Audit Oversight Issues Concerning Overseas-Listed Chinese Companies

Chapter 7 examines audit oversight issues concerning overseas-listed Chinese companies, paying particular attention to the disputes between China and the US. It also discusses how Hong Kong has managed to solve its audit dispute with Mainland China and how it has played an important role in solving the China–US dispute. In practice, the auditing of overseas-listed companies is usually undertaken by local accounting firms, raising the issue of whether the regulators of the host market can reach the local accounting firms and relevant documents in their possession, particularly audit working papers. Until recently, this legal conflict has long been a serious dispute between the Chinese securities regulators and their counterparts in the US and Hong Kong. Only after the US Congress intervened to pass the Holding Foreign Companies Accountable Act in 2020 could the US regulators finally reached an agreement with the Chinese regulators in 2022. This is a good start, but given the China–US geopolitical tensions, it remains to be seen whether the China–US 2022 Agreement will be implemented effectively as expected in the future.