Source: Visual China

Following a voting on Thursday, the Public Company Accounting Oversight Board (PCAOB), an accounting body under the U.S. Securities and Exchange Commission (SEC), vacated its previous determinations, and believes that it has for the first time secured complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong, according to an announcement of PCAOB that day.

PCAOB’s conclusion marks another milestone after it reached an audit and regulatory cooperation agreement with China’s Securities Regulatory Commission (CSRC) and the Ministry of Finance. The agreement grants PCAOB full access to Chinese audit information, and allow it to take direct testimony from accounting firm staff in China for its investigation.

During the nine-week on-site inspection in Hong Kong from September to November, PCAOB conducted inspection field work and investigative testimony in a manner fully consistent with the PCAOB’s methodology and approach to inspections and investigations in the U.S. and globally, according to the recent statement. PCAOB said it exercised sole discretion to select two firms for inspection: KPMG Huazhen LLP in mainland China and PricewaterhouseCoopers in Hong Kong, without consultation with, nor input from the Chinese government. Inspectors and investigators were able to view complete audit work papers with all information included, and retain information as needed, the watchdog said. Moreover, it had direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspected or investigated.

PCAOB called to secure the access “unprecedented“and believes investors are now more protected because of the Holding Foreign Companies Accountable Act (HFCAA). The law, which was came into effect in last December, allows SEC to prohibit companies from trading and make listed companies be kicked out of U.S. exchanges if PCAOB is unable to inspect or investigate these company audits for three consecutive years.

We welcome the determination made by the American regulator based on professional regulatory considerations, and look forward to working with the U.S. peer to continue promotion of regulatory annual cooperation during annual audits in the future, on the basis of previous experience, a spokesman of CSRC commented on PCAOB’s report. The Chinese regulator also wishes to form a regular and sustained cooperation system to jointly create a more stable and predictable international regulatory environment, and protect the legitimate rights and interests of global investors.

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