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Accounting and auditing
Business

US regulator in final talks with PwC, KPMG over audits of mainland firms facing delisting, with report due soon: sources

  • A landmark review of audits of companies facing US delisting is coming to an end, with a report expected as soon as year’s end, sources say
  • The Public Company Accounting Oversight Board is reviewing whether audits by PwC and KPMG can meet the demands of US regulators

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The New York Stock Exchange, pictured on June 29, 2022, in New York City. About 168 mainland China companies face possible delisting from US exchanges. Photo: AP
Enoch Yiu

A team of US regulators is in the final stages of discussions with two Hong Kong accounting firms regarding their audits of mainland Chinese companies facing possible delisting from US exchanges, according to two sources familiar with the situation.

This indicates the unprecedented review is nearing its end, and a report may come as soon as the end of this year, potentially deciding the fate of about 168 US-listed mainland firms.
Two teams of inspectors from the Public Company Accounting Oversight Board (PCAOB) spent about seven weeks at the Hong Kong offices of PwC and KPMG between mid September and early November. They went through hundreds of audit working papers and interviewed the firms’ accountants regarding their audits of the mainland companies.
The review marks the first time in history that the China Securities Regulatory Commission (CSRC) has allowed auditors to take audit records outside the mainland for PCAOB inspection.
A view of the China Securities Regulatory Commission (CSRC) office building located at Beijing’s Financial Street in downtown Beijing on December 18, 2019. The review taking place in Hong Kong represents the first time the CSRC has allowed audit records to be taken outside the mainland for inspection. Photo: Simon Song
A view of the China Securities Regulatory Commission (CSRC) office building located at Beijing’s Financial Street in downtown Beijing on December 18, 2019. The review taking place in Hong Kong represents the first time the CSRC has allowed audit records to be taken outside the mainland for inspection. Photo: Simon Song

After the on-site review wrapped up, the inspectors returned to the US. Recently, the team sent questions to the two accounting firms to discuss certain audit procedures and information, according to two separate sources familiar with the situation.

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