U.S. to review audit papers of U.S.-listed Chinese firms this week

U.S. regulators are scheduled to start reviewing audit papers of U.S.-listed Chinese companies this week, a process which may determine if the companies will continue trading on American stock exchanges, the Wall Street Journal reported.

Audit inspectors from the U.S. Public Company Accounting Oversight Board (PCAOB) are in China's Hong Kong Special Administrative Region and expected to take eight to 10 weeks to review the audit files, and results are expected in late November or early December.

The PCAOB is a nonprofit corporation established by the U.S. Congress to oversee the audits of public companies.

Sources told the Wall Street Journal that inspectors are set to review the audit papers of companies such as Alibaba Group Holding Ltd., Yum China Holdings Inc., NetEase Inc. and Inc.

The China Securities Regulatory Commission (CSRC) and the Ministry of Finance signed a supervision cooperation agreement with the PCAOB last month.

The agreement was established on the principle of equivalence, an official from the CSRC told the media in a statement at the time.

Regulators from both sides can conduct inspections following the statutory duties of relevant accounting firms in the other country. The CSRC official said that the scope of the assistance provided by China covers Hong Kong firms that provide audit services for Chinese concepts stocks and whose audit working papers are stored in the Chinese mainland.

Raymund Chao, the Asia Pacific and China chairman of accounting firm PwC, said in an earlier interview with CGTN that the agreement is a very positive step forward.

"It would enhance or drive greater activities at capital markets and greater flow of capital funds between the two markets," said Chao.

Opinion: Pragmatism key to China-U.S. audit cooperation

(Cover via CFP)

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