WASHINGTON – A US watchdog said yesterday that it secured “complete access” to inspect Chinese audit firms for the first time, temporarily easing delisting fears for many Chinese companies on American stock exchanges.
The Public Company Accounting Oversight Board’s announcement came amid worries that Chinese firms could be taken off United States stock exchanges if they did not comply with audit requirements – a demand that places around 200 businesses at risk.
The statement marks a breakthrough in a longstanding dispute.
Congress in 2020 passed a law targeting Chinese companies, under which the US audit watchdog must be able to inspect audits of foreign firms listed on US markets.
While many foreign companies conform to the standard, this has not been the case for mainland China and Hong Kong firms.
China has long cited national security and confidentiality concerns for denying foreign regulators access to local accounting firms.
“For the first time in history, the (board) has secured complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong,” the oversight board’s Chair Erica Williams said in a statement yesterday.
But she cautioned that the announcement “should not be misconstrued in any way as a clean bill of health for firms.”
“This is the beginning of our work to inspect and investigate firms in China, not the end,” said Williams, adding that it will reconsider its determination if China obstructs access at any time.
The oversight board is continuing to demand complete access in China and Hong Kong moving forward, with teams making plans to resume regular inspections early next year, she said.
The China Securities Regulatory Commission said on Friday it looked forward to “carrying out audit oversight cooperation with our US counterparts in the years to come with enhanced mutual respect and trust”.
US regulators have accessed audit documents and taken testimony from accounting firm personnel, the CSRC said.
It was earlier reported that China had asked to redact certain details in the audit work papers.
Williams said inspectors were able to view the papers “with no redactions”, while the CSRC said it had made “proper treatment” to some data such as personally identifiable information.
Prominent US-listed Chinese firms include e-commerce heavyweight Alibaba, rival JD.com, internet giant Baidu and video platform Bilibili. – AFP, December 16, 2022
