What’s new: The U.S. audit watchdog will launch a new round of inspections of U.S.-traded Chinese companies’ auditors in Hong Kong as soon as next week.
The inspections by the Public Company Accounting Oversight Board (PCAOB), which oversees audits of companies publicly traded in the U.S., will include branches of EY, Deloitte, PricewaterhouseCoopers and some other audit firms in Hong Kong and mainland China, Reuters reported, citing unnamed sources.
Chinese officials from the China Securities Regulatory Commission and the Ministry of Finance are to assist the inspections in Hong Kong, Reuters reported.
The context: The PCAOB inspections are part of a landmark agreement reached last August between Beijing and Washington to resolve a long-standing dispute over the U.S. regulator’s access to audit records of Chinese companies traded in the U.S.
Under American law, such companies that don’t comply with U.S. audit inspection rules are subject to delisting from U.S. exchanges. The threat could affect roughly 200 Chinese businesses.
Between September and November, the PCAOB conducted a nine-week on-site inspection in Hong Kong, examining the audit work of PwC and KPMG on eight Chinese companies.
The U.S said in December that its inspectors were able to sufficiently review audit documents of the businesses, diminishing the chances that companies including Alibaba Group Holding Ltd. and JD.com Inc. will be delisted in New York.
The PCAOB said routine inspections on audits of Chinese companies in Hong Kong and the mainland will be carried out regularly.
Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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