The Chinese arms of all Big Four accounting firms face a six-month ban on practicing in the US in the latest development in a long-running row over giving regulators greater access to audit documents for work conducted by Chinese accounting firms for Chinese companies that list in the US markets.

In a new ruling, Securities and Exchange Commission (SEC) Judge Cameron Elliot has censured the Chinese affiliates of KPMG, Deloitte & Touche , PwC and EY, saying they had 'willfully' failed to give US regulators the audit work papers of certain Chinese companies under investigation for accounting fraud. A fifth firm, Dahua, was also censured by the judge but not suspended.

The auditors have cited concerns about violating Chinese secrecy laws as the reason for failing to hand over the audit details. Last year, the US announced that an agreement had been reached whereby Chinese regulators would hand over some audit documents of US-listed Chinese companies to the SEC. However, the papers filed in the latest case suggest that not all the papers requested were produced, according to Reuters.

The Big Four firms have indicated that they intended to appeal against the ruling, issuing a joint statement saying: 'In the meantime the firms can and will continue to serve all their clients without interruption.'

Paul Gillis, an accounting professor at Peking University, said: 'This decision will be a huge shock in Beijing. The SEC has pushed a lot of chips out on the table.'

Gillis claimed that if the ban goes ahead, mid-tier firms might find it hard to take over auditing of the Chinese companies previously handled by the Big Four because of the workload and capacity required.

The SEC had sought to have a permanent bar imposed on the Big Four's Chinese affiliates, but the judge in the case said a six-month bar was in the public interest, and that he had 'little sympathy' for the firms.

Matthew Solomon, chief litigation counsel in the SEC's enforcement division, said: 'These records are critical to our ability to investigate potential securities law violations and protect investors.'

The ruling will not take effect immediately, and the issue is now likely to be addressed through diplomatic channels.