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China-United States Negotiate An Audit Deal to Avoid Delistings: Reuters

According to sources familiar with the matter, China and U.S. regulators are discussing operational details of an audit deal that Beijing intends to sign this year, in the latest attempt to keep Chinese companies listed on U.S.

Benzinga · 04/29/2022 07:20

According to sources familiar with the matter, China and U.S. regulators are discussing operational details of an audit deal that Beijing intends to sign this year, in the latest attempt to keep Chinese companies listed on U.S. exchanges, reported Reuters.

Reuters source stated that a preliminary framework for audit supervision cooperation had been established, with China likely to classify less information as confidential, potentially letting more information into companies' audit working papers.

China is also considering the details of onsite inspections by the Public Company Accounting Oversight Board (PCAOB), which would provide the U.S. audit regulator access to such data, stated three sources.

These discussions come after the long-running audit dispute between China and the United States; PCAOB demands complete access to audit working papers of New York-listed Chinese companies stored in China.

China has so far denied the request on national security grounds. According to U.S. regulators, this standoff could lead to roughly 270 firms being forced to delist from American exchanges by 2024.

"China will make clear classifications on information disclosure and will likely narrow the scope of major, confidential information," stated a source.

China hopes the deal can be reached this year, and implemented next year, added another source.