pwc hong kong, kpmg china are first firms to host us regulator for audit inspections of mainland firms, sources say

PwC Hong Kong and KPMG China are the first accounting firms that will help a US regulator carry out inspections of the audit work of US-listed mainland companies, part of a historic process that aims to head off mass delisting of Chinese companies from US exchanges.

The two firms have received notice that the Public Company Accounting Oversight Board (PCAOB) picked them for inspections of several of their audit clients, two sources familiar with the situation told the South China Morning Post.

Inspectors from PCAOB have not yet arrived in the city but are expected soon. They will serve the required three-day hotel quarantine before they begin work at the Hong Kong offices of the accounting firms, the sources added.

The two firms have already prepared the paper and electronic audit materials to be made available. All the records would have already been archived according to PCAOB standards, while auditors stand ready to be interviewed by the inspectors upon request, the sources said.

pwc hong kong, kpmg china are first firms to host us regulator for audit inspections of mainland firms, sources say

The US and Chinese flags, seen outside a hotel in Beijing on May 14, 2019. The longstanding dispute over audit visibility put 168 US-listed, China-based companies at risk of delisting from US exchanges. Photo:AFP

The two other Big Four accounting firms, Deloitte and EY, have not yet received notice from the PCAOB, but expect to be inspected as well, according to another two sources.

The Big Four accounting firms audit more than 130 of the 168 US-listed mainland firms, representing more than 78 per cent of the total, according to data from the PCAOB.

The PCAOB, PwC, KPMG, Deloitte and EY did not provide comments in response to a Post inquiry.

China’s Securities Regulatory Commission and the PCAOB signed an agreement last month to pave the way for Beijing to allow overseas inspectors to review the audit records of Chinese companies, addressing the PCAOB’s complaint about being unable to check audit quality.

Some 168 Chinese firms listed in the US, with a combined market value of US$1.5 trillion as of June, were audited by 15 Hong Kong and mainland accounting firms registered with the PCAOB, according to the audit regulator.

These companies face delisting from US exchanges under the Holding Foreign Companies Accountable Act if they do not allow the PCAOB to review their audit records for three consecutive years.

HutchMed, the pharmaceutical unit of tycoon Li Ka-shing’s flagship CK Hutchison Holdings, and tech giant Alibaba Group Holding are among the 168 companies that could be affected. Alibaba owns the Post.

Hong Kong’s regulator, the Financial Reporting Council, will provide all necessary help and facilitation for PCAOB inspectors as far as it is able to, Christopher Hui Ching-yu, Secretary for Financial Services and the Treasury, said in an earlier interview with the Post.

The several accounting sources, however, said that the PCAOB did not request much help from the FRC, as the US regulator decided on its inspection targets and logistics itself.

The Chinese regulator will allow auditors to bring records to Hong Kong for PCAOB inspection after redacting sensitive details such as addresses, names of factories and personal information, the sources said.

“While we do not have any specific knowledge of which audits the PCAOB will inspect, generally the PCAOB will seek to look at a representative sample of an auditor’s work, with a focus on companies that may present a greater level of audit risk or that are of greatest importance to prospective investors,” said Drew Bernstein, co-chairman of Marcum Asia CPAs LLP, a New York-headquartered accounting firm focused on Asia companies seeking access to US capital markets.

It will be a “race against the clock” to complete enough work to allow the PCAOB to certify to the US Congress that China is in compliance with the Holding Foreign Companies Accountable Act by year’s end, Bernstein said.

If the initial round of audit inspections in Hong Kong is carried out successfully, it should encourage more mainland firms to seek listings in the US, he added.

“I believe we will see a sizeable backlog of Chinese companies coming to market in 2023,” he said.

Keyword: PwC Hong Kong, KPMG China are first firms to host US regulator for audit inspections of mainland firms, sources say

TECH'S NEWS RELATED

Climate and sustainability: Hong Kong bourse says one-size-fits-all approach not desirable when it comes to disclosure standards

Hong Kong’s bourse will take into account smaller firms’ capacities when deciding on how it will mandate listed companies to meet more onerous international disclosure requirements, the ReThink HK conference heard on Thursday. The International Sustainability Standards Board (ISSB), created last November during the global climate talks in Glasgow, ...

View more: Climate and sustainability: Hong Kong bourse says one-size-fits-all approach not desirable when it comes to disclosure standards

China must sacrifice GDP growth to rebalance its economy

China was once blessed, and now is cursed, with an extraordinarily high investment share of GDP. According to the World Bank, investment comprises around 25 per cent of global GDP, ranging from the high teens and low 20s for more mature economies to the high 20s and low 30s ...

View more: China must sacrifice GDP growth to rebalance its economy

New boat lift on a canal linking Berlin and Poland is an engineering feat that can carry ‘the weight of 50 blue whales’

Germany’s whopping new boat lift could lug the weight of 50 blue whales above a stretch of canal that lies between Poland and Berlin, although it is still no challenge in terms of world records to a lift in China. The powerful concrete elevator – Germany’s largest – is ...

View more: New boat lift on a canal linking Berlin and Poland is an engineering feat that can carry ‘the weight of 50 blue whales’

Twitter under Musk? Most of the plans are a mystery

Traders gather around a post as Twitter shares resume trading on the floor at the New York Stock Exchange in New York, Tuesday, Oct. 4, 2022. Credit: AP Photo/Seth Wenig A super app called X? A bot-free free speech haven? These are some of Elon Musk’s mysterious plans for ...

View more: Twitter under Musk? Most of the plans are a mystery

mReview: 2022 Mercedes-Benz C200 AMG Line - More Refined Than Ever

The Mercedes-Benz C-Class is the bread-and-butter of the great German marque. This nameplate has almost 30 years of history, and we’ve had a go in this latest iteration! Now in its fifth generation, the new C-Class, dubbed the W206, debuts a few key features never before seen in its ...

View more: mReview: 2022 Mercedes-Benz C200 AMG Line - More Refined Than Ever

Researchers deliver science for humanitarian action

AI estimates population density in crisis areas Better medical care through efficient logistics Private biometrics for aid distribution A secure digital infrastructure Harmful information against humanitarian organisations The ’Engineering Humanitarian Action’ initiative aims to put the expertise of the two federal institutes of technology at the service of humanitarian ...

View more: Researchers deliver science for humanitarian action

Optus data breach: regulatory changes announced, but legislative reform still needed

Changing regulations, not legislation Important safeguards What is needed now In response to Australia’s biggest ever data breach, the federal government will temporarily suspend regulations that stop telcos sharing customer information with third parties. It’s a necessary step to deal with the threat of identify theft faced by 10 ...

View more: Optus data breach: regulatory changes announced, but legislative reform still needed

2023 Audi R8 GT Arrives in Final Form With 2010 Throwback Vibes

Audi’s Final V10 Weight Reduction Rare, fast, and gorgeous! Those are good words to describe the 2023 Audi R8 GT, limited to just 333 units worldwide. Officially called the R8 Coupe V10 GT RWD, the new super sports car is Audi’s most powerful rear-wheel drive vehicle yet, with unique ...

View more: 2023 Audi R8 GT Arrives in Final Form With 2010 Throwback Vibes

Audi Electric Cars: How to Tell Your E-Trons Apart

MG Air Electric Car Spied Testing – To Be Cheaper Than Tiago EV?

Hong Kong residents’ nest eggs shrink by HK$56,500 each as Mandatory Provident Fund posts record HK$258.9 billion nine-month loss

New simulation shows how the Moon may have formed

Hong Kong stocks pare best rally in 5 months as Goldman sees bigger slide in home prices, CALB slips below IPO price

Logitech MX Master 3S for Mac review: The best mouse gets better

China’s third-largest EV battery maker CALB eyes global top-three spot, using IPO funds for capacity and tech upgrades

Audi RS4 Avant estate

SF Reit, spun off by owner of ‘China’s FedEx’, won’t achieve goal of doubling assets to US$1.5 billion as interest rates soar

2024 Mercedes-AMG C63 S E Performance First Ride

Dino-killing asteroid caused a global tsunami, new study claims

Most investors see Chinese stocks as unattractive, hold bearish views on property market and yuan weakness, BCA survey shows

OTHER TECH NEWS

;