Why has the US-China Audit Deal Given Chinese Companies a Breather
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The loose auditing standards followed by Chinese companies, along with multiple cases of fraud, US authorities have been looking to delist several hundred Chinese companies from US exchanges. These companies do not follow the rules and regulations set down by the US regulators, resulting in incomplete reporting. In 2020, the USA passed the Holding Foreign Companies Responsible Act which required companies to declare whether the Chinese government yields control over them. Further, Chinese auditors would have to comply with US audit standards, rather than the loose standards the Chinese government allows companies to get away with. The Chinese government’s reluctance to allow thorough scrutiny of the Chinese firms’ books for “national security” reasons, had led to a scenario where Chinese companies had no other option but to delist from US exchanges. However, USA and China have managed to find common ground and enter a deal that could prevent a significant number of Chinese companies from being forcefully delisted from US exchanges.
Why has the US-China Audit Deal Given Chinese Companies a Breather
Why has the US-China Audit Deal Given Chinese…
Why has the US-China Audit Deal Given Chinese Companies a Breather
The loose auditing standards followed by Chinese companies, along with multiple cases of fraud, US authorities have been looking to delist several hundred Chinese companies from US exchanges. These companies do not follow the rules and regulations set down by the US regulators, resulting in incomplete reporting. In 2020, the USA passed the Holding Foreign Companies Responsible Act which required companies to declare whether the Chinese government yields control over them. Further, Chinese auditors would have to comply with US audit standards, rather than the loose standards the Chinese government allows companies to get away with. The Chinese government’s reluctance to allow thorough scrutiny of the Chinese firms’ books for “national security” reasons, had led to a scenario where Chinese companies had no other option but to delist from US exchanges. However, USA and China have managed to find common ground and enter a deal that could prevent a significant number of Chinese companies from being forcefully delisted from US exchanges.