US watchdog uncovers major deficiencies in audits of Chinese companies

The US Public Company Accounting Oversight Board (PCAOB) found unacceptable deficiencies in audits of US-listed Chinese companies performed by KPMG in China and PricewaterhouseCoopers in Hong Kong. The deficiencies were so great that auditors failed to obtain enough evidence to substantiate companies' financial statements. The PCAOB will give the two firms a year to remediate deficiencies around quality controls, and the agency will make referrals to the agency's enforcement team where appropriate.