She declined to specify the types of deficiencies, but said they are in line with those audit inspectors have seen during first-time inspections elsewhere. "Today’s announcement should not be misconstrued in any way as a clean bill of health for firms in mainland China and Hong Kong," she said. PCAOB staff identified "numerous potential deficiencies" in their inspection work, PCAOB's Williams said, saying the inspection reports will be finalized and made public next year. In its statement, the PCAOB said it exercised sole discretion to select firms for audit and had selected two, KPMG Huazhen LLP in China and PricewaterhouseCoopers in Hong Kong. However any issues uncovered due to the more stringent accounting oversight "could be very bad for the sector, especially if there is then no effort to correct it or come clean," he said. Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, said the move should take "one of the risks, theoretically off the table of investing in them." There were some concerns voiced about what issues the audits might uncover. The iShares MSCI China ETF (MCHI.O) was down 2.2%. U.S.-traded shares of Ecommerce giants Alibaba (BABA.N),, JD.com (9618.HK) as well as internet behemoth Baidu (9888.HK) were down between 3-5% while music streaming provider Tencent Music was down 3.5%, more than the broader market where the S&P 500 Index (.SPX) was down 2.5%. However, the relief was not seen in Thursday's trading for U.S.-listed shares of Chinese companies, which were higher amid the news, but gave up gains and some ended sharply lower. "This falls into the category of a game changing view of Chinese companies because the threat of their delisting seems to have been eliminated," said Art Hogan, chief market strategist at B. "For the first time in history, we are able to perform full and thorough inspections and investigations to root out potential problems and hold firms accountable to fix them,” said PCAOB Chair Erica Williams. Washington and Beijing have been locked in a heated trade and technology war. regulators and a relief for Chinese firms, including Alibaba, facing delisting amid rocky relations between the world's largest economies. The statement from the Public Company Accounting Oversight Board (PCAOB) marks a victory for U.S. accounting watchdog on Thursday said it has full access to inspect and investigate firms in China for the first time ever, removing the risk that around 200 Chinese companies could be kicked off U.S. The audit committee, a subset of the board of directors consisting of non-management members, gained new responsibilities, such as approving numerous audit and non-audit services, selecting and overseeing external auditors, and handling complaints regarding the management's accounting practices.NEW YORK/HONG KONG/WASHINGTON, Dec 15 (Reuters) - The U.S. The audit committee receives wide leverage in overseeing the top management's accounting decisions. One direct effect of the Sarbanes-Oxley Act on corporate governance was the strengthening of public companies' audit committees.
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