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US and China reach deal on audits of listed companies
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China has agreed to give U.S. regulators access to Chinese accounting firms that audit U.S.-traded Chinese companies. The Public Company Accounting Oversight Board (PCAOB) signed a deal, announced Friday, with the China Securities Regulatory Commission and the Ministry of Finance. The agreement represents a significant concession that could prevent some 200 Chinese firms from being delisted from U.S. stock exchanges.
The pact is first step toward opening access for the U.S. accounting regulator to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong completely, consistent with U.S. law.
"On paper, the agreement signed today grants the PCAOB complete access to the audit work papers, audit personnel, and other information we need to inspect and investigate any firm we choose, with no loopholes and no exceptions. But the real test will be whether the words agreed to on paper translate into complete access in practice," said PCAOB chair Erica Williams.