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US Regulators to Vet Chinese Firms’ Audits

Published: August 31, 2022
E-commerce firm Alibaba is one of the largest tech companies in China and has undergone hefty scrutiny at the hands of Chinese regulators. (Image: via Reuters)

U.S. regulators have selected major U.S.-listed Chinese companies for audit inspection, with e-commerce majors Alibaba and among those chosen, according to sources close to the matter.

It follows last week’s landmark audit deal between Beijing and Washington, which allows U.S. regulators to vet accounting firms in mainland China and Hong Kong.

The move could potentially end a long-running dispute that threatened to remove more than 200 Chinese companies from U.S. stock exchanges.

Sources told Reuters that Yum China — the owner of KFC, Taco Bell and Pizza Hut restaurants in China — would be among the first to be inspected in Hong Kong, alongside Alibaba and, by the Public Company Accounting Oversight Board (PCAOB).

A spokesperson for the U.S. audit watchdog said Tuesday, Aug. 30 that it had not comment on inspections.

The PCAOB said on Aug. 26 that it had notified the selected companies — without naming them — and that it expects its officials to land in Hong Kong by mid-September.

U.S. regulators have for more than a decade demanded access to audit papers of U.S.-listed Chinese companies.

However, Chinese authorities have been reluctant to let U.S. regulators inspect accounting firms in China, citing national security concerns.

(Source: Reuters / YUM! Brands Handout)