US Moves to Audit Chinese Firms: WSJ

Chinese companies listed on US stock exchanges have not been subjected to inspections by US regulators, and the US Senate approved legislation that would require the Chinese firms to meet US standards. “Unlike other countries, China has never given U.S. regulators routine access to audit records needed to review the quality of financial accounting, according to U.S. officials, who have sought a deal for years,” reports the Wall Street Journal. “China says sharing audit work papers would violate its sovereignty and risk leaking state secrets.” The proposed legislation covers about 200 companies, worth about $1.4 trillion, according to one market analysis firm. The firms would also be required to report about any control by state authorities. Concerns emerged after disclosure of accounting fraud and fabrication of revenues at Luckin Coffee. The US Securities and Exchange Commission reports that its ability to enforce standards in emerging economies is limited. The US House of Representatives is expected to approve similar legislation, and under the Senate version, companies would have three years to comply. – YaleGlobal