SEC Files Administrative Proceeding Against Audit Firm Frazer Frost
February 11 2016 - 5:40PM
Dow Jones News
The Securities and Exchange Commission on Thursday accused a
California audit firm of mishandling its audits of a Chinese
company.
The SEC's administrative proceeding against Frazer Frost LLP of
Brea, Calif., is the latest of several cases the commission has
filed in recent years against small U.S. audit firms that gave
clean bills of health to U.S.-traded Chinese companies facing
questions about their accounting or disclosure.
The SEC has been pursuing auditors, financiers, consultants and
other "gatekeepers" who helped the Chinese companies gain access to
U.S. markets.
Two Frazer Frost accountants signed off on a 2010 review of
China Valves Technology Inc., a maker of water flow management
products, even though they knew the company's financial report
contained inaccurate information about a China Valves acquisition,
the SEC said.
The accountants also failed to find out that $1.7 million in
value-added-tax payments that a China Valves subsidiary had
purportedly made to a local tax bureau in 2011 had not in fact been
made, the SEC said.
Frazer Frost hasn't issued any audit reports for public
companies since 2012. A representative of Frazer Frost said they
were still reviewing the SEC's complaint and didn't have any
immediate comment. Officials of China Valves Technology couldn't be
reached for comment.
China Valves Technology withdrew from its Nasdaq Stock Market
listing in 2012, and the SEC barred it from U.S. trading in
2015.
Write to Michael Rapoport at Michael.Rapoport@wsj.com
(END) Dow Jones Newswires
February 11, 2016 17:25 ET (22:25 GMT)
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