China proposes cybersecurity check for auditors if national security involved

BEIJING/HONG KONG (Reuters): China’s finance ministry has proposed that auditors undergo or conduct additional cybersecurity checks when their work involves national security.

A draft of the new measures, made public on Friday, also lays out how accounting firms should manage data that relates to Chinese firms.

Over the past two years, China’s cybersecurity authority has established policies that outline how all businesses should handle and implement security assessments and checks.

The new measures apply specifically to auditors that have been hired by domestic firms or are conducting cross-border work. The chief partner of an auditing firm is the person responsible for data security, the draft rules say.

The draft is open for public consultation until Dec. 11.

PricewaterhouseCoopers, Deloitte, KPMG and EY – the world’s big four auditing firms – did not immediately respond to requests for comment.

Concern about data security has prompted Chinese authorities to step up scrutiny of auditors in recent years.

Rules issued in May already stipulate that state-owned companies and listed enterprises should strengthen checks on accountants’ ability to manage information security.

Beijing has asked some state-owned firms to stop using the four big global accounting firms as it seeks to curb the influence of Western auditors, Bloomberg News reported in February.

The United States and China last year reached a deal to settle a long-running dispute over auditing compliance of U.S.-listed Chinese firms, agreeing to conduct audit inspections in Hong Kong as China hesitates to grant full access to U.S. regulators.