China will strengthen international cooperation in audit inspections and securities regulations while exploring more options to resolve the ongoing Sino-US audit impasse, senior officials said during the Annual Conference of Financial Street Forum 2020.
Speaking at the opening ceremony of the meeting, Vice-Premier Liu He said that strengthening international cooperation is crucial under the current global situation, and China will press ahead with its opening-up efforts in the financial sector.
Yi Huiman, chairman of the China Securities Regulatory Commission, the top securities watchdog, said the country will step up efforts to strengthen international cooperation in cross-border audit issues as well as securities supervision and law enforcement, besides being an active part of the international finance governance.
The efforts will help the country to steadily push forward a rule-based capital market opening-up, said Yi in his address to the conference, which will end on Friday. The remarks came amid the ongoing audit dispute between China and the United States that could force Chinese companies already listed in the US to delist.
US officials have urged the government to delist Chinese firms that fail to meet local audit inspection requirements by January 2022, after the US Senate passed a bill in May that proposed to delist the foreign firms that do not satisfy the requirements for three consecutive years.
The CSRC has extended its determination of strengthening audit inspection cooperation on different occasions this year and has made continuous efforts to solve the dispute, proposing bilateral joint inspection over audit firms as a solution.
"We believe that joint inspections in accordance with international practice should be a feasible path. We hope we can continue cooperation with the US in this direction on the basis of the previous pilot program," Yi said in an interview with business media news outlet Caixin in June.
In 2017, the two sides piloted a joint inspection over a Chinese accounting firm, where the Chinese side helped the US Public Company Accounting Oversight Board, the organization that oversees audits of US-listed companies, examine the firm's quality control system and its audit working papers of three US-listed Chinese firms.
The CSRC has told the PCAOB last year that it would carry out consultations on the joint inspection approach and has provided related proposals to the PCAOB on many occasions, with the latest one delivered in early August.
The commission also stressed that the country has never prohibited or prevented accounting firms from providing audit working papers to overseas regulators.
"We understand that the essence of Chinese laws and regulations is that information such as audit working papers should be exchanged through channels of regulatory cooperation and in accordance with relevant provisions on security and confidentiality. This is also in line with international practice," Yi said in the interview.
The CSRC has provided audit working papers of 14 US-listed Chinese firms to the US side so far.
Apart from pushing ahead joint inspections, Yi also called for the establishment of a joint law enforcement alliance on the basis of mutual trust, to combat cross-border securities crimes, adding that China will provide law enforcement assistance in accordance with multilateral law enforcement cooperation arrangements.