Not acceptable restrictions on access to audit documents of listed Chinese companies: US

The head of the US regulatory authorities confirmed that he would not accept any restrictions imposed by the Chinese side on the US side’s access to audit documents related to Chinese listed companies in the United States, saying that if the relevant audit documents could not be fully consulted, all Chinese listed companies in the United States would be suspended.

Reuters said on Monday (August 1, 2022) that Erica Williams, chairman of the Accounting Oversight Board of U.S. Public Companies (PCAOB), confirmed a Reuters report last week in an interview on the same day, which quoted pCAOB sources as saying, “If Chinese regulators will have any degree of restriction on us, it will not allow us to complete the request, and we will not accept it.”

“Going public on the U.S. stock market is a special treatment, not a right,” Williams said. The law makes it clear that one condition for obtaining this special treatment is that the PCAOB has unrestricted access to the working papers of audit documents of companies listed on the U.S. securities market. ”

The PCAOB must determine as soon as possible whether China has given the U.S. side full access to the relevant audit documents, because the U.S. Securities and Exchange Commission (SEC) needs to decide whether Chinese listed companies in the United States have complied with audit regulations based on PCAOB’s determination before the end of the year. Previously, the SEC said 273 Chinese companies, including some prominent Chinese Internet companies, were at risk of being formally suspended as early as 2023 for failing to comply with U.S. audit regulations.

Williams said that first the two countries must reach a relevant agreement, and then the PCAOB will send regulators to China to review the relevant documents, and then determine whether China really allows the United States to fully access the relevant audit documents.

Earlier, the Chinese side said that both sides were committed to reaching an agreement, but the United States was not optimistic about this prospect.

Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), said earlier in July that he was “not particularly confident” that the two sides could reach an agreement.

For years, the United States has demanded legal access to all audit documents for Chinese companies listed in the United States, but Beijing has banned Chinese companies from providing audit working papers to foreign institutions on grounds of national security concerns.

Eeven shutting down Chinese companies would not make Beijing comply with U.S. rules and laws, two people familiar with the matter were quoted as saying on July 26. ####

— VOA report