China urges state-owned companies to abandon Big Four auditors – mass media
[ad_1]
Chinese authorities have urged state-owned companies to phase out the services of the four largest international auditing firms over data security concerns.
It is reported Bloomberg with reference to knowledgeable interlocutors.
China’s Ministry of Finance issued recommendations to some state-owned enterprises last month calling for early termination of contracts with Big Four audit firms, the agency’s interlocutors said.
While offshore subsidiaries can use US auditors, Chinese authorities have urged parent firms to hire local Chinese or Hong Kong accountants instead.
According to the interlocutor, in this way China is trying to limit the influence of US-linked global auditing firms and ensure the security of the country’s data, as well as support the local auditing industry.
It is noted that Beijing has for years suggested that state-owned companies abandon the services of the “Big Four”, but recently re-emphasized that companies should use other auditors. There is no deadline for the changes, so the process can happen gradually as the contracts expire.
Last year, China and the U.S. reached an audit agreement that was seen as a sign that the rival nations could still work together on some issues. But Beijing’s latest guidance is a reminder that the rift continues in sensitive areas such as state-owned enterprises and advanced technology.
One risk for China is that a shift to lesser-known auditors will make it harder for state-owned enterprises to raise capital from international investors.
The exclusion from China’s state-owned business will also be a blow to audit firms. In 2021, the Big Four earned a combined revenue of 20.6 billion yuan, or $3 billion, from all Chinese customers.
certificate: The “Big Four” are the four largest auditing companies in the United States. It includes Deloitte, Ernst & Young (EY), PricewaterhouseCoopers (PwC) and Klynveld Peat Marwick Goerdeler (KPMG).
[ad_2]
Original Source Link
