USA: A team of US regulators is currently in talks with two Hong Kong accounting firms about their audits of mainland Chinese companies that could be delisted from US exchanges, according to two sources with knowledge of the situation.

This suggests that the unprecedented review is nearing an end, and a report could be released by the end of this year, which will likely determine the future of some 168 mainland US companies listed on the New York Stock Exchange.

Between mid-September and early November, two inspection teams from the Public Company Accounting Oversight Board (PCAOB) spent approximately seven weeks at PwC and KPMG offices in Hong Kong. He questioned the firms' accountants about their audits of mainland companies after sifting through hundreds of audit work papers.

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The China Securities Regulatory Commission (CSRC) had never previously allowed auditors to take audit records outside the Chinese mainland for PCAOB inspection, but that has changed with this review.

The on-site review was completed, and the inspectors then returned to the U.S. left for The team recently sent inquiries to two accounting firms to discuss specific audit procedures and data, according to two separate sources with knowledge of the matter.

According to the two sources, who also noted that the entire inspection process went without a hitch, the two companies are currently responding together to the US regulator in the manner customary for the PCAOB.

The PCAOB website states that if the inspection team finds a potential shortcoming, it talks to the accounting firm about it, reviews additional audit records, and may also submit a comment form regarding its concerns. . The audit firm being inspected is given an opportunity to respond in writing in a comment form.

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"PCAOB evaluates the matter for inclusion in the inspection report after receiving the firm's response on the comment form," the PCAOB said, adding that the audit firm implemented additional audit procedures to address the issue raised by the inspectors. Can do

"A review of the effectiveness of a firm's corrective actions, either with respect to previously identified deficiencies or deficiencies identified during that inspection, may be included in an inspection on a sample basis."

According to the PCAOB, this communication marks the conclusion of the review process before a report is published. The PCAOB previously said it expected a report by the end of this year on whether the review could meet the requirements of US inspectors.

According to the audit regulator, 15 Hong Kong and mainland accounting firms registered with the PCAOB audited 168 Chinese companies listed in the US with a combined market value of US$1.5 trillion as of June.

These companies risk being delisted from US exchanges in accordance with the US Holding Foreign Companies Accountable Act if they refuse to allow the PCAOB to review their audit records for three consecutive years.

As it was unable to review audit papers of Chinese companies being audited by mainland and Hong Kong-based accounting firms, the PCAOB said in December last year that China and Hong Kong were two regions that did not meet the requirements.

After the Ministry of Finance, the CSRC and the PCAOB signed an agreement in late August, China issued audit papers for the process.

According to the Post's sources, the mainland regulator is pleased to see that the US regulator is only concerned with ensuring that the auditors have performed their duties.

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According to a source familiar with mainland regulators, “Mainland regulators were concerned that foreign regulators would try to look at sensitive information during inspections, but the review process has proved that the US regulator is only looking at audit quality.”

This could encourage mainland China to consider allowing US inspectors to conduct audit inspections next year.