KPMG, PwC Miss on China Audit Results After Landmark Deal (3)

A landmark deal that exposed the work of Chinese audit firms to US regulatory scrutiny has uncovered struggles two Big Four affiliates had in meeting basic standards, from independence to testing revenue.

KPMG’s affiliate in China and PwC’s Hong Kong member firm both fell short in vetting their clients’ accounting or internal controls in seven of the eight audits reviewed as part of their inaugural regulatory inspections, the Public Company Accounting Oversight Board said Wednesday.

The publication of the KPMG and PwC assessments marks a milestone for the board: They are the first inspection reports the regulator has released for ...