PCAOB Signs Agreement with Chinese Authorities, Taking First Step Toward Complete Access for the PCAOB to Select, Inspect and Investigate in China

  • PCAOB (US Public Company Accounting Oversight Board) (dark gray) Image

Aug 26, 2022

On August 26, 2022, the Public Company Accounting Oversight Board (PCAOB) released a statement about it having signed a Statement of Protocol with the China Securities Regulatory Commission and the Ministry of Finance of the People’s Republic of China, which is the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong completely, consistent with U.S. law.

The agreement grants the PCAOB complete access to the audit work papers, audit personnel, and other information its needs to inspect and investigate any firm it chooses, with no loopholes and no exceptions.

The PCAOB Is currently finalizing preparations to be on the ground by mid-September so it can put this agreement to the test.

The Statement of Protocol specifically grants the PCAOB complete access in three important ways:

  • The PCAOB has sole discretion to select the firms, audit engagements and potential violations it inspects and investigates – without consultation with, nor input from, Chinese authorities;
  • Procedures are in place for PCAOB inspectors and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed; and
  • The PCAOB has direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates.

Re­view the press release on the PCAOB’s web­site.

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