April 4, 2022
Access to Auditor Workpapers: A Break in the Stalemate?
As we have covered in this blog over the past year, the SEC and the PCAOB have been implementing the Holding Foreign Companies Accountable Act, which amended the Sarbanes-Oxley Act to prohibit listing on US exchanges of foreign companies for which the PCAOB has been unable to inspect audit work papers. Just last month, the SEC began identifying companies that use auditors that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority of a foreign jurisdiction where the firm is located. Legislation that remains pending in Congress would accelerate the three-year time horizon for delisting under the Act to two-years, if enacted.
In a first sign toward an easing of the stalemate with China over audit work papers, last week the China Securities Regulatory Commission circulated draft revisions to its rules that would relax the restrictions on access to certain information about issuers in China and is soliciting public opinion on the draft. In particular, the draft revisions would provide that overseas competent authorities may request to investigate, including to collect evidence for investigation purpose under a cross-border regulatory cooperation mechanism, although no further details have been provided at this time.
– Dave Lynn