Chinese tech stocks slip as US watchdog finds 'unacceptable' problems with audits
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Several other Chinese tech stocks slipped on Wednesday as the U.S. watchdog in charge of auditing U.S.-listed Chinese companies said it had found several stark issues with audits performed by overseas auditors.
In a statement, U.S. Public Company Accounting Oversight Board Chairman Erica Y. Williams said the agency found "unacceptable rates" of deficiencies in audits performed by KPMG in China and PriceWaterhouseCoopers in Hong Kong.
The PCAOB inspected eight audits in 2022 - four from each firm - and found Part 1.A deficiencies in 100% of the audits performed by KPMG and 75% from PriceWaterhouseCoopers.
"The fact that our inspectors found these deficiencies is a sign that the [Holding Foreign Companies Accountable Act] was effective and the inspection process worked as it is supposed to," Williams said in a statement. "We identified problems so now we can begin the work of holding firms accountable to fix them."
The HFCAA tasks the Public Company Accounting Oversight Board to determine companies "that it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction."
The legislation states that a company would be delisted from a U.S. exchange if it was identified by the SEC for three consecutive years because of the PCAOB's inability to audit it properly.
Following the statement, Baidu (NASDAQ:BIDU) fell 0.6%, while JD.com (NASDAQ:JD) and Bilibili (BILI) dipped 2.3%. Pinduoduo (PDD) also lost ground, while Alibaba (NYSE:BABA) bucked the trend and gained more than 1% in mid-day trading.
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