China has told state-owned companies and firms listed on the mainland to do more thorough reviews of auditors’ ability to “safeguard information security”, according to a report by the Financial Times, which showed that authorities want to tighten controls on sensitive corporate information, while noting that the move could potentially undermine efforts to woo foreign investors.
The ‘Big Four’ accounting firms – Deloitte, KPMG, EY and PwC – had decades of business experience in China, but Deloitte’s Beijing operation was shut for three months in March and the group fined $31 million for “serious deficiencies” in its audit of bad debt manager China Huarong Asset Management, the report said, adding that local auditors were also facing increased scrutiny.
Read the full report: The FT.
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