By Rachel Armstrong
(Reuters) - Accounting giant Deloitte has asked a federal judge to reject a request from the U.S. securities regulator to resume a court case in which it is trying to force the auditor to hand over work papers from its audit of an allegedly fraudulent Chinese IT company.
The move is the latest in a standoff between the Securities and Exchange Commission (SEC) and audit firms over access to accounting documents of U.S.-listed Chinese companies suspected of fraud.
The SEC wants Deloitte to supply documents relating to its audit of Longtop Financial Technologies Ltd but the auditor says it is barred from doing so by Chinese secrecy laws.
The regulator asked for the case to be reopened last month following a six-month hiatus while it tried, but ultimately failed, to reach a diplomatic solution through negotiations with the China Securities Regulatory Commission (CSRC). The case began in May 2011.
Deloitte filed papers late on Monday, arguing that the case should be postponed pending the outcome of new action taken by the SEC against it and four other audit firms for securities violations related to their refusal to provide Chinese audit documents.
The auditor also argued that the SEC's difficulties are partly of their own-making.
"The SEC has long been aware that the CSRC forbids China-based audit firms to produce audit work papers directly to the SEC, and yet the SEC chose to allow China-based companies to sell securities in the United States despite those restrictions," Deloitte wrote in the papers.
U.S. stock markets were rocked by a string of accounting scandals at China-based companies in 2010 and 2011, but the SEC has struggled to take any action because it is unable to access evidence, such as audit work papers, kept in China.
When the regulator asked last month for the case against Deloitte to be resumed, it said that the CSRC "remains unwilling or unable to provide the SEC with meaningful assistance in its enforcement investigations".
Longtop was delisted from the New York Stock Exchange in 2011 for failing to meet listing standards, and the SEC opened a probe into the firm for alleged accounting irregularities.
(Reporting by Rachel Armstrong in SINGAPORE; Editing by Daniel Magnowski)