Connect with us

Why PCAOB Blocked a Hong Kong Auditor?



PCAOB Blocked Hongkong AuditorFollowing the U.S. Securities and Exchange Commission’s increased focus on Chinese-based companies that trade on American stock markets, today (06/10/2011)’s headline at Bloomberg said that, the Public Company Accounting Oversight Board (PCAOB)—for the first time since toughening rules—blocked a Hong Kong-based auditor named Zhonglei CPA Co. to become a registered U.S. auditor, citing an inability to inspect its work for companies based in China.

The PCAOB issued a new policy in October 2010 making the inability to inspect auditors in nations such as China a factor when considering whether to approve them. The organization is blocked from inspecting firms based in China.


“Since 2004, the board has approved registration applications of non-U.S. firms with the expectation that any potential obstacles to inspections would be resolved, ” PCAOB Acting said in an October 2010 statement. “The continuing obstacles to inspections in some jurisdictions have forced us to re-evaluate that approach to registration.”

And, yesterday, the SEC cautioned investors about buying stakes in companies that gain listings through so-called reverse mergers, saying they may be prone to “fraud and other abuses.”

In a reverse merger, a closely held firm buys a publicly traded shell company to gain a stock listing, avoiding the scrutiny usually involved in an initial public offering. More than 150 Chinese firms entered U.S. markets through reverse mergers since 2007, according to the PCAOB, which oversees auditors of public companies. And, more than 24 companies have disclosed auditor resignations or accounting problems to the SEC since March.

Zhonglei CPA can appeal the decision. But, Zhonglei CPA decided to stop the application process to be registered as an U.S. auditor and focus on its Hong Kong and China businesses, the company said in an e-mailed response to Bloomberg News today. (Via: Bloomberg).

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Are you looking for easy accounting tutorial? Established since 2007, hosts more than 1300 articles (still growing), and has helped millions accounting student, teacher, junior accountants and small business owners, worldwide.


Related pages

investments in marketable securitiesrefresh pivot tablesias16under a perpetual inventory systemwhich ratios measure a corporation's liquiditysales leaseback accountingifrs on fixed assetsdupont turnoverdaily cash sheet templatebaumol model of cash management pptaccounting coach balance sheetaudit caatstockholders equity examplesdeferral accountingaccounts payable days formulajournal entry for intangible assetsadjusting journal entrywhat is the first step in the accounting cyclereciprocal transactioncashflow analysishow to compute taxable incomehow to prepare a cash budget managerial accountingaccounting journal entries practice problemsdeferred tax allowancestockholder equity formulaforensic accountant definitionperiodic inventory system cost of goods soldcash disbursement scheduledividends payable journal entrytolerable misstatement definitioncash budget example accountinginterest bearing debt ratiosample accounting ledgercomputation of taxable salaryembedded audit modulepartners withdrawals of assets areowners equity definition in accountingdiminishing value depreciation calculationform for promissory noteifrs definitionmateriality constraintcover letter to irsstraight line depreciation excelwhat are the steps of the accounting cyclewhen is revenue recognizedexample of direct method cash flow statementgoals of profit maximizationtreasury function in a companystraight line amortization examplecpa cma salaryinventory capitalization gaapcommon size cash flow statementhow to calculate bep in excelbank reconciliation definition in accountingreceivables turnover definitionhorizontal analysis of cash flow statementtotal stockholders equity representspersonal statement of assets and liabilities templatehow to calculate common size income statementoverhead expenses definitionrevaluation method examplehow to calculate flexible budgetinventory sale journal entrypromissory note termsepr stockcpa exam tutoraverage accounts receivablesaicpa sophow to calculate the economic order quantitylapping accountingbudgeted contribution format income statementadjusting entry for supplies on handaccrual journal entriesamortization of goodwill for tax purposesfactoring arrangementsunearned revenue income statement