US watchdog fines PwC affiliates and Chinese accounting firm some US$8 million for audit failures
- PwC’s affiliates in China and Hong Kong will pay a total of US$7 million in penalties for failing to detect and prevent cheating on internal training exams
- Shandong Haoxin and four of its accountants fined US$940,000 for improprieties, including failing to maintain independence from their client
PwC’s affiliates in mainland China and Hong Kong, along with a Chinese accounting firm, have agreed to pay a combined fine of nearly US$8 million for auditing failures related to US-listed Chinese companies, according to the US accounting watchdog.
The settlements come a year after China and the US reached a landmark agreement that allowed the Public Company Accounting Oversight Board (PCAOB) to inspect auditors’ work of more than 100 Chinese companies.
The companies faced the prospect of being delisted from US exchanges if Chinese authorities continued to bar audit inspections on grounds of national security.
“The days of China-based firms evading accountability are over,” PCAOB chairwoman Erica Williams said on Thursday. “The PCAOB is demonstrating that we will take action to protect investors in US markets and impose tough sanctions against anyone who violates PCAOB rules and standards, no matter where they are located.”
The two PwC affiliates have agreed to pay US$4 million and US$3 million in penalties, respectively, for failing to detect and prevent cheating on internal training exams.
Between 2018 and 2020, more than 1,000 employees from PwC Hong Kong and hundreds of employees from PwC China engaged in “improper answer sharing” by providing or receiving answers using unauthorised software, said Williams.
