PCAOB Enters into Agreement with China Over Audit Documents

The Public Company Accounting Oversight Board has entered into a long-awaited agreement with the China Securities Regulatory Commission and the Ministry of Finance, which will help the U.S. gain access to audit documents.

The Memorandum of Understanding (MOU) on Enforcement Cooperation establishes a cooperative framework between the parties by providing a mechanism for them to help each other obtain documents and information needed for investigations.

The Wall Street Journal reported that more than 100 Chinese companies listed in the U.S. have faced questions about their accounting, and investors lost billions when stocks plunged.

“This agreement with China is an important step toward cross-border enforcement cooperation that is necessary to protect the interests of investors in U.S. capital markets,” said PCAOB Chairman James R. Doty. There are 47 audit firms in China that are listed with the PCAOB.

“We look forward to continued progress with our Chinese counterparts to reach an agreement on cross-border inspections of PCAOB-registered firms as well,” Doty said. The agreement does not allow PCAOB into China for inspections of Chinese firms that audit U.S.-trade companies.