Securities and Exchange Commission Chair Jay Clayton said he is pressuring major accounting firms to scrutinize Chinese firms because of a lack of U.S. oversight amid the coronavirus outbreak on "Mornings with Maria" on Monday.
The Public Company Accounting Oversight Board (PCAOB), due to many of these Chinese companies' state control, is unable to audit all their records.
|BABA||ALIBABA GROUP HOLDING LTD.||82.90||+0.61||+0.74%|
|PTR||PETROCHINA CO. LTD.||51.23||+0.91||+1.81%|
"Late in the fall last year and in the last couple of weeks, I and my colleagues have met with the big four accounting firms and said, 'What are you doing to do more in light of the fact that the PCAOB can't go out and inspect these audits of these Chinese firms?'" Clayton said.
There are 156 Chinese companies listed on U.S. exchanges combined carrying a total market cap of $1.2 trillion as of February 2019, according to the U.S.-China Economic Security Review Commission.
These companies range in size from behemoths such as ecommerce giant Alibaba to smaller China Automotive Systems. Additionally, some of these companies are 30 percent state-owned, including PetroChina and China Telecom.
"Around the world, almost every country has allowed the PCAOB in to inspect the audits of public companies that are listed in the U.S.," Clayton said. "In China, they have resisted that on a state secret basis. This has gone on for a while. We've been trying to explain this to U.S. investors."
FOX Business' inquiries to accounting firms Ernst & Young, PricewaterhouseCoopers and Deloitte were not immediately returned.
FOX Business' Suzanne O'Halloran contributed to this report.