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The Public Company Accounting Oversight Board is imposing $7 million in penalties against PwC China and PwC Hong Kong for violations of US securities laws and PCAOB standards.
It marks two of the first enforcement settlements enacted by the board against mainland China and Hong Kong firms since it was granted access to investigate companies based in those areas in 2022.
“The days of China-based firms evading accountability are over,” PCAOB Chair Erica Williams said in a statement. “The PCAOB will take action to protect investors on US markets and impose tough sanctions against anyone who violates PCAOB rules and standards, no matter where they are located.”
The actions, which also include a $940,000 disciplinary order against another China-based public accounting firm and some of its employees, comprise the “highest civil money penalty the Board has imposed against a China-based firm,” according to the statement.
In the case of PwC China and PwC Hong Kong, the PCAOB alleges “both firms failed to detect or prevent extensive, improper answer sharing on tests for mandatory internal training courses.”
Between 2018 and 2020, the board said more than 1,000 PwC Hong Kong employees and hundreds of PwC China employees illicitly shared answers for online, internal training tests by “either providing or receiving access to answers through two unauthorized software applications.”
In addition to $4 million and $3 million civil money penalties for PwC Hong Kong and PwC China, respectively, the firms are also required to “review and improve their quality control policies” and report their compliance to the PCAOB.