In the News: China Allows U.S. Audit; CIMC-Maersk Acquisition Called Off; and Wealth Management Compliance

Credit: ALM

Landmark U.S.-China Audit Deal

On August 26, the China Securities Regulatory Commission (CSRC), China's Ministry of Finance, and the U.S. Public Company Accounting Oversight Board (PCAOB) signed an agreement allowing U.S. authorities to vet audits of U.S.-listed Chinese companies.

The agreement aims to empower the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. This is based on three main provisions: First, the PCAOB has sole discretion to select the firms, audit engagements and potential violations it inspects and investigates—without consultation with, nor input from, Chinese authorities; Second, PCAOB inspectors and investigators can view and retain complete audit work papers with all information included; Finally, the PCAOB has direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates. The CSRC may deem certain data, such as personally identifiable information, as "restricted" and limited to a "view only" review by select inspectors. The PCAOB will dispatch inspectors to Hong Kong by mid-September to begin on-site inspections and investigations.