In a move to increase the transparency of Chinese companies, Washington and Beijing on Friday signed an agreement to “inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong.” The move comes after Chinese companies were delisted from the US stock market amid concerns of security threats.
The Public Company Accounting Oversight Board (PCAOB) signed an agreement with Chinese authorities, taking the first step toward complete access for PCAOB to select, inspect and investigate in China.
The PCAOB is a non-profit corporation established by Congress to oversee the audits of public companies in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports.
PCAOB Chair Erica Y Williams underscored agreement is just the first step and said that PCAOB must now test it before making a December determination.
“Today, I directed the PCAOB inspection team to finalize their preparations to be on the ground by mid-September so we can put this agreement to the test,” said Williams.
Williams released the following statement today after the PCAOB signed a Statement of Protocol with the China Securities Regulatory Commission and the Ministry of Finance of the People’s Republic of China.
“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 Williams.
“The US Congress sent a strong message with the passage of the Holding Foreign Companies Accountable Act that access to the US capital markets is a privilege, not a right. The PCAOB has been working to execute our mandate under the law,” added Williams.