Reporter: On the morning of December 15th local time, the Public Company Accounting Oversight Board (PCAOB)？of the U.S. issued a report confirming that it was able to completely inspect and investigate the accounting firms headquartered in Chinese Mainland and the Hong Kong SAR in 2022, and thus vacating its relevant determinations made in 2021. This announcement, showing good progress in China-US audit oversight cooperation, is widely seen by the market as a positive signal for Chinese companies listed or seeking listings on the U.S. market. What are the CSRC’s comments on this matter?

Official: We have noticed the report and relevant statements issued by the U.S. regulators. The CSRC has always been committed to resolving cross-border audit oversight issues via a regulatory cooperation mechanism. The practice has proven that a practical path for cooperation that accommodates the legal and regulatory requirements in both jurisdictions can certainly be found, as long as both sides work together with mutual respect, professionalism, and pragmatism.

On August 26th, the CSRC, Ministry of Finance of the People’s Republic of China, and the PCAOB signed an agreement for audit oversight cooperation to bring the inspection and investigation of accounting firms under a bilateral cooperation framework. Regulators from both sides have since then acted in strict accordance with the legal and regulatory requirements of their respective jurisdictions and consensus reached in the agreement, and worked together efficiently and effectively on a number of field inspections and investigations, yielding good progress. During the cooperation, both sides set up inspections and investigation plans upon thorough communication and coordination. The U.S. regulator accessed audit documentation including audit work papers through the Chinese regulator, and conducted interview and took testimony of related personnel of the accounting firms with the participation and assistance of the Chinese side. Meanwhile, in compliance with relevant laws and regulations and in line with international common practice, the Chinese side made proper treatment in accordance with the agreement to certain data, such as personally identifiable information, contained in audit documentation for inspections or investigations. By doing so, information security requirements in applicable laws were met as regulators from both sides fulfilled their statutory regulatory mandates.

The CSRC welcomes the PCAOB’s decision to vacate its previous determinations based on professional and regulatory considerations. We look forward to building on previous experience and carrying out audit oversight cooperation with our U.S. counterparts in the years to come with enhanced mutual respect and trust, thus establishing long-term and sustainable cooperation arrangements that will enhance the stability and predictability of international regulatory environment and better protect global investors.