A historic agreement between the US and China has been reached to let US authorities review the audits of US-listed companies with offices in China and Hong Kong. This agreement is a first step toward preventing additional delistings from the New York stock exchange, POLITICO reports.
As a result of the agreement that the Public Company Accounting Oversight Board (PCAOB) reached with the China Securities Regulatory Commission and the People’s Republic of China’s Ministry of Finance, inspectors from the PCAOB will be able to visit Hong Kong by mid-September and start conducting inspections there.
“As part of our ongoing efforts, this morning, the PCAOB signed a Statement of Protocol with the China Securities Regulatory Commission and the Ministry of Finance of the People’s Republic of China – the first step toward opening access for the PCAOB to inspect and investigate completely registered public accounting firms in mainland China and Hong Kong,” Chair Erica Y. Williams said in an official statement.
Now that the agreement is in place, the PCAOB should, for the first time, have “full access” to choose which businesses it inspects, read all of the audit work documents, and speak with anybody connected to the audits being looked at. Officials point out that the agreement is merely one part of a strategy to keep 200 businesses from being delisted from American exchanges.
Beijing and Washington have been in conflict for many years over the PCAOB’s incapacity to check the audits of Chinese and Hong Kong-based businesses that are listed on the Nasdaq and NYSE.
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