United States securities regulators and the Chinese affiliates of the big four accounting firms are nearing agreement on a high-profile dispute that could have derailed the audits and fundraising of dozens of Chinese companies and US multinationals.
A deal would sanction the Chinese audit firms for refusing to disclose to the US Securities and Exchange Commission details about some of their US-traded Chinese clients that were under SEC investigation, the Wall Street Journal reported Thursday.
The Chinese units of PricewaterhouseCoopers, Deloitte Touche Tohmatsu, KPMG and Ernst & Young would pay fines worth a combined US$2 million, or about half a million each, under the tentative deal.
SEC commissioners could vote on the settlement as soon as Thursday but because the pact has not been approved, it is possible some details may change or the vote could be delayed, the report said.
In addition to the fines, the tentative settlement tosses out a six-month suspension from auditing US-traded companies that a judge had levied on the firms for breach of US disclosure regulations.
The lifting of the suspension would save more than 90 Chinese clients having to seek new auditors, at least temporarily.
It also means US multinationals with major Chinese operations can continue using the Chinese big four firms to help with their audits, the report said.
The settlement also includes a strong framework for the firms to cooperate with the SEC and for the agency to obtain audit documents in the future, the people familiar with the situation were quoted as saying.
The settlement, which the two sides have been discussing since last June, would bring an end to a dispute that dates to 2011.
More than 170 US-traded Chinese companies have encountered questions about their accounting and disclosure in recent years, many of them audited by the Chinese member firms of the big four.
The SEC began investigations of some of those companies and demanded documents from the audit firms in an effort to find out more about what the auditors knew about their clients.
But the Chinese firms said they couldn’t turn over the documents to the SEC because strict Chinese laws treat such documents as state secrets.
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