China, US enter into audit oversight cooperation agreement
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E-mail Xinhua, August 27, 2022
China Securities Regulatory Commission (CSRC) and the Ministry of Finance signed an audit oversight cooperation agreement with the U.S. Public Company Accounting Oversight Board (PCAOB) on Friday.
It is an all-win choice to promote cooperation in cross-border audit oversight in accordance with the law and ensure unimpeded channels for companies to list overseas, which benefits the two countries' capital markets, issuers as well as global investors, according to sources with authorities.
Currently, there are more than 30 Chinese audit firms that are registered with the PCAOB and qualified to provide audit services to more than 200 Chinese companies listed on the U.S. capital markets.
For more than a decade, the CSRC and China's Ministry of Finance have maintained communication and consultation with the PCAOB and other U.S. regulators, and they have tried various ways of cooperation.
The agreement emphasizes the principle of reciprocity as the agreement is equally binding on both sides, the CSRC said, adding that the scope of cooperation under the agreement includes assisting with the inspections and investigations of relevant audit firms taken by the authorities.
The agreement also identifies the approach of cooperation. The two sides will communicate and coordinate in advance to plan for inspections and investigations, according to the CSRC.
The materials such as audit work papers that the U.S. regulator needs access to will be obtained by and transferred through the Chinese side. The Chinese side will also take part in and assist in the interviews and testimonies of relevant personnel of audit firms requested by the U.S. side.
The agreement has made clear arrangements on the treatment and use of possible sensitive information during audit oversight cooperation, including procedures for processing personal information and other certain data categories, providing a feasible path for both sides to discharge their regulatory mandates while protecting relevant information.
The signing of the agreement will help smooth the channels for Chinese companies to be listed on U.S. stock exchanges and further stabilize market expectations, according to sources with authorities.
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