The U.S. Listed Companies Accounting Supervision Committee (PCAOB) found major audit defects in the first inspection of mainland China and Hong Kong, saying that the local branches of KPMG and PwC (PWC) are right.U.S. listed companies in the region did not meet the standards.
According to the Wall Street Journal, the US audit supervision agency completed the first round of inspections of the local audit company in China last fall. Previously, Chinese regulators have refused to receive such inspections for many years because of national security concerns for many years.EssenceAfter PCAOB employees returned to the United States from Hong Kong, the regulatory agency said in December last year that he had obtained the permissions of these companies.
According to a US law signed in 2020, if the company's audit institutions have not undergone PCAOB inspections for three consecutive years, more than 200 Chinese companies have faced the risk of delisting from the US Stock Exchange.PCAOB's permissions of the inspection reset the three -year delisting schedule faced by these companies.
It is reported that this milestone itinerary inspected the two accounting firms: the Perma Veylia Certified Public Accountants in Mainland China and the Hong Kong Priceward Yongdao's accounting work on the eight companies. Among them, of whichIncluding state -owned enterprises and companies in sensitive industries.The PCAOB inspection team selected some completed audit drafts from these two accounting firms for inspection.The agency did not list the selected companies in its inspection report.
PCAOB Chairman Erica Williams said that PCAOB's inspection of other companies located in the mainland and Hong Kong has begun to enter the field stage.By the end of this year, PCAOB will conduct audit work inspections of 99%of companies listed in the United States and audited by Chinese institutions. After a round of inspections last year, this proportion is 40%.The inspection objects will include local branches of Ernst Young and Deloitte and other companies in China.
PCAOB's inspection report released on Wednesday (May 10) shows that the ratio of auditing defects in KPMA is 100%, which means that there are defects for the four audit drafts that have been picked out.Pwa's audit defect rate is 75%, which means that there are three problems with the four audit drafts that have been picked out.Williams said that PCAOB discovered the level of "unacceptable" defect.
For example, KPMG found that there was a risk of fraud in the diary record of a customer company who did not disclose the name.However, PCAOB said that the audit company did not fully test the customer's diary account record, because the inspection process was limited to certain entries that comply with fraud standards in the diary account list.PCAOB said that the company will only lack reasonable reasons for the test process to be limited to these diary accounts.
William said: "We found so many defects, which is indeed a sign that the check process is valid. Now we can take the responsibility of the company to improve the quality of audit. This is what we want to.Do it. "
PricewaterhouseCoopers Hong Kong said that the company promised to continue to improve and is cooperating with PCAOB inspections to solve the problems raised.The company said: "Although PCAOB has raised some problems, the report also pointed out that as far as the audit work, no wrong opinions on financial statements have been found." The company said that it will continue to be committed to improving the quality of audit.
KPMA Vendor said that the results of PCAOB's survey were recognized, and the company had taken measures to solve the problems found."The quality of audit is the foundation of our business. We will continue to invest a lot in innovation, technology, personnel and training to create a stronger and tough audit business."
WilliamSi said that many potential defects found in the audit of Chinese companies are similar to the problems encountered in the first inspection of the agency in other parts of the world.
According to reports, PCAOB not only has the right to inspect and audit companies and formulate audit standards, but also punish other company's other illegal acts (not necessarily related to the results of the inspection).It is unclear whether PCAOB will take law enforcement operations on these two latest accounting firms.