U.S., China Near Deal to Allow Audit Inspection of N.Y.-Listed Chinese Companies

The Wall Street Journal

Agreement could prevent many Chinese companies from being delisted from American stock exchanges

Regulators from the Public Company Accounting Oversight Board in Washington are prepared to travel to Hong Kong to inspect Chinese companies’ auditors.

SINGAPORE—The U.S. and China are nearing an agreement that would allow American accounting regulators to travel to Hong Kong to inspect the audit records of Chinese companies listed in New York, according to people familiar with the matter, as the two countries move toward resolving a yearslong standoff.

Securities regulators in Beijing are making arrangements for U.S.-listed Chinese companies and their accounting firms to transfer their audit working papers and other data from mainland China to Hong Kong, the people said.

Regulators from the U.S. Public Company Accounting Oversight Board would then travel to the semiautonomous city to perform on-site inspections of the Chinese companies’ auditors and their records, they added.

The China Securities Regulatory Commission recently informed some accounting firms and companies about the plan, the people said, adding that U.S. accounting inspectors could arrive in Hong Kong as soon as next month. A final agreement can only be reached if the U.S. side determines that it has full access to the audit working papers, they said.