China and the U.S. reach an agreement on audit and supervision cooperation

The China Securities Regulatory Commission issued a statement : China Securities Regulatory Commission and the Ministry of Finance of the People’s Republic of China signed an audit supervision cooperation agreement with the American Public Company Accounting Oversight Board (PCAOB) on August 26, 2022, and relevant cooperation will be launched in the near future. In accordance with the laws and regulations of the two countries, the cooperation agreement respects common international practices, and in accordance with the principle of reciprocity and mutual benefit, the two sides have made clear agreements on the supervision, inspection and investigation activities of relevant accounting firms in cooperation, forming a cooperation framework that complies with the laws and regulations of both sides and regulatory requirements. The signing of the cooperation agreement is an important step taken by the regulators of China and the United States in addressing the common concern of audit supervision cooperation, and lays a foundation for the two sides to actively, professionally and pragmatically promote cooperation in the next stage. Promoting cross-border audit supervision cooperation in accordance with the law will help to further improve the practice quality of accounting firms, protect the legitimate rights and interests of investors, and will also help create a good international regulatory environment for enterprises to carry out cross-border listing activities in compliance with laws and regulations. The deal will prevent numerous Chinese companies from delisting from U.S. stock exchanges.

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