Chinese companies get ready for US audit rules

Chinese companies get ready for US audit rules

Adopting rules costing millions

Chinese companies listed in the US are spending millions of dollars bringing
themselves in line with US accounting rules which begin on 15 July this year.

According to an auditing consultant, these companies must comply with section
404 of the notorious Sarbanes-Oxley Act by providing an audit on the strength of
their financial reporting controls.

Compliance is costing larger companies as much as $7m (£4m) and some foreign
companies have apparently reconsidered plans to list in the US because of the
regulatory regime.

‘It costs a lot of money and took a tremendous amount of time,’ Lester
Sussman, the California-based managing director of Resources Global
Professionals told Reuters.

‘The Chinese and Hong Kong companies will benefit somewhat from the
experiences of companies in the US,’ he said, adding that Chinese companies
seemed to be setting aside an appropriate amount to cover the costs.

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