U.S. fines three Chinese accounting firms $7.9M for violating securities laws

Dec. 1 (UPI) -- The U.S. Public Company Accounting Oversight Board fined three Chinese firms and four people affiliated with them $7.9 million Thursday for allegedly violating U.S. securities laws and other misconduct.

Public accounting companies PwC China and PwC Hong Kong, were fined $7 million for allowing more than 1,000 people from PwC Hong Kong and hundreds more from PwC China to share answers to tests for mandatory internal training.

Two unauthorized software applications were used to share answers to the tests.

PCAOB said they violated quality control standards related to integrity and personnel management.

PwC China and PwC Hong Kong agreed to pay the fines without admitting or denying the board's findings.

Accounting firm Shandong Haoxin was fined $750,000 and four people associated with it were fined $190,000 for violating securities laws.

Haoxin was also censured and cannot accept new PCAOB accounting clients. An independent monitor was also assigned to improve practices at the company and to ensure future compliance.

PCAOB said the company made false statements on an audit report and violated "independence requirements and/or PCAOB auditing, ethics, and/or quality control rules and standards."

Haoxin and the individuals sanctioned agreed to the penalties without admitting or denying the board's findings.

The sanctioned individuals were Liu Kun. Ma Yao, Sun Penghuan and Zhu Dawei. They are also barred from being "associated persons of a registered public accounting firm."

According to PCAOB, these are the first enforcement settlements with Chinese and Hong Kong companies since the oversight board gained powers to inspect and investigate Chinese firms.

It said they are also the largest civil financial penalties the board has levied against a China-based company.

"The days of China-based firms evading accountability are over. The PCAOB will take action to protect investors on U.S. markets and impose tough sanctions against anyone who violates PCAOB rules and standards, no matter where they are located," said PCAOB Chair Erica Y. Williams in a statement.