Exclusive-U.S. regulators to vet Alibaba, other Chinese firms’ audits -sources

By Julie Zhu

HONG KONG (Reuters) -U.S. regulators have chosen e-commerce large Alibaba Group Holding Ltd and different U.S.-listed Chinese language firms for audit inspections beginning subsequent month, three sources aware of the matter mentioned.

The transfer follows Friday’s landmark audit deal between Beijing and Washington permitting U.S. regulators to vet accounting corporations in mainland China and Hong Kong, probably ending a long-running dispute that threatened besides greater than 200 Chinese language firms from U.S. inventory exchanges.

Alibaba has been notified that it’s among the many first batch of Chinese language firms whose audits shall be inspected by the U.S. audit watchdog – Public Firm Accounting Oversight Board (PCAOB) – in Hong Kong, the sources informed Reuters.

PwC, the accounting agency of China’s greatest e-commerce firm, has additionally been knowledgeable of the audit work inspection, mentioned the sources, declining to be recognized because of confidentiality constraints.

Alibaba didn’t instantly reply to a request for remark whereas a PwC spokesperson mentioned it was firm coverage to not touch upon any consumer issues.

A PCAOB spokesperson mentioned the board didn’t touch upon inspections. The China Securities Regulatory Fee (CSRC) couldn’t be instantly reached for remark outdoors of enterprise hours.

U.S. regulators have for greater than a decade demanded entry to audit papers of U.S.-listed Chinese language firms, however Beijing has been reluctant to let U.S. regulators examine its accounting corporations, citing nationwide safety considerations.

Alibaba, which went public in New York in 2014 in what was on the time the most important itemizing in historical past, is essentially the most helpful Chinese language agency listed in the USA with a market worth of $256 billion as of Monday.

The PCAOB mentioned on Friday that the watchdog had notified the chosen firms, with out naming them, and its officers are anticipated to land in Hong Kong, the place the inspections will happen, by mid-September.

The regulator, which oversees audits of U.S.-listed firms, would choose firms primarily based on threat components, equivalent to dimension and sector, and that no firms may count on particular therapy, in keeping with the PCAOB.

Reuters couldn’t instantly decide what number of and which different Chinese language firms have been within the first batch of U.S. inspections.

(Reporting by Julie Zhu in Hong Kong, further reporting by Katanga Johnson in Washington; Modifying by Sumeet Chatterjee and Emelia Sithole-Matarise)