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Officials from Relevant Departments of the CSRC Answered Reporters Questions regarding Audit Oversight Cooperation with the U.S.
20-11-2020

Reporters: A U.S. Senator recently sent an open letter to every Chinese-based company listed on the U.S. stock exchanges, requesting explanations as to how these companies comply with the U.S. Public Company Accounting Oversight Board (PCAOB) supervisory rules. Further, according to the media, the U.S. Securities and Exchange Commission (SEC) is proposing new rules requiring companies with shares listed in the U.S. to get a second review of their books by an accounting firm from a country where the PCAOB can inspect; otherwise, the companies will face delisting. What's the CSRC's comment on this matter?

CSRC officials: We have noted the Senator's letter as well as the media reports. We would like to make the following two clarifications.

First, Chinese companies listed in the U.S. stock exchanges follow the U.S. laws and regulations for financial reporting and information disclosure. Otherwise, their securities cannot be registered with the U.S. regulatory authorities. It is an issue of cross-border regulatory cooperation that for the time being the U.S regulatory authorities are unable to inspect the Chinese audit firms who provide audit services for Chinese companies listed in the U.S. This does not mean that Chinese companies fail to comply with the relevant laws and regulations of the United States.

Second, our position with respect to audit inspections has been consistent that such inspections shall be conducted under a regulatory cooperative mechanism. On 4 August 2020, after thoroughly considering the concerns of the U.S. regulators, the CSRC sent the fourth version of proposal for joint inspection over audit firms to the U.S. Public Company Accounting Oversight Board (PCAOB). The PCAOB confirmed the receipt of the proposal and suggested that it would examine the proposal in due course. We look forward to starting a meaningful dialogue with the U.S. regulator on the details of the proposal. We believe that with openness and professionalism, the two sides will certainly reach a consensus on a joint inspection scheme, which will effectively enhance Sino-US audit oversight cooperation and create a sound supervisory environment for cross-border listings.



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