US Regulators in China for Corporate Audit Talks: Report

  • U.S. officials are in Beijing for talks aimed at settling a long-running accounting dispute, Reuters reported Friday.
  • The SEC this week added more than 80 Chinese companies to a list of firms facing possible US stock delistings.
  • Concessions made by Chinese officials have moved the talks forward.

US accounting regulators are in China to settle a dispute over the auditing of US-listed Chinese companies, Reuters reported Friday, with an agreement needed to prevent stock delistings.

Officials from the US Public Company Accounting Oversight Board, or PCAOB, and their counterparts at the China Securities Regulatory Commission, or CSRC, are in the ‘late stage’ of talks after China made concessions in recent months, sources told the news agency.

Talks are slated to take place next week after PCAOB officials exit COVID quarantines. Discussions between the countries moved forward after authorities in Beijing loosened their stance on US auditors gaining access to the financials of Chinese companies. The auditing dispute has been running for more than a decade.

Last month, Chinese regulators proposed revising confidentiality rules for offshore listings and ending requirements that on-site inspections of overseas-listed Chinese companies were conducted mainly by domestic regulators, Reuters reported. Chinese officials have been reluctant to allow inspections by overseas regulators of local accounting firms because of national security concerns.

If discussions progress as needed, the PCAOB is likely to send a larger team to China this year to run on-site inspections of local auditors, the report said.

The talks will take place after the Securities and Exchange Commission this week added more than 80 companies to a list of companies facing possible stock expulsions, including e-commerce heavyweight and China Petroleum & Chemical Corp., or Sinopec.

The SEC in December finalized rules to delist Chinese companies under the Holding Foreign Companies Accountable Act. The PCAOB as of Friday has named 128 Chinese companies as at risk of being delisted.

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