Barron’s spent a lot of time analyzing the Alibaba Group Holding Ltd. numbers and strongly questioning the stock’s future, even though those numbers have never been verified by an independent third party fully vetted by U.S. regulators.The PricewaterhouseCoopers Hong Kong member firm, the one that signs Alibaba’s(BABA, US) audit, has never been inspected by the audit regulator in the United States, the Public Company Accounting Oversight Board. That’s because the Chinese government forbids the PCAOB from performing audit-quality inspections of the Chinese firms and their U.S.-listed company audits, whether on the mainland, in Hong Kong or in Macau.

On Sept. 12, Barron’s magazine published a story with the headline “Alibaba: Why It Could Fall 50% Further.”Alibaba Groupimmediately responded to the Barron’s story, objecting to its “factual inaccuracies and selective use of information” in a letter to the magazine’s editor penned by Jim Wilkinson, the company’s Senior Vice President of International Corporate Affairs.

Venture capitalist Marc Andreessen and CNBC commentator Josh Brown both tweeted on Monday that Barrons had, more or less, said Alibaba was committing accounting fraud.

https://twitter.com/pmarca/status/642835845691535360https://twitter.com/ReformedBroker/status/643245133207601152 Brown told MarketWatch he holds a position in Alibaba. Andreessen responded via Twitter that he has no position in Alibaba.

The Alibaba business model — an online market with mainland China headquarters, registrations in the Cayman Islands and an audit signed not by the U.S. firm nor even its mainland China office — should cause investors to pause immediately and apply a healthy dose of skepticism and caution.

Alibaba has filed quarterly reports with the Securities and Exchange Commission since its IPO last September, but only one annual report and audit opinion so far, from PricewaterhouseCoopers Hong Kong. That report, filed on June 25 for a full year of financial information as of March 31, says that “Most of our operations are conducted in the PRC (People’s Republic of China) and substantially all of our revenue is sourced from the PRC.”

Why would the Hong Kong member firm sign the audit if the headquarters and the majority of the operations and revenues are in mainland China? Maybe Alibaba thinks investors will take the numbers more seriously if the Hong Kong member firm of PwC and not the mainland China member firm audited them.

Barron’s certainly did.

The mainland China member firms of the largest global audit networks, remember, because they refused to turn over documents regarding investigations of fraud at Chinese companies. They dodged that bullet, for now. In February those Chinese accounting firms — separate legal entities who pay for the use of the Deloitte, EY, KPMG and PricewaterhouseCoopersbrand — agreed to pay $500,000 each for their lack of cooperation in the investigations and to comply with future SEC document requests when their clients are being investigated for fraud.

Investors should care who signs a company’s audit report. The PCAOB has proposed to require firms to disclose in the audit report the names, locations, and extent of participation (as a percentage of total audit hours) of other public accounting firms that took part in the audit. The Alibaba situation shows how important that proposal is to financial statement integrity and the integrity of the global capital markets. Under auditing standards, the audit report needs to be signed by the ”principal auditor,” the one that does the most work. Is it PricewaterhouseCoopers Hong Kong or PricewaterhouseCoopers Zhong Tian LLP on the mainland?

Paul Gillis, a PhD and CPA and a professor of practice at Peking University’s Guanghua School of Management, has written on his site China Accounting Blogthat the practice of signing reports in Hong Kong to cover work done substantially on the mainland is consumer fraud, like “a Chinese shirt maker sewing ‘Made in Italy’ labels on shirts made in Wenzhou.”

PwC, like the rest of its Big Four brethren, likes to take credit for the global service delivery network enabled by having member firms all over the world. However, PwC has faced issues in the past with at least three other companies it audits or audited that have substantial activities in China — NQ Mobile (NQ, US), NuSkin (NUS, US), and Herbalife (HLF, US).

NQ’s audit opinions were signed by the PwC mainland firm, PricewaterhouseCoopers Zhong Tian LLP, even though the company has substantial activities outside of China, including in the U.S. After several investigations and other ups and down exacerbated by attacks form short sellers, PwC resigned the NQ audit and a lawsuit against PricewaterhouseCoopers International Limited, the international network coordinating firm, was dismissed.

NuSkin, a U.S.-based, U.S.-listed company, faced trouble with China over its multi-level-marketing business model. NuSkin’s final audit report is signed by the PwC firm in Provo, Utah, but PwC’s mainland China office is presumably supporting the audit of a significant portion of NuSkin’s revenue since news reports put its China revenue at 31% of consolidated sales. NuSkin has been accused of flouting China’s MLM laws, putting the viability of its China operation and the validity of balance sheet representations related to that operation in serious doubt.

In April, The Wall Street Journal reportedthat concerns about Herbalife’s operations in China and an activist investor presentation highlighting those issues were part of a probe into potential market manipulation of Herbalife’s stock. Investor Bill Ackman’s presentation said that Herbalife is paying its distributors commissions on sales from downstream recruits, in violation of Chinese law. The Journal reviewed Ackman’s firm’s research notes and transcripts of interviews with Herbalife distributors in China, and described a confusing and at times contradictory picture of Herbalife’s compensation model in that country.

In December, analysts questioned Alibaba Group’s aggressive acquisition of companiesafter its Hong Kong-listed subsidiary, Alibaba Pictures Group, admitted to misstating its tax reports and convertible bonds. Who investigated and reported on the discrepancy for Alibaba Group? The Shanghai branch of PricewaterhouseCoopers Business Consulting.

A spokeswoman for the SEC declined comment on the Barron’s story and its allegations. Spokespersons for the PCAOB, PwC Hong Kong and Alibaba did not respond to a request for comment.