SEC Bars Chinese Units of Big Four Accounting Firms

Last week, a U.S. Securities and Exchange Commission (SEC) administrative law judge ruled that, based on their refusal to turn over documents to SEC investigators, the Chinese units of the "Big Four" accounting firms—Ernst & Young, KPMG, Deloitte Touche Tohmatsu, and PricewaterhouseCoopers—were barred for six months from auditing companies that do business in the United States. Although the decision does not go into effect immediately, and the firms have already said that they intend to appeal, if upheld, the decision could have a negative impact on Chinese companies that use Big Four firms to audit their financial statements included in SEC filings, as well as U.S. companies with significant operations in China.