US starts new round of audit inspections on China firms – source

4:01 am Friday, July 07th, 2023

(Reuters) -U.S. inspectors have started a fresh round of routine checks on Wall Street-listed Chinese companies’ audits in Hong Kong in recent weeks, a source familiar with the matter said on Friday.

The latest inspections, led by the Public Company Accounting Oversight Board (PCAOB), a U.S. audit watchdog, are part of an agreement signed between Washington and Beijing last year.

The source told Reuters the latest visit would continue field work from a previous trip by PCAOB officials in March, which Reuters reported earlier. The source requested anonymity as they were not authorised to speak to media.

A PCAOB spokesperson declined to comment as it does not comment on ongoing inspections.

The PCAOB said in December it had full access to inspect and investigate U.S.-listed Chinese companies for the first time, removing the risk that around 200 Chinese companies would be kicked off Wall Street stock exchanges.

The PCAOB previously said it would demand complete access in mainland China and Hong Kong in their regular inspections from 2023.

Bloomberg reported the latest inspection earlier on Friday and said about a dozen Chinese firms would be inspected this time, including Tencent Music Entertainment Group, Didi Global Inc. and NetEase Inc.

The PCAOB, Tencent Music Entertainment Group, Didi Global, and NetEase did not immediately respond to Reuters’ requests for comment.

Washington’s demands for access to the audits of Chinese companies follow a long-running dispute over auditing compliance of U.S.-listed Chinese firms. Authorities in China have long been reluctant to let overseas regulators inspect local accounting firms, citing national security concerns.

The United States and China have been locked in a heated trade and technology war. U.S. Treasury Secretary Janet Yellen on Thursday began a four-day visit to China focused on easing tensions between the world’s two largest economies.

(Reporting by Xie Yu in Hong Kong and Yana Gaur in Bengaluru; Editing by Rashmi Aich and Sam Holmes)