SEC charges five accounting firms

Dec. 3, 2012 at 5:01 PM
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WASHINGTON, Dec. 3 (UPI) -- The U.S. Securities and Exchange Commission said Monday it had charged five accounting firms with failing to turn over reports on Chinese companies.

The U.S. market regulator said it was attempting to investigate "China-based companies ... for potential fraud against U.S. investors."

The investigation involved nine companies whose securities are publicly traded in the United States.

However, the SEC said, "the audit firms have refused to cooperate in the investigations."

The SEC charged foreign offices of the so-called Big Four accounting firms, plus one other, with withholding reports in violation of the Securities Exchange Act and the Sarbanes-Oxley Act.

The firms charged are BDO China Dahua Co. Ltd, Deloitte Touche Tohmatsu Certified Public Accountants Ltd., Ernst & Young Hua Ming LLP, KPMG Huazhen and PricewaterhouseCoopers Zhong Tian CPAs Ltd., the SEC said in a statement.

"Only with access to work papers of foreign public accounting firms can the SEC test the quality of the underlying audits and protect investors from the dangers of accounting fraud," said Robert Khuzami, director of the SEC's Division of Enforcement.

"Firms that conduct audits knowing they cannot comply with laws requiring access to these work papers face serious sanctions," he said.

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