Is the Next Wave of Auditor Resignations Coming?

Floyd Norris notes:

Several Chinese companies that are registered in the United States missed the May 1 deadline for filing their annual reports and received two-week extensions. There are many reasons that a company’s report can be delayed, but given the recent history there is speculation that one or more companies might be fighting with their auditors. Presumably we will find out by the new deadline, May 15.

It's been a little over a month since we last wondered aloud about ballparking the number of resignations of U.S.-registered Chinese companies, so I checked in with Paul Gillis, Professor of Practice and co-director of the IMBA program at Peking University's Guanghua School of Management, and author of the China Accounting Blog to get a read on this:

The way I see it is that absent a major last minute transaction, there are only two reasons to file your annual report late  – you are out of control or you are fighting with your auditors.   Neither of those reasons should give investors any comfort. There were 14 late filings by Chinese companies this year, not counting those that might have "gone dark" – just stopped filing.  Each of the Big Four except Deloitte had two. Deloitte had none, even though it audits the largest number of U.S. listed Chinese companies and has been the auditor of a number of alleged frauds in the past. 
This sounds like a bit of good news for Deloitte who has had quite the rash of resignations in the past year, including two in one week this past March. They would probably appreciate it if some of this auditor resignation attention went to their rivals, although they may have just been lucky to lock things up for one quarter. Stay tuned!

China and the Integrity of Accounting [Economix/NYT] 

Latest Accounting Jobs--Apply Now:

Have something to add to this story? Give us a shout by email, Twitter, or text/call the tipline at 202-505-8885. As always, all tips are anonymous.

Related articles

Talent-Strapped PwC Is That Desperate Ex Texting You With ‘WYD’ After You’ve Moved On

Leaving public accounting is rarely an easy decision, even when the choices are “stay or have a crippling nervous breakdown.” It’s not that the decision itself is hard, rather the consequences of taking an oftentimes necessary leap can lead to difficulties in securing subsequent employment if, as your accounting professors would have you believe, walking […]

Grant Thornton Auditors Are Just Showing Off Now

It’s fair to say Grant Thornton auditors are no longer on the struggle bus. From 2010 to 2015, the Purple Rose of Chicago had an average audit failure rate of 44% in its PCAOB inspection reports during that time frame, including a whopping 65% worth of screw-ups in the firm’s 2012 report, which gave GT […]