- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Aaron Nicodemus2022-09-07T19:02:00
U.S.-based audit firms seeking new public company clients in China should ensure they have full access to previous audits and work papers before taking the job or risk potential enforcement, the acting chief accountant at the Securities and Exchange Commission (SEC) warned.
Paul Munter said in a statement Tuesday that Chinese companies should not believe swapping out a China- or Hong Kong-based auditor for a U.S.-based firm will result in quick compliance with the Holding Foreign Companies Accountable Act (HFCAA). The U.S. firms in that scenario must similarly understand their responsibilities under standards established by the Public Company Accounting Oversight Board (PCAOB).
The HFCAA, signed into law in 2020, would delist any public company that does not meet U.S. audit inspection standards after three consecutive years of noncompliance. The SEC has identified approximately 200 Chinese companies listed on U.S. stock exchanges that face delisting.
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The Public Company Accounting Oversight Board found seven of eight audit engagements it reviewed in China and Hong Kong contained “unacceptable rates” of deficiencies.
The Public Company Accounting Oversight Board announced it received “complete access to inspect and investigate” audit firms in China and Hong Kong, potentially averting the delisting of hundreds of Chinese public companies from U.S. exchanges.
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 SEC for audit failures that included asking clients to conduct their own audit work.
Financial institutions holding Russian sovereign assets that have not reported them to the Treasury Department’s Office of Foreign Assets Control are now required to do so by Aug. 2.
Compliance officers should take note of proposed laws in the U.K. with the newly elected Labor government setting the legislative agenda in the King’s Speech last week, promising consultations on enhanced employee rights and a higher minimum wage.
Four federal banking regulators have joined the Treasury Department’s Financial Crimes Enforcement Network in issuing a notice of proposed rulemaking that would require financial institutions to conduct more thorough risk assessments on their anti-money laundering/countering the financing of terrorism programs.
