SEC judge is late | China Accounting Blog | Paul Gillis

SEC judge is late

The SEC brought administrative charges against the Big Four and BDO’s then China affiliate on December 3, 2012 for failure to turn over audit working papers to the SEC. Separate charges against Deloitte had been brought on May 9, 2012. At risk is the right of these firms to practice before the SEC. If this right is revoked, U.S. listed Chinese firms may find themselves without an auditor and consequentially be kicked off of U.S. exchanges. Under SEC rules, the presiding administrative law judge is to issue a decision within 300 days. On March 8, 2013, the SEC approved a delay in the case against Deloitte and put the Deloitte case on the same timetable as the rest of the firms – October 11, 2013.

A hearing was held in Washington between July 8 and July 31, 2013.

The CSRC reached an agreement with the PCAOB to release working papers in connection with investigations in May 2013, but continued to block the PCAOB from doing inspections of accounting firms. The CSRC began to release the working papers that the SEC had requested. The firms asked the judge for a summary disposition of the case because the SEC had found another way to get the working papers. The judge dismissed this request on December 6. 

On October 2, 2013 the Commission extended the deadline for a decision until January 20, 2014, citing the heavy workload of the assigned judge. 

January 20, 2014 was Martin Luther King day, a public holiday, so perhaps the deadline was postponed automatically to January 21, 2014. But as I write this at 5:40 PM EST on January 21st, the decision has not been released on the SEC website. Perhaps they are burning the midnight oil, but it appears that the deadline has been missed.

I am not sure what to make of that. The SEC is not the kind of organization that ignores deadlines. Perhaps a negotiated deal has been reached, but there has not been enough time to finalize it. I expect we hear something within days. 

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