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00:00Let's talk about what the agreement is what does it provide. It's great to be with you David. So the agreement as Chair Gensler mentioned is the most detailed and prescriptive that we've ever had with the Chinese. And it provides for us to have complete access to the audit work papers in China with no loopholes and no exceptions. There are three key provisions. First the PCAOB and the PCAOB alone has the authority to select which firms and audit engagements we inspect and investigate. Second there are procedures that allow us to view the audit work papers completely with no redactions. And third we have direct access to interview and to take testimony of any of the individuals who are involved in the audits that the PCAOB chooses. How does this compare with arrangements with other countries that have publicly traded companies or traded our exchanges. So we are able to access the audit work papers of more than 50 countries every country where the PCAOB has registered entities. We accept China. We've been able to have complete access. This agreement allows us that complete access that we demand so that we can audit the auditors in China. And it is though more detailed and prescriptive than any agreement we've ever had with the Chinese. It doesn't go any farther than your arrangements with other countries. Or does it go any less far. And by the way are there any special provisions with such a sense of data. Because as I understand the Chinese guard was saying we're worried about national security. There are no special arrangements with China. We are not providing them anything that we don't provide other regulators and entities around the world. So this is just an agreement that's very detailed so that there are no questions that the PCAOB is going to be able to have full complete access as is required under the Holding Foreign Companies Accountable Act that Congress passed. And we are very hopeful that this first step in reaching the agreement will allow us once we get our inspectors and investigators on the ground in China to have complete access as it's written and paper in the agreement. Matt Miller you just said the critical phrase their first step. I mean we all know that it's one thing to get agreement. And by the way congratulations. I know you've been working out a long time but then you have to actually get it implemented. What are the next steps in implementation. So I have instructed our inspectors and investigators to be able to be on the ground in China in mid-September. We are actually going to be conducting the inspections and investigations in Hong Kong because the health and safety of our staff is of critical importance. We are though going to be able to have a full and complete access to the Chinese work papers in Hong Kong that we need in order to conduct our inspections and investigations. How big a job is this. I guess one of things I'm asking is how many people are gonna have to send over there and how long is it going to take them. So inspections and investigations David they take as long as they take. I can't predict that right now. We have a team of talented dedicated PCAOB staff that are ready and their bags are packed and ready to go. And whether or not we are able to complete the inspections and investigations really will determine be determined on whether or not the Chinese provide us with complete access as is required under the agreement that we signed today. Is there a dispute resolution mechanism in the agreement itself. As I say if something comes up for your investigator say we want that you're told you can't have it. Is there a way that the parties can reach a resolution of that dispute. So the law is very clear that we have to have complete access to the audit work papers with no loopholes and no exceptions. And our agreement is prescriptive. That requires the Chinese to provide us with that complete access. If there is a dispute and we're not given the access that we need then at the end of the year when we're required to make a determination we will have to follow the law. Well let's just pursue. Please understand. I hope this agreement works perfectly. I'm sure you do as well. It all just works fine. And they'll be treated Chinese publicly traded companies like the rest of the world. But if something goes wrong and you review it and you don't make that determination then you're what's the consequence for the company. So if we are not provided the complete access that we need and are not able to conduct our complete investigations and inspections the law is clear that the PCAOB needs to make a determination and that we were not able to comply as required by the holding foreign companies accountable like we were not given the full access that the act requires us to have. At that point the Securities and Exchange Commission will need to determine if there needs to be a trading prohibition placed on Chinese companies that trade in U.S. markets. Just one more quick one if I could. Why did it take so long. I don't mean that sense of you should have done it quicker. But typically when there's that long in negotiations because there's a need for a lot of compromises going back and forth the way you described this it doesn't sound like it was like compromises from your side. No the PCAOB did not compromise. Again the law is very clear and requires complete access. And so that's what we've demanded on paper and natural world demand when we have our team on the ground in China. The protracted nature of the negotiations is something that we just needed to make sure that we had a prescriptive agreement and that the agreement complied with the law. This has been something that we have been working with the Chinese on for more than a decade. We've had a number of agreements and we have not been able to get complete access over the time period of more than a decade. But the Holding Foreign Companies Accountable act in that law. Congress really gave us a strong tool and we are using that tool in accordance with their direction. And I'm really grateful for their leadership.

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PCAOB Chair Williams Details US-China Audit Agreement

Public Company Accounting Oversight Board Chair Erica Williams discusses the preliminary deal between the US and China to allow American officials to review audit documents of Chinese businesses that trade in the US. The agreement is a first step toward avoiding the delisting of about 200 firms from New York exchanges. She speaks with David Westin on "Balance of Power." (Source: Bloomberg)