Beijing has sent a team of regulators to Hong Kong to assist the U.S. audit watchdog with on-site audit inspections involving Chinese companies, according to four sources familiar with the matter. , as part of a historic agreement between the two countries.
Last month’s China-U.S. deal allows U.S. regulators, for the first time, to inspect China-based accounting firms that audit New York-listed companies, an important step toward resolving an audit dispute that threatened to delist more than 200 Chinese companies from US stock markets.
Around 10 agents from the China Securities Regulatory Commission (CSRC) and the Ministry of Finance (MOF) have arrived in Hong Kong and joined the inspection of the audits, which started on Monday, three of the sources said.
The agents will assist a team of inspectors from the Accounting Oversight Council of Listed Companies (PCAOB), the US audit watchdog, who are in Hong Kong for the on-site inspection, the four sources said.
All sources declined to be named due to the sensitivity of the matter.
CSRC and MOF representatives did not immediately respond to Reuters requests for comment. The PCAOB did not respond to Reuters inquiries sent outside US business hours.
The meeting of US and Chinese officials in Hong Kong marks an important step forward in what was expected to be a tense process for the implementation of the audit agreement, the most detailed that the PCAOB has reached with China.
Reuters reported last month that US regulators had targeted a number of US-listed Chinese companies, including major e-commerce companies Alibaba Group Holding (NYSE: BABA ) Ltd and JD.com (NASDAQ: JD ) Inc for an audit inspection.
Representatives from the CSRC, which has been leading negotiations with US authorities to resolve the audit dispute, are expected to be present when the PCAOB conducts interviews and takes testimony from audit firm staff, one of the four sources said. familiar with the audit process.
The entire inspection process will take between eight and 10 weeks, two of the four sources said, consistent with comments from Securities and Exchange Commission (SEC) Chairman Gary Gensler at a meeting with lawmakers last week. pass.