The U.S. agency identified unsatisfactory Chinese firm audits. The federal body announced Wednesday that the U.S. Public Company Accounting Oversight Board (PCAOB) discovered unacceptable weaknesses in audits of U.S.-listed Chinese businesses by KPMG in China and PriceWaterhouseCoopers in Hong Kong.
After almost a decade of talks with Chinese officials, the U.S. audit agency disclosed its inspection results.
On Wednesday, PCAOB Chair Erica Williams told reporters that auditors couldn’t find enough evidence to support firms’ financial statements due to the shortcomings. She claimed Hong Kong and mainland China businesses audited 40% of U.S.-listed corporations.
KPMG and PWC did not reply to calls for comment.
The results are consistent with what the agency generally finds when accessing a foreign country’s audit data for the first time. Still, they may worry global investors about the integrity of U.S.-listed Chinese businesses’ public financial statements.
“The fact that we found so many deficiencies is really a sign that the inspection process worked, and now we can go about the work of holding firms accountable and driving audit quality,” Williams said.
