US regulators have selected e-commerce companies Alibaba Group Holding and JD.com among its selection of US-listed Chinese firms for audit inspection starting from September, according to an exclusive report from Reuters.
The news organisation cited people with information of the situation. The report follows a landmark audit agreement between Beijing and Washington last Friday, which allows US regulators to vet accounting firms based in mainland China and Hong Kong.
The move marks a significant step towards ending a long-running disagreement that threatened to kick over 200 Chinese companies off the US stock exchanges.
Companies included in the initial slate of Chinese companies to have their audits inspected by US public watchdog the Public Company Accounting Oversight Board (PCAOB) apparently include Chinese KFC and Pizza Hut restaurant owners Yum China Holdings.
Reuters confirmed their unidentified source noted the respective accounting firms of Alibaba, JD.com and Yum China have been alerted to the inspection.
Alibaba currently stands as the most valuable Chinese company listed on the US market, with a value of $248 billion.
The new agreement comes after more than a decade of US regulators hammering on China’s door for access to audit the papers of US-listed Chinese companies, however Chinese authorities have previously denied any access to national accounting firms by US regulators, citing security concerns.
US regulations state any Chinese companies which fail compliance with audit working papers requests will be suspended from trading in the US from early 2024.
Reuters said it could not confirm how many and which other Chinese firms were scheduled in the first selection of US inspections at the time of writing.
