The U.S. Securities and Exchange Commission (SEC) fined Deloitte-China $20 million on Sept. 29 for its failure to comply with basic U.S. audit requirements. Experts say the incident highlights the need for better oversight of Chinese audit firms.
Deloitte-China, also known as Deloitte Hua Yong, is the Chinese affiliate of international accounting firm Deloitte Touche Tohmatsu.
Responding to the allegation the same day, Deloitte Hua Yong acknowledged on its official website that its audit failed to meet Public Company Accounting Oversight Board (PCAOB) auditing standards for fiscal year 2018. The firm said those audit procedures have been “re-performed and effectively remediated.”
“We find that Deloitte-China fell woefully short of professional auditing requirements in numerous component audits of Chinese operations of U.S. issuers and audits of Chinese companies listed on U.S. exchanges,” said SEC Chair Gary Gensler in a Sept. 29 press release confirming the $20 million settlement. “These basic, foundational auditing requirements are necessary to instill trust in our capital markets.”…