Deloitte, EY China Affiliates Miss Mark in US Audit Inspections

Both Deloitte and Ernst & Young’s Chinese affiliates failed to meet basic US audit standards in the second round of US regulatory inspections in the region since a landmark deal in 2022.

The Big Four firms’ affiliates in both China and Hong Kong were inspected last year under an agreement with Beijing that enabled the US Public Company Accounting Oversight Board to inspect and oversee the work of auditors in the two jurisdictions for the first time in its history.

Mainstay accounting areas tripped up the firms including inventory and revenue as well as vetting their clients’ use of variable ...