China issued rules on Thursday to tighten scrutiny of foreign accounting firms’ domestic operations as Beijing seeks to rein in accounting failures and fraud.
According to the new rules, which came into effect immediately, foreign accounting organisations are subject to “supervision and management” by the authorities including the finance ministry and public securities bureau.
Foreign accounting firms’ units in China are also required to report to authorities their annual business planning and annual reports.
Prior to the new regulations, China had an administrative guideline under which foreign accounting firms were only required to file with the finance ministry when they conducted business in the domestic market.
Beijing imposed a record fine of 441 million yuan ($60 million) on PwC in September over the firm’s audit of failed property developer China Evergrande Group.
The authorities also launched probes earlier this year into “intermediaries” for property giant China Evergrande Group, which was found to have inflated its revenue by $78 billion.
After that the finance ministry conducted more rigorous checks of work done by the Big Four auditing firms, namely Deloitte, EY, PwC, KPMG, for Chinese companies, sources told Reuters in July.
PwC has been hit by regulatory investigations and a client exodus this year, Reuters reported in July citing sources.
($1 = 7.2983 Chinese yuan renminbi)
Reuters
