American MNCs fear fallout from US-China audit dispute

The dispute centres on Beijing’s refusal to give US regulators access to audit records for nine US-listed Chinese companies, a standoff that has so far focused minds only on the implications for the future of US-traded Chinese stocks.

However, accounting experts say the issue has the potential to not only force Chinese firms to de-list from US markets, it could also put US-based firms with big Chinese businesses in a position where they have difficulty producing audited accounts.

“The potential consequences of failure to find common ground are almost too frightening to contemplate,” said Thomas Shoesmith, a partner at Pillsbury law firm in a note to clients.

This week, the US Securities and Exchange Commission (SEC) charged the Chinese affiliates of five of the world’s biggest audit firms with violating US securities law, raising fears that it could go on to apply its ultimate penalty — banning the affiliates from working on audits of US-listed companies.

“If these five accounting firms are barred from practicing before the SEC, it seems certain that companies with major Chinese operations will find it difficult or impossible to find accountants,” Shoesmith said.

US firms with major Chinese businesses include fast food group Yum Brands, tech firm Qualcomm and construction equipment maker Caterpillar. Some have begun to show concern about

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