China Access Granted
The Public Company Accounting Oversight Board, formed as part of the 2022 Sarbanes-Oxley Act, has the mandate of auditing public companies to protect US investors from potential accounting and malfeasance issues that might not be disclosed by foreign companies. Back in 2020 the board began efforts to audit the over 150 Chinese companies that were listed on US exchanges, but met with considerable resistance from the Chinese government, which has passed legislation in 2019 that barred the transfer of financial data outside of the country.
The US government passed the “Holding Foreign Companies Accountable Act” to put teeth n its negotiations with the Chinese government over the potential audits, but a year ago the board issued a statement that they were still unable to gain access to the financial details of the Chinese companies listed in the US, and steps would be taken to force those companies to comply or be removed from US listing. Negotiations continued through much of this year, but it seems that the Chinese government relented, and in September board auditors were allowed to begin the process of auditing the companies involved.
This has allowed the board to issue a statement rescinding it ‘non-compliance’ statement made last year, although noting that they were not stating that the audits were complete, but that they have been given the access requested, after the Chinese government requested time to review the financial data and redact the names and addresses of factories, customers, and suppliers before their release. There are still a few hurdles that have to be met before the board can make a certification of full access to the SEC but at least in this instance it seems some progress has been made. As of the end of September there were 262 Chinese companies listed on US exchanges, with a market capitalization of ~$775b.
The US government passed the “Holding Foreign Companies Accountable Act” to put teeth n its negotiations with the Chinese government over the potential audits, but a year ago the board issued a statement that they were still unable to gain access to the financial details of the Chinese companies listed in the US, and steps would be taken to force those companies to comply or be removed from US listing. Negotiations continued through much of this year, but it seems that the Chinese government relented, and in September board auditors were allowed to begin the process of auditing the companies involved.
This has allowed the board to issue a statement rescinding it ‘non-compliance’ statement made last year, although noting that they were not stating that the audits were complete, but that they have been given the access requested, after the Chinese government requested time to review the financial data and redact the names and addresses of factories, customers, and suppliers before their release. There are still a few hurdles that have to be met before the board can make a certification of full access to the SEC but at least in this instance it seems some progress has been made. As of the end of September there were 262 Chinese companies listed on US exchanges, with a market capitalization of ~$775b.
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