US, China Near Deal To Allow Audit Inspection of NY-Listed Chinese Companies

The U.S. and China are nearing an agreement that would allow American accounting regulators to travel to Hong Kong to inspect the audit records of Chinese companies listed in New York, WSJ reported Thursday, citing people familiar with the matter, as the two countries move toward resolving a yearslong standoff. From the report: Securities regulators in Beijing are making arrangements for U.S.-listed Chinese companies and their accounting firms to transfer their audit working papers and other data from mainland China to Hong Kong, the people said. Regulators from the U.S. Public Company Accounting Oversight Board would then travel to the semiautonomous city to perform on-site inspections of the Chinese companies' auditors and their records, they added. The China Securities Regulatory Commission recently informed some accounting firms and companies about the plan, the people said, adding that U.S. accounting inspectors could arrive in Hong Kong as soon as next month. A final agreement can only be reached if the U.S. side determines that it has full access to the audit working papers, they said. The CSRC said, in response to a Wall Street Journal query, that it doesn't have any relevant information to disclose. The PCAOB declined to comment. Earlier this month, Erica Williams, chair of the PCAOB, told the Journal that U.S. accounting inspectors and investigators were prepared to travel to inspect Chinese companies' audit work papers when an agreement was in place. "We have teams ready, bags packed and ready to go -- if we have an agreement that's reached, so that we can actually test out that agreement and make sure that what we have in the agreement on paper is actually working in practice," Ms. Williams said, adding that she herself is prepared to go if need be.

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