US needs full access to Chinese companies’ audit documents to resolve accounting dispute


The logo of the U.S. Securities and Exchange Commission adorns an office door at SEC headquarters in Washington, June 24, 2011. REUTERS/Jonathan Ernst

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WASHINGTON, Aug 1 (Reuters) – The U.S. public company accounting regulator will not accept any restrictions on its access to audit documents of Chinese companies listed in New York, its chairman said on Monday, confirming a Reuters report published last week. Read more

Washington and Beijing are in talks to settle a long-running dispute over audit compliance of Chinese companies listed in the United States. Chinese authorities have long been reluctant to let foreign regulators inspect local accounting firms, citing national security concerns.

Reuters reported on July 26 that the main sticking point has been the degree of access China is willing to grant the Public Company Accounting Oversight Board (PCAOB), which oversees audits of U.S.-listed companies, to company documents. companies. While Chinese counterparts want varying degrees of access, the PCAOB says US law requires full access.

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“Access to US capital markets is a privilege. It’s not a right. And the law is very clear that part of that privilege comes with granting the PCAOB access. audit working papers for companies listed on U.S. markets,” Erica Williams, chair of the PCAOB, told Reuters in an interview on Monday.

“If we are unable to obtain full access to audit working papers – without loopholes, without exceptions – all Chinese companies listed on US stock exchanges would be banned from trading in the United States,” he said. she declared.

The U.S. Securities and Exchange Commission (SEC), which oversees the PCAOB, would make that final decision after the PCAOB determines whether China has granted full access.

“We have to make a decision by the end of this year. Despite that, we are doing everything we can to try to reach an agreement,” Williams said.

The oversight dispute, which has been simmering for more than a decade, came to a head in December when the SEC finalized rules to potentially ban trading by Chinese companies under the Foreign Corporate Liability Act. He said there were 273 businesses at risk.

Williams said her agency is in daily discussions with Chinese regulators and while time is running out to reach an agreement, the resulting inspections and investigations “will take as long as it takes.”

“While we need to get an agreement as soon as possible, we need to be sure that we are faithfully applying the law,” she said.

“China knows what it needs to do. PCAOB inspectors stand ready with the necessary resources for the inspection.

China has previously said the two sides are determined to reach an agreement, although the United States has been more cautious about the outlook. Read more

“We won’t send our team out until we at least have a deal and then we have to test if what’s on paper actually works in practice,” Williams said.

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Reporting by Katanga Johnson in Washington Editing by Michelle Price and Matthew Lewis

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