By Michelle Worth
WASHINGTON (Reuters) -U.S. accounting companies that agree to guide audits of New York-listed Chinese language and Hong Kong corporations trying to keep away from potential buying and selling bans danger breaching U.S. guidelines, the U.S. Securities and Change Fee (SEC) warned on Tuesday.
Anxious they might be kicked off U.S. exchanges if China doesn’t enable the SEC’s accounting watchdog to vet Chinese language firm audits, some U.S.-listed Chinese language and Hong Kong corporations have just lately switched their lead auditor from a neighborhood to a U.S. or different overseas agency, the SEC stated.
“Such preparations pose particular challenges that increase questions on whether or not the newly engaged registered public accounting companies … will be capable to fulfill their duties,” the SEC’s Appearing Chief Accountant Paul Munter wrote.
Abroad auditors could not have the native data, experience, language expertise or entry to firm personnel essential to conduct rigorous audits, Munter famous.
U.S. regulators have for over a decade demanded entry to audit papers of U.S.-listed Chinese language corporations, however Beijing has been reluctant to let abroad regulators examine its accounting companies, citing nationwide safety issues..
Whereas each side agreed a preliminary deal final month to present the SEC’s accounting watchdog, the Public Firm Accounting Oversight Board (PCAOB), entry to Chinese language audit papers, it is unclear if that deal will work in apply. Round 200 U.S.-listed Chinese language issuers might be delisted if the deal does not succeed.
Munter warned new lead auditors that they need to purchase the corporate’s audit papers from native predecessor audit companies and search a spread of data referring to, amongst different points, the integrity of the issuer’s administration, any disagreements the auditor could have had with the corporate administration, and former communications with the corporate’s audit committee.
With out such info, switching out auditors was “merely buying and selling one unhealthy consequence for an additional and doesn’t adequately deal with the underlying downside,” he added.