China will for the first time give audit records for a Chinese company to US authorities after regulators reached an agreement in May to allow each other access to companies’ documents.
The China Securities Regulatory Commission (CSRC) has informed its US counterpart that it is ready to hand over the audit papers, the official China Securities Journal reported on Tuesday, citing an unidentified CSRC official. A commission press officer, who asked not be identified because of the agency’s rules, confirmed the report when contacted by telephone yesterday.
The US 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 do not comply with the US 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 companies whose shares trade in the US.
The CSRC’s decision to provide the papers comes as US and Chinese officials are scheduled to start a two-day US-China Strategic and Economic Dialogue in Washington.
The meetings, the first to be hosted by US Secretary of the Treasury Jack Lew and US 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 US Securities and Exchange Commission and the US Public Company Accounting Oversight Board, according to the China Securities Journal, which did not identify the company.
Once the Chinese regulator provides the audit documents, the US will have no reason to sue the Chinese auditors involved, the newspaper reported, citing the CSRC official.