Deloitte China fined $20M for ‘basic’ audit standard violations

The Chinese affiliate of Big Four audit firm Deloitte agreed to pay a $20 million penalty and undertake extensive remedial measures as part of a settlement with the U.S. Securities and Exchange Commission (SEC) for audit failures that included asking clients to conduct their own audit work.

Deloitte Touche Tohmatsu Certified Public Accountants (Deloitte China) audits companies in China that trade on U.S. exchanges on behalf of the U.S. arm of the global firm. Deloitte-China is registered with the Public Company Accounting Oversight Board (PCAOB) and must abide by its standards.

On multiple occasions, Deloitte China invited its clients to create paperwork that gave the appearance Deloitte-China had tested their financial statements and internal controls when “there was no evidence in the audit file that they had in fact done so,” according to the SEC’s order filed Thursday.