US SEC fined Deloitte’s Chinese affiliate for letting clients conduct self-audit

 

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The US Securities and Exchange Commission (SEC) on Thursday fined the Chinese affiliate of accounting firm Deloitte $20 million for letting some clients conduct their own audit work.

Over multiple years, Deloitte’s Chinese affiliate asked some clients to select their own samples for testing and to prepare documentation that gave the appearance that Deloitte-China had tested the clients’ financial statements and internal controls, when there was no evidence it had in fact done so, the SEC said.

“We find that Deloitte-China fell woefully short of professional auditing requirements in numerous component audits of Chinese operations of US issuers and audits of Chinese companies listed on U.S. exchanges,” said SEC Chair Gary Gensler.

Deloitte self-reported the violations at its China affiliate to the PCAOB in 2019 upon learning of them, an SEC official said.