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☆ Former Inspectors of Public-Company Audits Say Process Needs Retooling
▼ + stars: | 2023-10-26 | by ( Mark Maurer | ) www.wsj.com time to read: 1 min

The Public Company Accounting Oversight Board is in the middle of a transformation under Chair Erica Williams, who took the helm in January 2022. Photo: Ting Shen for The Wall Street JournalThe process to inspect the audits of U.S. public companies needs an upgrade, according to some of the people who should know best—former inspectors who did the work over the last two decades. Former inspectors of the U.S. auditing watchdog say inspections are a useful tool for detecting potential deficiencies in audits of public companies, but that public reports on the process are limited in scope, lack details and not released in a timely fashion.

Persons: Erica Williams, Ting Shen Organizations: Public Company, Wall Street

☆ East Coast mayors call for more office-to-apartment conversions
▼ + stars: | 2023-07-15 | by ( Carlos Waters | In Carloswaters | ) www.cnbc.com time to read: +2 min

Mayors in cities across the U.S. want to loosen rules that can slow the pace of office-to-residential conversions. In some instances, cities have offered generous tax abatements to developers who build new housing. Prominent investors Societe Generale and KKR have worked with developers like Philadelphia-based Post Brothers to finance institutional-scale office conversions in expensive central business districts. Many experts believe local governments will alter zoning laws and building codes to make these conversions easier over the years. Watch the video above to learn how cities are getting developers to convert more offices into apartments.

Persons: Muriel Bowser, Erica Williams, Eric Adams, Michael Pestronk, Dan Garodnick Organizations: DC, Societe Generale, KKR, Brothers, Post, New York City's Department of, Planning Locations: U.S, Washington, DC, New York City, Philadelphia

WASHINGTON, May 10 (Reuters) - A U.S. accounting watchdog found unacceptable deficiencies in audits of U.S.-listed Chinese companies performed by KPMG in China and PricewaterhouseCoopers in Hong Kong, the government agency said on Wednesday. The deficiencies were so great that auditors failed to obtain enough evidence to substantiate companies' financial statements, PCAOB Chair Erica Williams told reporters on Wednesday. KPMG Huazhen in China said in a statement it has taken steps to address the issues the PCAOB had found. With its 2023 work, the PCAOB expects it will have inspected auditors representing 99% of the work in the region. The agency will continue to demand full access to do its work, Williams said.

WASHINGTON, May 10 (Reuters) - The U.S. Public Company Accounting Oversight Board (PCAOB) found unacceptable deficiencies in audits of U.S.-listed Chinese companies performed by KPMG in China and PriceWaterhouseCoopers in Hong Kong, the government agency said on Wednesday. The U.S. audit watchdog published the findings of its inspections after gaining access to Chinese company auditors' records for the first time last year following more than a decade of negotiations with Chinese authorities. The deficiencies were so great that auditors failed to obtain sufficient evidence to substantiate companies' financial statements, PCAOB Chair Erica Williams told reporters on Wednesday. The two firms represented 40% of the market share of U.S.-listed companies audited by Hong Kong and mainland China firms, she said. While the findings are consistent with what the agency usually discovers when gaining access to a foreign country's audit records for the first time, they will likely raise worries among global investors over the accuracy of U.S.-listed Chinese companies' public financial statements.

☆ Audits of Chinese companies by KPMG and PwC full of holes, US watchdog finds
▼ + stars: | 2023-05-10 | by ( Julia Horowitz | ) edition.cnn.com time to read: +2 min

London CNN —US inspectors, after receiving access to auditors’ books for the first time, discovered significant shortcomings in audits of companies based in China and Hong Kong that are listed on US stock exchanges. The Public Company Accounting Oversight Board (PCAOB) said Wednesday that it uncovered major “deficiencies” after checking the work of KPMG Huazhen, which is headquartered in mainland China, and PwC’s practice in Hong Kong. Deficiencies were found in 100% of the audits by KPMG Huazhen reviewed and 75% of those from PwC Hong Kong. US regulators had long lobbied for this access, worried that Chinese firms listed on Wall Street were misrepresenting their financial heath. The breakthrough meant that more than 160 Chinese companies avoided being kicked out of the world’s biggest stock market, as US regulators threatened if they weren’t able to inspect their audits.

☆ U.S. Audit Watchdog Proposes Move to Get Inspections Started Faster
▼ + stars: | 2023-03-28 | by ( Mark Maurer | ) www.wsj.com time to read: +1 min

Erica Williams has been chair of the Public Company Accounting Oversight Board for just over a year, and has increased its enforcement efforts. The Public Company Accounting Oversight Board proposed cutting by more than half the amount of time auditors have to assemble final audit documentation, which might allow the audit watchdog to start its inspection process up to a month earlier and provide key information to investors sooner. The U.S. audit regulator has been working to update more than 30 standards that have gone largely unchanged since they were adopted on an interim basis roughly 20 years ago from the American Institute of Certified Public Accountants. With the proposal released Tuesday, the PCAOB suggested consolidating and modernizing four interim standards into one standard on auditors’ core responsibilities, including areas such as professional skepticism, independence, competence and professional judgment.

☆ Lack of Crypto Audit Regulation Raises Questions About PCAOB Authority
▼ + stars: | 2023-02-17 | by ( Mark Maurer | ) www.wsj.com time to read: +6 min

Additionally, there isn’t a regulatory framework for audits for many crypto companies. The SEC, which oversees the PCAOB, is reviewing how crypto companies portray reports from audit firms in the aftermath of the FTX collapse. The PCAOB—which sets audit standards, inspects audits and disciplines audit firms—has said it can only oversee audits of public companies and SEC-registered broker-dealers. In a letter last month to PCAOB Chair Erica Williams, they said the watchdog ignored what they called questionable practices by auditors of crypto companies. Even potential improvements to crypto audit regulation might not prevent fraud in the crypto industry, said Andrew Kitto, an assistant professor of accounting at the University of Massachusetts Amherst and a former PCAOB economic research fellow.

☆ Memphis officers charged in Nichols death face review of older cases
▼ + stars: | 2023-02-10 | by ( Brendan O'Brien | ) www.reuters.com time to read: +2 min

"This involves any criminal case that [the officers] were involved in. It is any case where there were criminal charges that were brought by the DA anytime since they became officers." The beating occurred despite the use-of-force policies that Memphis and other U.S. cities pledged to strengthen after the 2020 death of George Floyd at the hands of Minneapolis police. The five officers were members of SCORPION, a now-disbanded specialized police unit that was formed in October 2021 to concentrate on crime hot spots. Several of the officers who have been fired had received written reprimands or short suspensions for violating department policies, according to their personnel files.

☆ PCAOB Proposes Tighter Requirements for Audit Firms Verifying Outside Information About Clients
▼ + stars: | 2022-12-20 | by ( Mark Maurer | ) www.wsj.com time to read: +4 min

The Public Company Accounting Oversight Board proposed tightening the requirements around how audit firms obtain and verify outside evidence about their clients, such as from customers and lenders, a process aimed at preventing fraud. Under the current rule, audit firms must send out requests, typically electronically, asking a third party to confirm the accuracy of certain information, such as the amount of accounts receivable. Audit firms are allowed to assume that the lack of a response is a corroboration of accuracy. The PCAOB now wants audit firms to go a step further by confirming the amounts of cash and cash equivalents held by third parties—typically lenders. The PCAOB last proposed changes to its confirmation rules in 2010, but the proposal, which some audit firms at the time called overly prescriptive, didn’t advance further.

☆ Stock delisting risks averted as US gains access to audit papers of Chinese tech companies
▼ + stars: | 2022-12-16 | by ( Laura He | ) edition.cnn.com time to read: +3 min

The announcement marks a major breakthrough in a yearslong standoff over how Chinese companies listed on Wall Street should be regulated. There are more than 260 Chinese companies listed on US stock exchanges, with a combined market capitalization of more than $770 billion, according to recent calculations posted by the US-China Economic and Security Review Commission. The United States had increased pressure by passing a law in December 2020 requiring Chinese companies listed in the US to open their books to audit watchdogs. In Friday’s statement, the PCAOB said it had inspected the audits of eight Chinese companies completed by KPMG Huazhen LLP in China and PricewaterhouseCoopers in Hong Kong. She added that the watchdog is continuing to demand complete access in mainland China and Hong Kong moving forward.

☆ Premarket stocks: The Grinch comes for retailers
▼ + stars: | 2022-12-16 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +6 min

What’s happening: US retail sales, which measure the total amount of money that stores make from selling goods to customers, fell 0.6% in November, the weakest performance in nearly a year. The Fed factor: November’s report could indicate that consumers are feeling the double-punch of sky-high inflation and painful interest rate hikes from the central bank. This retail sales data adds to recessionary concerns, as it suggests that consumers may be becoming more cautious with their spending. Those increases were spurred by the Federal Reserve’s unprecedented campaign of harsh interest rate hikes to tame soaring inflation. The Fed announced on Wednesday that it will continue to raise interest rates — albeit by a smaller amount than it has been.

The announcement from the U.S. accounting watchdog removes the risk that around 200 Chinese companies, including Alibaba (BABA.N), could be kicked off U.S. stock exchanges. "This falls into the category of a game changing view of Chinese companies because the threat of their delisting seems to have been eliminated." Washington and Beijing reached a landmark deal in August to settle a long-running dispute over auditing compliance of U.S.-listed Chinese firms. Authorities in China have long been reluctant to let overseas regulators inspect local accounting firms, citing national security concerns. U.S. lawmakers in 2020 agreed to legislation that would oust Chinese companies from U.S. stock exchanges unless they adhere to American auditing standards.

"This falls into the category of a game changing view of Chinese companies because the threat of their delisting seems to have been eliminated," said Art Hogan, chief market strategist at B. Riley Financial. However, the relief was not seen in Thursday's trading for U.S.-listed shares of Chinese companies, which were higher amid the news, but gave up gains and some ended sharply lower. Washington and Beijing reached a landmark deal in August to settle a long-running dispute over auditing compliance of U.S.-listed Chinese firms. Authorities in China have long been reluctant to let overseas regulators inspect local accounting firms, citing national security concerns. U.S. lawmakers in 2020 agreed to legislation that would oust Chinese companies from U.S. stock exchanges unless they adhere to American auditing standards.

☆ U.S. watchdog levies $7.7 mln in fines against KPMG entities
▼ + stars: | 2022-12-07 | by ( Chris Prentice | ) www.reuters.com time to read: +1 min

Dec 6 (Reuters) - A U.S. agency tasked with overseeing the audits of public companies on Tuesday said it imposed $7.7 million in fines and sanctioned three firms across KPMG's global network for violations of professional auditing standards, quality control standards and other rules. The companies are all member firms of KPMG, known as one of the "Big Four" accounting firms, which also include Deloitte & Touche LLP, Ernst & Young LLP and PricewaterhouseCoopers LLP. Larry Bradley, global head of audit at KPMG, acknowledged the PCAOB's findings and said the firm "remains committed globally to the highest standards of quality and integrity." The PCAOB also barred or suspended four KPMG auditors from participating in public company audits. Reporting by Chris Prentice; editing by Jonathan Oatis, Aurora Ellis and Leslie AdlerOur Standards: The Thomson Reuters Trust Principles.

☆ U.S. Watchdog Sanctions KPMG Firms, Audit Professionals
▼ + stars: | 2022-12-06 | by ( Jennifer Williams-Alvarez | ) www.wsj.com time to read: +7 min

PREVIEWThe U.K. firm was additionally sanctioned for allegedly failing to reasonably supervise an unregistered audit firm, Romanian audit firm KPMG Audit SRL, in four consecutive audits of Endava PLC, a British technology services company. KPMG U.K. was found to have also made several inaccurate PCAOB filings about the involvement of unregistered firms in certain audit work. The PCAOB imposed a $600,000 penalty for the alleged failings around unregistered audit firms, which KPMG U.K. didn’t admit or deny. KPMG U.K. has reviewed the way it works with other firms, enhancing controls and providing additional training, Cath Burnet, U.K. head of audit at KPMG, said. The U.K.’s audit and accounting regulator in a July letter to seven audit firms, including KPMG, said that it is “deeply concerned” about audit professionals cheating on external professional exams and internal assessments.

☆ More Crypto Exchanges Verify Reserves, But Questions About Assets Remain
▼ + stars: | 2022-12-05 | by ( Mark Maurer | ) www.wsj.com time to read: +7 min

Most crypto exchanges are privately held, meaning they don’t have to file financial statements with the Securities and Exchange Commission or get them audited. He added that customers of crypto exchanges should “look for as rigorous of that as you can look for regulatory reporting.”FTX founder Sam Bankman-Fried sat down with The Wall Street Journal to discuss what happened to the billions of dollars deposited by the exchange’s customers. Photo: Kenny Wassus/The Wall Street JournalSuch a third-party verification represents a step toward more transparency around crypto exchanges, but there are significant shortcomings, some academics said. Coinbase Global Inc. last month reported $95.11 billion in both customer crypto assets and liabilities for the quarter ended Sept. 30, up from $88.45 billion the previous quarter, filings show. Still, the PCAOB encourages investors to review reports on the work those companies’ auditors have done, Chair Erica Williams said at a conference Tuesday.

☆ U.S. Audit Watchdog Looks to Strengthen Rules on Quality Controls
▼ + stars: | 2022-11-18 | by ( Mark Maurer | ) www.wsj.com time to read: +5 min

The regulator inspects audit firms’ approach to quality controls as part of its reviews. Fourteen audit firms issued audit reports for over 100 businesses apiece last year, the PCAOB’s website shows. Audit firms would have to conduct the first evaluation of their quality controls by the following Nov. 30. It is considering revising changes to rules on confirmations, a process by which audit firms obtain and evaluate audit evidence from independent third parties. The regulator is working to update more than 30 audit rules related to 10 of its standard-setting projects, many of which refer to outdated technology.

☆ Audit Regulator Steps Up Enforcement Under New Leader
▼ + stars: | 2022-10-29 | by ( Jean Eaglesham | Photographs Alyssa Schukar For The Wall Street Journal | ) www.wsj.com time to read: 1 min

The U.S. audit regulator is getting tougher on rule-breaking accountants after years of criticism for its alleged light touch. But there are limits to how much it can change. The shift is being led by the new chair of the Public Company Accounting Oversight Board, Erica Williams , who said, “When people cheat, you need to…make sure that there are serious consequences.”

☆ Partner at Accounting Firm Fined for Allegedly Misleading Investigators
▼ + stars: | 2022-10-18 | by ( Mark Maurer | ) www.wsj.com time to read: +4 min

A partner at accounting firm Spielman Koenigsberg & Parker LLP was fined $150,000 for allegedly misleading investigators, the largest monetary penalty imposed on an individual in a case settled by the U.S. auditing watchdog. The regulator also permanently barred Mr. Taylor from associating with a PCAOB-registered accounting firm. Mr. Taylor became a partner at the firm in 1999, according to the firm’s website. Neither Mr. Taylor nor the firm immediately responded to a request for comment. “The quality control systems at audit firms are fundamental to audit quality and regulatory compliance,” Mark Adler, the acting director of the PCAOB’s division of enforcement and investigations, said in a statement.

read moreAbout 10 officials from the China Securities Regulatory Commission (CSRC) and the Ministry of Finance (MOF) have arrived in Hong Kong and joined the audit inspection, which started on Monday, three of the people said. However, in a speech on Thursday, PCAOB chair Erica Williams said agency officials had arrived in Hong Kong to begin the inspections. As with all inspections, they will look at factors, including the audits of the selected companies and the overall quality control systems of the audit companies. State-owned China Southern Airlines and data centre company GDS Holdings are among the U.S.-listed Chinese companies for audit inspection in the Asian financial hub, two separate sources said. The onsite inspections by the PCAOB are being conducted in the Hong Kong offices of the selected Chinese companies' audit firms, said two of the sources.

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