In a recent development, auditors from the United States have embarked on a brand-new round of routine checks on Chinese companies listed on Wall Street in Hong Kong. A well-informed source shared this information on Friday.
According to the source, these latest inspections are being carried out by the Public Company Accounting Oversight Board (PCAOB), which acts as a watchdog for audits in the US. This initiative is a part of an agreement inked between Washington and Beijing last year.
The source, wishing to remain anonymous due to lack of authorization, informed Reuters that the ongoing visit builds upon the field work conducted during the PCAOB officials’ previous trip in March, as reported earlier.
In December, the PCAOB declared that it had gained full access to inspect and investigate Chinese companies listed in the US for the very first time. This development mitigated the risk of approximately 200 Chinese companies being delisted from Wall Street exchanges.
Furthermore, the PCAOB had previously communicated its intention to demand unrestricted access to mainland China and Hong Kong for regular inspections starting in 2023.
As per Bloomberg’s report earlier on Friday, the current inspection is set to scrutinize around a dozen Chinese firms, including Tencent Music Entertainment Group (NYSE:TME), Didi Global Inc., and NetEase (NASDAQ:NTES) Inc.
When approached for comment, neither the PCAOB, Tencent Music Entertainment Group, Didi Global, nor NetEase responded to Reuters’ requests.
This move by Washington comes amidst an enduring dispute regarding the auditing compliance of Chinese firms listed in the US. Chinese authorities have consistently been hesitant to allow overseas regulators to examine local accounting firms, citing concerns related to national security.
Given the backdrop of a heated trade and technology war, the United States and China find themselves engaged in ongoing tensions. Recently, US Treasury Secretary Janet Yellen embarked on a four-day visit to China, with a primary focus on easing these tensions between the world’s two largest economies.