U.S. and Chinese officials gathered in Hong Kong to audit Chinese stocks listed in the U.S. (Image credit: Ruby Tang/Watch China)
[See China September 22, 2022 News](See a comprehensive report by Chinese reporter Li Zhengxin) On September 22, people familiar with the matter said that the Beijing authorities had dispatched a group of regulatory officials to Hong Kong to assist the US Audit Supervisory Authority (PCAOB) in the US audit supervision agency (PCAOB). On-site inspection of the audit papers of listed Chinese concept stocks may mean that companies listed on the delisting risk list by the U.S. Securities and Exchange Commission (SEC) are exempted from forced delisting and delisting.
On September 22, according to an exclusive report by Reuters, about 10 officials from the China Securities Regulatory Commission (CSRC) and the Ministry of Finance (MOF) have arrived in Hong Kong to participate in audit inspections that began on September 19, four people familiar with the matter said. The Chinese officials will assist a team of inspectors from the U.S. audit watchdog, the Public Company Accounting Oversight Board (PCAOB), to conduct on-site inspections in Hong Kong.
The gathering of U.S. and Chinese officials in Hong Kong marks an important step in the implementation of the China-U.S. audit agreement on Chinese stocks.
Chinese concept stocks, referred to as Chinese concept stocks, refer to a series of stocks of companies whose main components are assets or revenue in mainland China. Generally speaking, a Chinese concept stock company is a way for a Chinese company to obtain overseas funds by listing overseas with the official consent or instigation.
The China Securities Regulatory Commission has been negotiating with U.S. authorities to resolve the audit dispute, and Chinese officials will be interviewing and hearing testimony from audit firm staff at the PCAOB.
The entire inspection process will last about eight to 10 weeks, the sources said, in line with comments made by Securities and Exchange Commission (SEC) Chairman Gary Gensler during a meeting with lawmakers last week.
Earlier on September 15, Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), said in a Senate hearing that inspectors from the U.S. Public Company Accounting Oversight Board (PCAOB) went to Hong Kong to begin reviewing the Audit documents of US-listed Chinese companies. It is reported that U.S. regulators can know whether China has complied with the China-U.S.-China stock audit and supervision cooperation agreement before Thanksgiving at the end of November. “So we’ll probably know (the results) around Thanksgiving or early December,” Gensler said.
It is unclear whether Chinese officials will be involved with PCAOB representatives in every aspect of the inspection process.
Another source familiar with the matter said the involvement of Chinese regulators is in line with how the PCAOB conducts inspections in other parts of the world, and U.S. regulators have not given China any special consideration.
For more than a decade, U.S. regulators have demanded audit documents from U.S.-listed Chinese companies, but Beijing has been reluctant to allow U.S. regulators to inspect its accounting firms, citing national security concerns.
Despite the audit agreement, legal experts and China watchers warned last month that they could still clash over how to interpret and enforce the agreement, with the U.S. seeking full access without any consultation or input from Chinese regulators. The audit papers of China Concept Stock.
However, Beijing’s statement on the deal last month emphasized that U.S. regulators would have to go through Chinese regulators to obtain documents and that the Chinese would have to be involved in interviews and evidence collection.
Currently, PCAOB on-site inspections are conducted at the Hong Kong offices of selected accounting firms. The PCAOB will review the auditor’s compliance and internal control systems in the first week and review the audit working papers of the selected Chinese concept stocks from the second week.
According to the U.S. regulator’s statement, PCAOB inspectors will not need to make any changes to view the full audit working file, and they will keep the personally identifiable information they see confidential.
Hong Kong’s “South China Morning Post” English version reported on September 14 that two sources familiar with the situation said that PricewaterhouseCoopers Hong Kong and KPMG China have been notified that the US Public Company Accounting Oversight Board (PCAOB) has selected They conduct checks on their audit clients.
PwC Hong Kong and KPMG China have both paper and electronic audit materials ready for use. All records have been filed in accordance with PCAOB standards, and staff from both companies stand ready to be interviewed by PCAOB inspectors.
Source: Watch China
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