US Audit Agency Secures Complete Access to Inspect, Investigate Chinese Firms for First Time In History

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  • The U.S. accounting agency, Public Company Accounting Oversight Board (PCAOB), said it has full access to inspect and investigate firms in China for the first time in history.
  • The move removes the overhang of around 200 Chinese companies that could be delisted from the U.S. stock exchanges.
  • "For the first time in history, we are able to perform full and thorough inspections and investigations to root out potential problems and hold firms accountable to fix them," said PCAOB Chair Erica Williams.
  • In March this year, Zai Lab Ltd ZLABBeiGene Ltd BGNE, and Hutchmed China Ltd HCM were flagged by the SEC for failing to comply with a law governing US-listed companies.
  • However, any issues uncovered due to the more stringent accounting oversight "could be very bad for the sector, especially if there is no effort to correct it or come clean," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, in a Reuters report.
  • In its statement, the PCAOB said it exercised sole discretion to select firms for audit and had selected two, KPMG Huazhen LLP in China and PricewaterhouseCoopers in Hong Kong.
  • PCAOB staff identified "numerous potential deficiencies" in their inspection work, PCAOB's Williams said, saying the inspection reports will be finalized and made public next year.
  • In a statement, he said: "Chinese authorities will need to give PCAOB "full access for inspections and investigations in 2023 and beyond."
  • Photo: Body Stock and Dragon Claws by Shutterstock
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