China push to move away from Big 4 auditors is not new but is now urgent
China looked the other way when smaller "fixer" firms shared client data across borders. When Deloitte US and Deloitte China admitted the Big 4 did it too, China had to act.
Bloomberg has a new piece out about what it says is China’s urging of state-owned firms to “phase out using the four biggest international accounting firms, signaling continued concerns about data security,” despite the recent accords that allowed PCAOB inspectors to start looking at workpapers of two large firms, KPMG and PWC that operate in Hong Kong and mainland China.
I wrote recently about the limitations of that effort and the “be careful what you wish for” nature of the call for more transparency about the quality of audits of Chinese companies.
How will investors and markets react when they find out that Chinese company audits, and perhaps Chinese company accounting, are either much, much worse, as worse, or miraculously better than they have feared? What are the incentives for the PCAOB to report one of the above regardless of the actual results?
