China agreed to give a US regulator access to documents from Chinese accounting firms, moving toward a resolution of a dispute that could have pushed the country’s companies to stop trading on US markets.
The Public Company Accounting Oversight Board, the China Securities Regulatory Commission and China’s Ministry of Finance signed the agreement on May 7, the ministry said in a statement on its Web site on Friday.
The deal is a step toward resolving other disputes, including one with the US Securities and Exchange Commission, Public Company Accounting Oversight Board Chairman James Doty was quoted as saying by the Wall Street Journal, which reported the agreement earlier on Friday.
The Securities and Exchange Commission last year accused affiliates of the world’s top four auditing firms of withholding documents from investigators probing potential fraud by China-based companies.
Auditors that do not comply with the regulator’s demands face temporary or permanent deregistration in the US, according to the rule under which the proceedings were brought, meaning they would not be able to audit US-listed companies.
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 traded in the US, the Securities and Exchange Commission said in an administrative order in December.
BDO China Dahua Co was also named by the commission in the action.
The auditors had said Chinese law prevented them from meeting the commission’s demands.