Harsher penalties

In the meantime, the SEC's enforcement division has also asked the commission members to review the ruling, arguing that harsher penalties — longer or even permanent suspensions — should be imposed against the firms, the newspaper said.

The enforcement division also recommended the suspension of a fifth firm, Dahua CPA, which was censured but not suspended in the initial ruling. Dahua joined the Big Four firms in the appeal.

The ruling has yet to take effect, pending the appeal. A decision by the SEC could be months away or longer. Any SEC decision could then be appealed further to the US Court of Appeals in Washington.

Gene Buttrill, a partner with Jones Day, commented earlier that the issue isn't something to be fought out in the courts but a diplomatic matter to be resolved by the Chinese and US governments.

Jim Doty, chairman of the Public Company Accounting Oversight Board, the top US audit regulator, said last week he was optimistic the two sides will be able this year to sign an agreement to inspect the audit work of firms registered with it but based in China.

Doty said the Chinese regulator and the PCAOB are still exchanging draft agreements and haven't yet decided how inspections will be conducted.

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