US renews audit inspections of Chinese firms
US audit officials have started a fresh round of inspections of New York-listed Chinese companies in recent weeks amid simmering tensions between the world’s two largest economies.
The Public Company Accounting Oversight Board (PCAOB) sent a team to Hong Kong last month to review 2022 audit reports of some of the most high-profile Chinese stocks listed in the US, according to people familiar with the matter who asked not to be identified discussing private information.
Seeking common ground: Janet Yellen meeting Chinese Premier Li Qiang in Beijing last week. AP
About a dozen Chinese firms will be inspected this time, including Tencent Music Entertainment Group, Didi Global and NetEase, said the people. That is a bigger batch than the inaugural round in the third quarter last year, they added.
The inspections, part of a landmark deal signed last year, come as the world’s two superpowers escalate their tit-for-tat trade war on technology, from artificial intelligence to chip manufacturing. US Treasury Secretary Janet Yellen visited China last week seeking areas of common economic ground and open communication channels.
Entities facing the latest round of checks on their clients include the China units of PwC, EY and Deloitte. Three to four listed clients of each firm had been picked, said the people. KPMG’s China arm was inspected last year, alongside PwC’s Hong Kong branch.
A spokesperson for the PCAOB declined to comment. In a statement in May, board chair Erica Williams said the agency expected fieldwork to continue this year, with a goal of reviewing companies that account for 99 per cent of the market value of US-listed firms that are audited by Hong Kong and China firms.
Unlike the first inspections last year,
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