China’s Securities Supervisory Agency Mulls Move to Break Audit Deadlock With U.S.

Regarding one of the core issues in the cross-border supervision of Sino-US audits, whether the audit working papers can be inspected by overseas regulatory agencies, the relevant laws may be clearly explained, so that the audit papers of China Stocks can be exported to comply with relevant domestic laws.

The Financial Stability and Development Committee of the State Council held a special meeting on March 16 and the China Securities Regulatory Commission said on the same day that it will continue to strengthen communication with US regulators and strive to reach an agreement on China-US audit supervision cooperation as soon as possible.

The CSRC might consider a clear interpretation of the relevant provisions of the Securities Law. After certain conditions are met, audit working papers and other documents can be transferred to the Public Company Accounting Oversight Board (PCAOB). According to the "Securities Law" officially implemented by China in March 2020, "without the consent of the securities regulatory agency of the State Council and the relevant competent departments of the State Council, no entity or individual may provide documents and materials related to securities business activities to overseas without authorization".