The Public Company Accounting Oversight Board (PCAOB) revoked the registration of a Chinese audit firm on Nov. 8 for repeated violations of U.S. auditing rules and for failing to cooperate with an investigation into those violations.
Over a period of several years, JTC Fair Song CPA Firm, a public accounting firm located in Shenzhen, the People’s Republic of China, repeatedly failed to make required filings in accordance with PCAOB rules, the audit regulator said.
First, on multiple occasions, the accounting firm failed to timely report the participants in its issuer audits on PCAOB Form AP, in violation of PCAOB Rule 3211, Auditor Reporting of Certain Audit Participants. Second, the firm failed to timely file its annual reports on PCAOB Form 2 for 2021, 2022, and 2023, in violation of PCAOB Rule 2201, Time for Filing of Annual Report.
When the PCAOB’s Division of Enforcement and Investigations attempted to investigate those violations, JTC Fair Song failed to cooperate with the investigation, refusing to produce documents and information in response to formal demands, the board said.
“All registered firms must comply with PCAOB reporting requirements, which are designed to provide the PCAOB, investors, and other stakeholders with important information,” PCAOB Chair Erica Williams said in a statement. “When firms don’t comply, the PCAOB will use the tools at our disposal to hold them accountable to fulfill our investor-protector mission.”
Without admitting or denying the findings, JTC Fair Song settled with the PCAOB and consented to a disciplinary order censuring the firm and revoking the firm’s registration. The PCAOB decided to accept the firm’s offer of settlement—the board was going to fine JTC Fair Song $50,000 based on the firm’s rule-breaking and conduct but didn’t after taking the firm’s financial resources into consideration.
“Today’s order should serve as a stark reminder that firms must cooperate with the board’s investigatory process,” said Robert Rice, director of the PCAOB’s Division of Enforcement and Investigations. “Cooperation with the board’s processes is a bedrock principle under our rules and standards and is not optional.”
In 2022, the PCAOB finally gained access to inspect and investigate firms headquartered in mainland China and Hong Kong.
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Tags: Accounting, Audit Standards, Auditing, PCAOB
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