U.S., China audit deal puts fall inspections in spotlight

After months of negotiation and frayed nerves among investors, U.S. and Chinese regulators have reached a deal to allow U.S. inspections of Chinese audit firms and potentially avoid the prospect of Chinese companies being forced to delist from U.S. exchanges. But a U.S. oversight board warned that the agreement in principle needs to be put to the test this fall before companies can feel confident that the risk of being delisted has passed.

The China Securities Regulatory Commission (CSRC), China’s Ministry of Finance and the U.S. Public Company Accounting Oversight Board released separate statements Friday announcing the deal to provide PCAOB inspectors complete access to audit papers and personnel at Chinese firms. ...