U.S. PCAOB says it is able to inspect firms in China for first time

Authorities in China have long been reluctant to let overseas regulators inspect local accounting firms, citing national security concerns. U.S. lawmakers in 2020 agreed to legislation that would oust Chinese companies from U.S. stock exchanges unless they adhere to American auditing standards.

(Updates with details throughout) NEW YORK/WASHINGTON, Dec 15 (Reuters) -

The U.S. Public Company Accounting Oversight Board on Thursday said it has determined that it has gotten full access to inspect and investigate firms in China for the first time in history. The U.S. accounting watchdog said it exercised sole discretion to select firms for audit and had selected two, KPMG Huazhen LLP in China and PricewaterhouseCoopers in Hong Kong.

The PCAOB, which oversees registered public accounting firms around the world, said late last year said that Chinese authorities had prevented the watchdog from completely inspecting and investigating in mainland China and Hong Kong. Washington and Beijing

reached a landmark deal in August to settle a long-running dispute over auditing compliance of U.S.-listed Chinese firms. Authorities in China have long been reluctant to let overseas regulators inspect local accounting firms, citing national security concerns.

U.S. lawmakers in 2020 agreed to

legislation that would oust Chinese companies from U.S. stock exchanges unless they adhere to American auditing standards. The deal gave PCAOB right to full access to Chinese audit working papers with no redactions, the right to take testimony from audit company staff in China and sole discretion to select what companies it inspects.

U.S. officials had gained "good access" to all the information they requested during the seven-week inspection, Reuters reported in November.