WASHINGTON/HONG KONG—U.S. accounting firms that agree to lead audits of New York-listed Chinese and Hong Kong companies looking to avoid potential trading bans risk breaching U.S. rules, the U.S. Securities and Exchange Commission (SEC) warned on Tuesday.
Worried they may be kicked off U.S. exchanges if China does not allow the SEC’s accounting watchdog to vet Chinese company audits, some U.S.-listed Chinese and Hong Kong companies have recently switched their lead auditor from a local to a U.S. or other foreign firm, the SEC said.
“Such arrangements pose special challenges that raise questions about whether the newly engaged registered public accounting firms … will be able to satisfy their responsibilities,” the SEC’s Acting Chief Accountant Paul Munter wrote….