Hong Kong, China– The China-based affiliates of consultancy giant PwC said it had blocked technologies that enabled its employees to cheat on internal training exams, after a US agency hit it with a $7 million fine.
The Public Company Accounting Oversight Board (PCAOB) imposed the penalty on the China and Hong Kong offices of the “Big Four” auditing company on Thursday.
More than 1,000 people in both units were found to have cheated on internal training exams, it said.
The two offices issued identical statements on Friday saying it was “highly regrettable that a number of employees engaged in the improper sharing and use of technology aimed at assisting with internal trainings and assessments”.
They added that they had investigated the issues after being made aware of it and took remedial action.
“This included blocking any further use of or dissemination of the technologies concerned and directing the retake of courses where applicable,” they said.
“We reported this matter to the PCAOB during their inspection and have now reached a settlement,” PwC said, adding that they were “pleased that as part of that settlement the PCAOB has credited us with extraordinary cooperation in this matter”.
The board’s work comes after a deal last year between the United States and China to settle a longstanding dispute surrounding the auditing compliance of US-listed Chinese firms.
The nonprofit was established by Congress to oversee audits of public companies.
The risk was that around 200 Chinese companies such as e-commerce giant Alibaba could be ousted from US stock exchanges if they did not comply with American standards.
The access granted to the body has helped to ease delisting fears.
The Hong Kong office was fined $4 million and the China office $3 million.
A separate penalty was imposed on Shandong Haoxin and four of its auditors for falsifying an audit report and failing to maintain independence, among other issues.
PCAOB chair Erica Williams said the board was on track to inspect all Hong Kong and mainland China firms that audited US-listed companies by the end of 2024, adding that “the days of China-based firms evading accountability are over”.
China had long cited national security concerns for denying foreign regulators access to local accounting firms.
But the US Congress passed a law in 2020 specifically targeting Chinese firms, under which the PCAOB must be able to inspect audits of overseas companies listed on US markets.