Almost a year after receiving complete access to inspect accounting firms in China that are registered with the Public Company Accounting Oversight Board (PCAOB) for the first time, the PCAOB issued three enforcement orders for a total of $7.9 million in fines to three China-based accounting firms. Two of the firms penalized were engaged in “improper answer sharing—by either providing or receiving access to answers through two unauthorized software applications.” The third firm was sanctioned for “falsifying an audit report, failing to maintain independence from their issuer client, and improperly adopting the work of another accounting firm as their own.”

The PCAOB chair credited the Holding Foreign Companies Accountable Act with allowing the PCAOB to gain complete access to the records of China-based accounting firms and clearly wanted to highlight that these enforcement actions were a demonstration that the PCAOB was, in fact, granted the access it needed. The PCAOB also noted that two of the fines were the second and third largest fines imposed on any firm in PCAOB history.

Given the success of the investigations and enforcement actions, companies trading in the U.S. can continue to use China-based accounting firms to conduct audits without running afoul of the Holding Foreign Companies Accountable Act.