China Inks Accord with U.S. to Share Audit Files
China has signed an agreement with the United States to share company audit files, it said Friday, paving the way for more probes into accounting scandals involving Chinese firms listed in the U.S.
The China affiliates of five top accounting firms were charged by U.S. market regulators in December with violating securities laws for refusing to provide audit data related to investigations into some China-based but U.S.-listed companies.
But some of the auditors said despite being willing to assist the probes, they were caught in legal differences between the world's two largest economies, and Chinese law did not allow such information transfers.
China's securities watchdog announced that Beijing and Washington had inked a memorandum of understanding (MOU) on the exchange of audit and accounting records.
"The signing of the MOU is a significant step in cross-border cooperation," said a statement by the China Securities Regulatory Commission (CSRC).
It "laid a fine foundation for bilateral cross-border coordination of investigations in the future", according to the statement, read to Agence France Presse by a CSRC official.
But it signalled that the two sides have yet to agree on how Chinese accounting firms auditing U.S.-listed companies should be supervised.
The accord was signed earlier this month by the CSRC, China's Ministry of Finance and the U.S. Public Company Accounting Oversight Board, it said.
A number of accounting scandals have cost investors in Chinese firms listed in the U.S. billions of dollars in losses, raising wider concerns over fraud.
Investors in Toronto-listed Sino-Forest Corp. also lost hundreds of millions of dollars when it collapsed following allegations it had misstated its revenue and exaggerated the size of its plantations in China.
Source: Agence France Presse
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