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Last week the PCAOB signed a Statement of Protocol with the China Securities Regulatory Commission (CSRC) and the Ministry of Finance of the Peoples Republic of China governing inspections and investigations of audit firms based in China and Hong Kong. Governing Inspections and Investigations of Audit firms in China and Hong Kong.
Some 200 China based issuers access U.S Financial Markets and without the agreement they would face trading prohibitions. This marks an important step in the oversight and assurance of Chinese’s audit firms over Chinese companies listed on U.S markets. A step closer to global harmonization of audit oversight and assurance.
‘Why do these inspections and investigations matter? Its a privilege for foreign issuers to access our markets — the largest, deepest, most liquid markets in the world. Investors in U.S. markets should be protected — and have trust in a companys financial numbers — regardless of whether an issuer is foreign or domestic. Further, if foreign issuers want access to our public capital markets, they must be on a level playing field with U.S. firms.’
This follows recent affirmation by the U.S Congress under the HFCAA 2020, addressing the inability of the PCAOB to inspect or investigate completely registered public accounting firms located in foreign jurisdictions. One suspects the work now starts with the 200 firms in developing their SoX programs and Chinese regulators demonstrating that Chinese firms meet the audit requirements and attestation.
Ted Dziekanowski The Institute of Internal Auditors Inc.
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