cheating on mandatory internal training exams. The penalties were the largest imposed against a China-based firm and the second and third largest imposed in the PCAOB’s history.

These penalties were historic because of the location of the firms and the monetary totals. But these kinds of deficiencies are not new.