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US, China agree to share audit documents
Aggregated Source: Shanghai Daily: Business

CHINA has signed an agreement with the United States to share company audit files, paving the way for more investigations into accounting scandals involving Chinese firms listed in the US.

The China affiliates of five top accounting firms were charged by US market regulators in December with violating securities laws for refusing to provide audit data related to investigations into some China-based but US-listed companies.

But some of the auditors said that while willing to assist, they were caught up in legal differences between the two countries, and Chinese law did not allow such information transfers.

China's securities watchdog announced yesterday that Beijing and Washington had signed a memorandum of understanding on the exchange of audit and accounting records.

"The signing of the MOU is a significant step in cross-border cooperation," the China Securities Regulatory Commission said.

It "laid a fine foundation for bilateral cross-border coordination of investigations in the future," its statement said.

But the two sides have yet to agree on how Chinese accounting firms auditing US-listed companies should be supervised.

A number of accounting scandals have cost investors in Chinese firms listed in the US billions of dollars, raising wider concerns over fraud.

Investors in Toronto-listed Sino-Forest Corp lost hundreds of millions of dollars when it collapsed following allegations it had misstated its revenue and exaggerated the size of its plantations.

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