U.S. regulators probing potential fraud by China-based companies increased pressure on their auditors by formally accusing affiliates of Big Four firms of withholding documents from investigators.
Deloitte Touche Tohmatsu CPA Ltd., Ernst & Young Hua Ming LLP, KPMG Huazhen and PricewaterhouseCoopers Zhong Tian CPAs Ltd. have refused to cooperate with accounting investigations into nine companies whose securities are publicly traded in the U.S., the Securities and Exchange Commission said in an administrative order yesterday. BDO China Dahua Co. was also named by the SEC in the action.
The CSRC didn’t immediately respond to requests for comment. Questions faxed to the Ministry of Finance were not immediately answered.
Ernst & Young LLP will pay $117 million to settle claims in a Canadian class-action suit that Sino-Forest and some of its directors and officers, auditors and underwriters misled investors about business and accounting at the now insolvent Chinese timber trader, Siskinds LLP and Koskie Minsky LLP, the law firms behind the action, said in a statement yesterday.