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On May 9, 2012, the SEC announced an enforcement action against Deloitte Touche
Tohmatsu CPA Ltd. ("DT Tohmatsu") for not providing audit
work papers related to an unnamed China-based company under
investigation for potential accounting fraud against U.S.
investors. While this marks the first time the SEC has brought an
enforcement action against a foreign audit firm for failing to
comply with a Section 106 request under the Sarbanes-Oxley Act of
2002 (Sarbanes- Oxley), it is not the first time the SEC has
brought an enforcement action against DT Tohmatsu for refusing to
release documents related to an SEC fraud investigation. In
September 2011, the SEC filed a subpoena enforcement action against
DT Tohmatsu for failing to produce requested documents in
connection with the SEC's investigation of Longtop Financial
Technologies Limited. The SEC later filed charges against
Longtop.
Sarbanes-Oxley requires foreign public accounting firms to
provide audit work papers regarding U.S. issuers to the SEC upon
request.
DT Tohmatsu has refused to provide audit work papers to the SEC
based on its interpretation of Chinese law which it believes
prevents it from doing so.
Robert Khuzami, Director of the SEC's Division of
Enforcement has stated, "As a voluntarily registered U.S.
public accounting firm, D&T Shanghai cannot benefit from the
financial and reputation awards that come with auditing U.S.
issuers without also meeting its U.S. legal obligations." Mr.
Khuzami further noted, "Foreign firms auditing U.S. issuers
should not be permitted to shield themselves from regulatory
scrutiny to the detriment of U.S. investors."
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