Join our brand new verified AMN Telegram channel and get important news uncensored!

Deloitte Communist Conspiracy: Charged with letting Chinese firms audit themselves – gets slap on wrist

Xi Jinping speaks to the 19th National Congress of the Communist Party of China (CPC) at the Great Hall of the People in Beijing on Oct. 28, 2017. (Ma Zhancheng/Xinhua/Zuma Press/TNS)
October 05, 2022

The U.S. Securities and Exchange Commission (SEC) is ordering the Chinese operations for Deloitte’s global financial network to pay a $20 million fine as a settlement after the firm’s China-based operation was charged with letting its clients audit themselves.

In a Sept. 29 press statement, the SEC announced it had charged Deloitte Touche Tohmatsu Certified Public Accountants LLP (Deloitte-China) — the Chinese branch of the U.K.-headquartered Deloitte global network — with violating U.S. auditing requirements for Chinese companies listed on U.S. exchanges as well as U.S. issuers operating in China.

Deloitte-China ultimately settled with the SEC, agreeing to pay a $20 million fine. The fine is a relatively small sum compared to the approximately $60 billion in revenue Deloitte’s global operations brought in for 2022.

According to the SEC, Deloitte-China personnel asked clients in numerous auditing events to select their own audit samples and prepare audit documentation purporting to show Deloitte-China had obtained and reviewed their accounting.

“This created the appearance that Deloitte-China had conducted the required testing of clients’ financial statements and internal controls when there was no evidence in the audit file that it had in fact done so,” the SEC statement read.

SEC Chair Gary Gensler said his agency found that Deloitte-China “fell woefully short” of professional auditing requirements for numerous Chinese branches of U.S. issuers, as well as for Chinese companies listed on U.S. exchanges/

“These basic, foundational auditing requirements are necessary to instill trust in our capital markets,” Gensler added. “It’s a privilege for issuers to access our markets — the largest, deepest, most liquid markets in the world. Investors in U.S. markets should be protected — and have trust in a company’s financial numbers — regardless of whether an issuer is foreign or domestic.”

In addition to the fine, the SEC said Deloitte-China will also “complete a review and assessment of its policies and procedures by an independent consultant retained by Deloitte Touche Tohmatsu Limited (‘Deloitte-Global’).” The SEC described Deloitte Global as “a U.K. entity with which [Deloitte China] is indirectly affiliated.”

While Deloitte-China is part of the Deloitte global network, the China-based firm states that each of the various global Deloitte firms and related entities “are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties.”

Last week the Wall Street Journal reported Chinese securities regulators had advised U.S. firms doing business in China to avoid mentioning politically sensitive topics ahead of a major Chinese Communist Party (CCP) meeting this month.

Many multinational firms are trying to expand into China, which is the world’s second largest market and could overtake the U.S. in the coming years. The Chinese market can be an attractive opportunity for investors, but major U.S. firms that have expanded into China have already had to balance their financial interests with the political and economic interests of China