U.S. regulators have selected e-commerce majors Alibaba Group Holding Ltd and JD.com Inc among other U.S.-listed Chinese companies for audit inspection starting next month, people familiar with the matter said. ‘affair.
The selection follows a landmark audit deal between Beijing and Washington on Friday allowing U.S. regulators to vet accounting firms in mainland China and Hong Kong, potentially ending a long-running dispute that threatened to fire more than 200 companies Chinese stock exchanges.
Public Company Accounting Oversight Council
The tech duo, along with Yum China Holdings Inc – owner of KFC, Taco Bell and Pizza Hut restaurants in China – have been told they are among the first group of Chinese companies whose audits will be inspected in Hong Kong by the dog. US watchdog, the Public Company Accounting Oversight Board (PCAOB), the people told Reuters, declining to be identified due to confidentiality constraints.
The respective accounting firms Alibaba, JD.com and Yum China – PwC, Deloitte and KPMG – were also notified of the inspection, the sources added.
Alibaba, JD.com, Yum China, KPMG and the China Securities Regulatory Commission did not respond to requests for comment.
Spokespersons for PwC and Deloitte said it was company policy not to comment on client affairs.
A PCAOB spokesperson said Tuesday the board had not commented on the inspections. The watchdog could not be reached for comment outside of US business hours on Wednesday.
Access to audit documents
U.S. regulators have demanded access to U.S.-listed Chinese companies’ audit documents for more than a decade, but Chinese authorities are reluctant to let U.S. regulators inspect accounting firms in China, citing national security concerns. .
Alibaba, which went public in New York in 2014 in what was then the largest listing in history, is the most valuable Chinese company listed in the United States with a market value of $248 billion on Tuesday. .
“No special treatment”
The PCAOB said Friday it had notified the selected companies, without naming them, and expects its officials to land in Hong Kong, where the inspections will take place, by mid-September.
The regulator, which oversees audits of US-listed companies, said it selects companies based on risk factors, such as size and industry, and no company can expect a special treatment.
Reuters could not immediately determine how many and which other Chinese companies were part of the first batch of US inspections.
Alibaba was founded in 1999 with e-commerce as its core business. It has expanded in recent years into fast-growing sectors such as cloud services and the Internet of Things and also owns AutoNavi, a major Chinese digital mapping and navigation company.
In July, Alibaba was added to the U.S. Securities and Exchange Commission’s (SEC) list of Chinese companies that could be delisted if they failed to comply with audit requirements.
The list now includes more than 160 Chinese companies, including JD.com, Yum China and electric vehicle maker Nio Inc.
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