China’s Finance Ministry and securities regulator last year submitted recommendations to the State Council on how to work with the U.S. on cross-border auditing supervision, the Securities Times reported today.
The State Council, China’s cabinet, attaches great importance to the matter, the newspaper reported, citing Wu Qixiu, head of the ministry’s supervision and inspection bureau. The newspaper didn’t give any details on the recommendations.
Last year U.S. regulators accused affiliates of the world’s top four auditing firms of withholding documents from investigators as regulators probed potential fraud by China-based companies. Auditors that don’t comply with Securities and Exchange Commission demands face temporary or permanent deregistration in the U.S., according to the rule under which the proceedings were brought.
Deloitte Touche Tohmatsu CPA Ltd., Ernst & Young Hua Ming LLP, KPMG Huazhen and PricewaterhouseCoopers Zhong Tian CPAs Ltd. refused to cooperate with accounting investigations into nine companies whose securities are publicly traded in the U.S., the SEC said in an administrative order in December. BDO China Dahua Co. was also named by the SEC in the action.
The auditors claim Chinese law prevents them from assenting to the SEC’s demands.
China may send delegates to the U.S. this year to study the inspection work on auditing firms by the U.S. regulators, the Securities Times reported, without saying where it got the information.
China’s Finance Ministry will also work with regulators in Hong Kong to inspect audit reports of some mainland companies listed on the city’s stock exchange, according to the newspaper.