US media: More than a hundred Chinese companies are expected to avoid delisting in the

U.S. media reports that when a large number of famous Chinese companies can continue to be listed in New York depends on the results of a US audit investigation this month, many unknown companies believe that they have found ways to avoid delisting.Essence

According to the Wall Street Journal's assessment of documents submitted to the US accounting regulatory agency in the United States, more than 100 companies may avoid the threat of delisting.A variable method is used from time to time.

For a long time, the Chinese government has banned foreign institutions from obtaining the audit draft of Chinese enterprises on the grounds of national security -that is, the documents created by auditors when reviewing customer accounts.However, some small accounting firms headquarters in the United States have been able to cooperate with local accounting firms and independent contractors to audit Chinese companies, and their audit work is basically on the computer systems of these US accounting firmsconduct.

These original audit records are preserved by these US accounting firms, so they can be checked and inspected by US regulators.This means that Chinese customers of these American accounting firms do not violate the accountability bill of foreign companies in 2020.According to the bill, if a company's audit agencies cannot be inspected by the US audit and regulatory agencies for three consecutive years, the company's securities will be prohibited.

So far, more than 160 companies have been identified by the US Securities and Exchange Commission (SEC) that have not complied with the US audit rules, including Chinese Internet giants Alibaba, JD.com, and Pinduoduo.At least 130 Chinese companies listed in the United States have not been included in this list of companies that have not been complied with, but after the next round of annual report submission, this number may decline.

Among the Chinese companies listed in the United States, there are real estate service providers Leju and Fintech platform Jiayin Gold.According to FactSet data, almost all of these two companies' income last year came from China.

Earlier this year, some Chinese companies listed in the United States in the United States were used to use accounting firms in the United States. Many other companies were doing this. Even those companies without overseas business were the same.Essence

According to the Wall Street Journal, SEC warned on Tuesday (September 6) that a Chinese company listed in the United States with multinational business clearly stated that the US audit institutions of such companies need to closely supervise overseas contractors.The statement is not directly used by related small Chinese companies that are mainly operating in China and remotely audited by the United States institution.

In April of this year, the U.S. Listed Companies' Accounting Supervision Committee (PCAOB) sanctioned two US accounting firms, because it failed to correctly supervise external audit institutions in Hong Kong, and in a unregistered ChinaThe company issued a audit report after a basic audit.However, SEC said that as long as the auditors can fulfill their duties, this method of change is still allowed.

The Wall Street Journal reports that if a milestone agreement between China and the United States breaks down, this audit change method may provide a solution for Chinese companies listed in the United States.China has agreed to allow US accounting supervisors to go to Hong Kong from this month, where they can check the audit draft.This is expected to end the protracted dispute between China -US regulators, but the agreement is still risky.PCAOB Chairman Erica Williams recently said that the real test will be whether the protocol on the paper can be transformed into actual complete access permissions.

PCAOB said that the company can be freely replaced to audit institutions in mainland China and outside Hong Kong.The regulatory agency said: "No matter where customers are, these audit institutions must comply with the same set of PCAOB rules, including our standards for using other audit institutions and the requirements of PCAOB inspections and investigations.Cooperate with it. "

This change method depends on a gray area in Chinese law. This law stipulates that the audit draft prepared in China must be preserved in China.

Paul Gillis, a professor of the Foreign Language Institute of Beijing Second Foreign Language Institute, said that this is a bit savvy.

He said that because the audit draft was created in China, the act of creating a draft in the computer system of the US accounting firm at the same time may still be deemed to be transported out of China.

He said that the Chinese government chooses to open its eyes and close eyes; obviously, if China is willing, they can be closed within one minute; it is obvious that they have not done so, maybe because they think these fish are too smallIt is not worth the teacher.

It is reported that many Chinese companies have hired smaller accounting firms in order to control costs, but the threat of delisting has added their urgency to accept US audit institutions.

Friedman LLP Chinese business partner Eddie Wong said his team has received 15 new customers in the past year, and the number of customers has increased by 25%.He said that due to the influence of foreign companies' accountability bills, many registrars replaced audit institutions with American companies like us.Friedman completed the merger with the competitor Marcum LLP last week.PCAOB banned MARCUM from auditing a large number of business companies in China within three years in September 2020.Friedman said merging transactions will not change its Chinese business.

Steven Kreit, a partner of Paris Kreit Chiu CPA LLP in New York, said he suggested that Chinese companies listed in New York hired audit institutions located in the United States. In the United States, an accounting regulatory agency determined that Chinese companies are in line with foreign companies.Prior to the provisions of the accountability bill, the risk of delisting will still exist.Kreit has about one -fifth of customers from China. He expects that as the relevant delisting period is approaching, the next year will be more demand from Chinese companies.

In China, these smaller audit institutions are usually established in the form of consulting companies, rather than a full -scale accounting firms.These institutions outsourcing on -site work such as verification of accounts and transportation documents to local companies or individual contractors, and the latter records their work in the computer system of US audit institutions.This means that these audit records are still retained in the folders of US audit institutions, and PCAOB can be checked.