(Bloomberg) China will for the first time give audit records for a Chinese company to U.S. authorities after regulators reached an agreement in May to allow each other access to companies’ documents.
The China Securities Regulatory Commission has informed its U.S. counterpart that it is ready to hand over the audit papers, the official China Securities Journal reported yesterday, citing an unidentified CSRC official. A CSRC press officer, who asked not be identified because of the agency’s rules, confirmed the report when contacted by phone today.
The U.S. Securities and Exchange Commission last year accused affiliates of the world’s top four auditing firms of withholding documents from investigators probing allegations of fraud by China-based companies. Auditors that don’t comply with the regulator’s demands face temporary or permanent deregistration in the U.S., according to the rule under which the proceedings were brought, meaning they wouldn’t be able to audit companies whose shares trade in the U.S.
The CSRC’s decision to provide the audit papers comes as American and Chinese officials are scheduled to start the two-day U.S.-China Strategic and Economic Dialogue in Washington. The meetings, the first to be hosted by Treasury Secretary Jacob J. Lew and Secretary of State John Kerry, will touch on issues ranging from trade agreements and intellectual property to capital flows and monetary policies.
The CSRC will provide the audit documents to both the SEC and the Public Company Accounting Oversight Board, according to the China Securities Journal, which didn’t identify the company.
Once the Chinese regulator provides the audit documents, the U.S. will have no reason to sue the Chinese auditors involved, the newspaper reported, citing the CSRC official.
