In the News

Tom Vaughn Quoted in Compliance Week

Weighs In on Regulatory Standoff Between U.S. and China Over U.S. Access to Work Papers Prepared by Audit Firms

February 12, 2014

Thomas S. Vaughn, Detroit-based member of Dykema’s Corporate Finance group whose practice focuses on mergers and acquisitions and who leads the Firm’s China Team, is extensively quoted in a Compliance Week article—“Audit Standoff With China Threatens China Subsidiaries, Listings”—that appeared in the February 4 issue of this publication.

In the article, which discusses a prolonged battle between the Securities and Exchange Commission (SEC) and the China Securities Regulatory Commission (CSRC) over how much access to information the SEC should have on China-based companies listed on U.S. exchanges, Vaughn observes that those China-based companies who currently rely upon on an affiliate to one of the Big Four accounting firms “would be wise” to start forming relationships with other audit firms.

Vaughn suggests that “U.S.-based multinationals with businesses in China should also pay close attention as well.” He notes that while the risk to China affiliates of U.S. companies losing their audit firm is probably small, the battle between the two countries’ regulatory agencies could intensify.

“A lot of us are pretty surprised it has gotten to this level,” says Vaughn. He adds that a recent Administrative Law Judge (ALJ) decision—that effectively suspended the China-based affiliates of all the Big Four firms from practicing before the Commission for six months because of their failure to hand over documents requested by the SEC—has ramifications that could affect multinational companies, not just China-based entities.”

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