Comer Opens Inquiry into PCAOB Oversight of Audits for China-Based Companies

WASHINGTON—House Committee on Oversight and Accountability Chairman James Comer (R-Ky.) is today conducting oversight of the Public Company Accounting Oversight Board’s (PCAOB) inspections and investigations of accounting firms conducting audits for companies based in the People’s Republic of China (PRC). In a letter to PCAOB Chair Erica Williams, Chairman Comer requests documents and information to assist the Committee’s inquiry into how PCAOB applies federal law with respect to audits of PRC-based companies.

“PRC-based companies represent $1.3 trillion of market capitalized value in American financial markets, and unreliable financial reporting would prevent American investors and asset managers from making informed decisions, potentially jeopardizing Americans’ savings, including retirement savings. […] So long as PRC-based companies have access to American financial markets, the PCAOB is tasked with providing assurances to American investors that they can rely on financial reporting pertaining to those firms, because it has been properly vetted by the auditors of those companies,” Chairman Comer wrote.

In 2020, Congress passed the Holding Foreign Companies Accountable Act (HFCAA), which directed PCAOB to designate foreign jurisdictions where it was unable to conduct its oversight mandate of audit firms. The Chinese Communist Party (CCP) has made efforts to target the independence of the PCAOB’s oversight.

“The PRC, through the Chinese Communist Party (CCP), has historically resisted efforts by the PCAOB to ensure PRC-based companies are subject to the same regulatory scrutiny as American companies, including through CCP officials sanitizing information the PCAOB might review. […] Encroachment on the independence of American due diligence firms by the CCP, restrictions on information, and historic resistance to PCAOB oversight raises broad concerns about the future of meaningful regulatory engagement with the PRC and specific concerns with the PCAOB’s planned 2023 and 2024 investigations,” Chairman Comer continued.

Read the letter to Public Company Accounting Oversight Board Chair Erica Williams here.