Congress Shortens Timeline for Chinese Companies' Audit Compliance

Dec 23, 2022

The timeline for U.S.-listed Chinese companies to comply with American auditing inspection has been shortened from three years to two as part of the fiscal year 2023 omnibus spending legislation.

The acceleration of the Holding Foreign Companies Accountable Act came a week after the Public Company Accounting Oversight Board, the U.S. accounting watchdog, said it secured "complete access" for China-based audit in a recent inspection, relieving the delisting risk of numerous Chinese companies trading on American stock exchanges.

The latest amendment means that Beijing will need to continue granting full access for U.S. regulators to inspect audit papers in China, and companies whose auditors can’t be inspected for two consecutive years will be forced to delist.

"Cranking up the pressure now will help us hold China’s feet to the fire and keep investors protected as we continue demanding complete access moving forward,” PCAOB Chair Erica Williams said in a Friday statement.

The spending bill passed the House Friday and now goes to President Biden for signature.

[The Wall Street Journal]