U.S. inspections of China corporate audits at ‘very early stage,’ PwC says

ReutersOctober 4, 2022

By Huw Jones

LONDON (Reuters) – U.S. regulatory inspections of audits of Chinese companies listed in the United States have begun and it could be months before the conclusions are known, PwC Global Chairman Bob Moritz said.

A China-U.S. agreement in August allows U.S. regulators, for the first time, to inspect China-based accounting firms that audit New York-listed companies to help resolve a dispute that threatened to boot more than 200 Chinese companies from U.S. exchanges.

“We are in the middle of the inspection process. We are in the very early stages of that,” Moritz told Reuters.

PwC’s Chinese customers include e-commerce giant Alibaba Group.

“We’ve got a number of months to go yet before the conclusions are reached. We are continuing to share the information that is allowable,” Moritz said.

He confirmed record global revenues for PwC of $50.3 billion for the year ended June 30, up 13.4% on the prior period.

During its last fiscal year, the “Big Four” auditor pulled out of Russia following the country’s Feb. 24 invasion of Ukraine, while its global headcount rose by more than 32,000 to 328,000, as a four-year, $12 billion programme to hire 100,000 people kicked off.

Moritz expects “significant” hiring in the current fiscal year to continue as business rebounds from the COVID-19 pandemic.

PwC has yet to set out any mandatory minimum number of days for working in the office, though hybrid working was here to stay, he said.

“What we are expecting is that when they do come in, there is a purpose for coming in. It’s making sure the other people are there as well,” Moritz said.

Rival EY is asking partners if they back splitting audit and consulting into two companies.

“We have been very clear that our current construct and organisational model is appropriate for the stakeholders we serve … and we do not see any need for change,” Moritz said.

(Reporting by Huw Jones; Editing by Paul Simao)