Exclusive: U.S. regulators to vet Alibaba, other Chinese firms’ audits -sources

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  • Alibaba notified of US audit-inspection sources
  • Review of audits of US-listed Chinese companies to start next month
  • Tracks Historic US-China Audit Agreement
  • Alibaba shares fall nearly 3%

HONG KONG, Aug. 31 (Reuters) – US regulators have selected e-commerce giant Alibaba Group Holding Ltd (9988.HK) and other US-listed Chinese companies for audit inspections starting next month, said three sources familiar with the matter.

The move follows Friday’s landmark audit agreement between Beijing and Washington that will allow US regulators to investigate accounting firms in mainland China and Hong Kong, potentially ending a long-running dispute that threatened to take more than 200 Chinese companies off US stock exchanges. keep out. read more

Alibaba has learned that it is one of the first Chinese companies whose audits will be inspected by the US audit watchdog – Public Company Accounting Oversight Board (PCAOB) – in Hong Kong, the sources told Reuters.

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PwC, the accounting firm of China’s largest e-commerce company, has also been notified of the audit’s audit work, the sources said, who declined to be identified due to confidentiality restrictions.

Alibaba did not respond to a request for comment, while a PwC spokesperson said it is company policy not to comment on customer matters.

A PCAOB spokesperson said the board did not comment on inspections. The China Securities Regulatory Commission (CSRC) did not immediately respond to a request for comment.

Alibaba’s US-listed shares closed nearly 3% on Tuesday following the Reuters report, following a roughly 1% rise in pre-market trading. Shares of Hong Kong fell more than 3% in trading on Wednesday morning, while the city’s listed technology giants (.HSTECH) fell nearly 2%.

US regulators have demanded access to auditing documents from US-listed Chinese companies for more than a decade, but Beijing has been reluctant to let US regulators inspect its auditing firms, citing national security concerns.

Alibaba, which went public in New York in 2014 in what was at the time the largest IPO in history, is the most valuable Chinese company listed in the United States with a market value of $248 billion as of Tuesday.

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The PCAOB said Friday that the watchdog had notified the selected companies, without naming them, and that its officials are expected to land in Hong Kong in mid-September, where inspections will take place.

The regulator, which oversees audits of US-listed companies, would select companies based on risk factors, such as size and industry, and that no company could expect special treatment, the PCAOB said. read more

Reuters was unable to immediately determine how many and which other Chinese companies were in the first batch of US inspections.

Founded in 1999, Alibaba considers e-commerce to be its main activity and has grown in recent years into high-growth sectors such as cloud services and internet of things. It also owns AutoNavi Holdings Ltd, a major Chinese digital map and navigation company.

In July, it was added to the U.S. Securities and Exchange Commission (SEC)’s list of Chinese companies that could be delisted for failing to meet audit requirements. read more

The list now has more than 160 Chinese companies, including fellow e-commerce group JD.com Inc (9618.HK) and electric vehicle manufacturer Nio Inc.

Current U.S. rules provide that Chinese companies that fail to comply with audit working paper requests will be suspended from trading in the United States by early 2024.

Days before it was added to the SEC’s takedown list, Alibaba said it planned to add a primary listing in Hong Kong to its New York presence targeting investors in mainland China. read more

The tech giant has already been on the Hong Kong stock exchange with a secondary listing since 2019 and expects the primary listing to be completed by the end of 2022.

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Reporting by Julie Zhu in Hong Kong; Additional reporting by Katanga Johnson in Washington; Editing by Sumeet Chatterjee and Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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