The US securities regulator has charged Deloitte’s China arm with falling “woefully short” by having clients complete their own audit tasks, as negotiations between Washington and Beijing over setting cross-border accounting standards come to a head, reports the Financial Times. Deloitte China has agreed to pay a $20 million penalty for asking clients to select samples of accounting entries to be tested, the US Securities and Exchange Commission said on Thursday.
The division also asked clients to prepare documents showing it had assessed accounting entries when there was no such evidence it had done so. The settlement with Deloitte China includes the highest penalty levied by the SEC against an affiliate of the Big Four accounting firms, relative to audit revenue.
Deloitte China was not charged with violating the Holding Foreign Companies Accountable Act, the law passed in the US in 2020 requiring foreign groups trading on US markets to make their audits available for review every three years or be barred from trading.