SEC approved new PCAOB rules, not cooperating with foreign companies to investigate or remove them

With the implementation of United States Public Company Accounting Oversight Board (PCAOB) Rule 6100, foreign companies listed in the United States are required to provide information to their inspectors and accept the PCAOB (also known as " Board ”). For the purpose of functional inspection, it will prohibit foreign companies from registering and doing business in the United States.

A US Securities and Exchange Commission (SEC) press release on Friday, November 5 acknowledged this significant improvement.

An article published by the SEC on its official website indicates that it has approved PCAOB Rule 6100, a new law to meet the requirements of the Foreign Liability Act. The Convention on the Elimination of All Forms of Discrimination (HFCAA) is expected to be published in the US Federal Government Gazette in 2020.

Rule 6100 was developed by the PCAOB in May 2021. Its purpose is to establish the procedures and procedures necessary to determine the adequacy and scrutiny of the PCAOB project review. are prohibited by foreign or other jurisdictions. Therefore, the diagnosis cannot be completed. .

As usual, a foreign company listed in the United States is required to file an audit report for the domestic accounting firm of the listed company. This information should provide the investor with accurate information about the public company and provide a fair, objective and professional assessment to understand it, its employment and its financial condition.

The quality of audit data is very important to investors as US investors rely on external audit data from listed companies to analyze the financial condition and business model of listed companies and to make investment decisions based on them. function of these.

The PCAOB is a nonprofit organization established by the United States Congress and is responsible for overseeing the operations of all companies operating in the United States. In other words, it oversees the financial institution that prepares the audit records.

The HFCAA, enacted in 2020, requires foreign companies to accept PCAOB ratings or they can be excluded from the SEC. However, the SEC must first get a decision from the PCAOB before making a "revocation" or other public company decision to ensure that the PCAOB is not affected by the local government or governing body. when inspecting public affairs. business. . For the PCAOB to make an "unreliable decision" it must go through many necessary steps, that decision cannot be made on air and will ultimately depend on the fate of publicly traded US companies. the theme. This is the story of Code 6100 developed by the PCAOB.

In other words, the PCAOB must determine that it "is not obstructed by a foreign regulator and cannot inspect a foreign financial institution" under the new Rule 6100. established by the "HFCAA Law" . Without this ruling, the SEC could not have complied with the provisions of the “HFCAA law”.

However, with the enactment of Rule 6100 on November 5, 2021, the situation will change dramatically and the actions of the SEC and PCAOB will become “policy compliance”.

According to SEC information released by Hong Kong Singularity Finance, PCAOB Rule 6100 sets out the requirements for enforcing HFCAA regulations.

In particular, these new regulations require the PCAOB to comply with a set of associated information and procedures before announcing solutions that "foreign financial institutions cannot be investigated for interference in local government. ". The new law also defines the key factors that the PCAOB must take into account and the data and information that must be included in the decision.

In addition, the new rule 6100 also specifies the formats in which the PCAOB must publish the above solutions, the promulgation of the solutions, as well as the date and time of resolution of this situation. create a path.

In accordance with HFCAA rules, if PCAOB sets up a solution by an agency capable of administering a foreign company to protect PCAOB by performing an audit of the listed company For three consecutive years, the United States prohibits the company from being scholarship below. HFCAA.

SEC Chairman Gary Gensler said it was an important step to protect U.S. investors. “I think it's very important to make sure that the scrutiny of foreign companies entering the US investment market follows the same rules,” he said by an MIT Sloan Business professor. School at the SEC.

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According to a report by Hong Kong Singularity Finance, the HFCAA was signed and passed by President Trump on December 18, 2020 US time. Passed the PCAOB auditor's exam for 3 consecutive years. 2. Listed companies must disclose their dealings with the government of the country in which they live.

U.S. media believe the bill was a tool Trump used to intimidate China prior to his resignation. Reuters reported that while the law would apply to businesses in all countries, certification protesters hoped the bill would target Chinese businesses in the United States.

The PCAOB in the United States has a wide range of testing capabilities and may attempt to enter the lab directly to perform tests and obtain work information outside of the United States. However, not all countries are willing to provide the PCAOB with its own conception of its investigative work, for example, the China Securities Regulatory Commission has provided regulations for the review of PCAOB projects in China, in hope for a bilateral solution.

On November 20, 2020, the China Securities Regulatory Commission explained the problem on its legal website. First of all,US government authorities are unable to temporarily audit Chinese companies that provide auditing services to US companies. This does not mean that Chinese companies do not comply with US regulations due to cross-border joint ventures.

second,China's parallel work with Sino-US supervisory cooperation is to conduct inspections of financial companies by overseeing cross-border cooperation.

According to a statement from the China Securities Regulatory Commission, on August 4, 2020, after ruling on the United States' appeal, Chinese politicians sent a fourth letter of its recommendation to investigate joint ventures for the PCAOB . The PCAOB accepted the receipt and indicated that everything would be fine. to research.

“We hope that the US administration will discuss special plans with us as soon as possible. The two sides will be open and work to reach consensus on a joint review, conduct Sino-US quality inspection and cooperate with supervision; co -create a healthy environment for cross-border businesses.

As of this writing, the China Securities Regulatory Commission has yet to provide additional information on the US SEC's November 5 announcement.