Transparency in accounting and auditing has been a major issue for mainland companies wanting to list overseas.
However, a joint declaration between the China Auditing Standards Board and the Hong Kong Institute of Certified Public Accountants (HKICPA) shows that convergence between the two accounting jurisdictions is well on the way.
Questions have been raised about whether the standard of mainland auditing firms is on par with international standards. Ever since Hong Kong Exchanges and Clearing (HKEx) allowed mainland companies to be audited by mainland auditors, critics have pointed out that a lack of supervision may leave retail investors short-changed.
Even after HKEx said in April that Hong Kong-listed mainland companies that used mainland auditing standards would be annually reviewed by the city's Financial Reporting Council, critics have raised questions about the protection of retail investors.
Earlier this month, the joint declaration pledged that convergence between mainland and Hong Kong auditing standards would speed up.
According to a statement, the China Auditing Standards Board and the HKICPA have signed a joint commitment. 'Both parties are committed to maintaining convergence and we have established a mechanism for ongoing maintenance,' says Philip Tsai Wing-chung, president of the HKICPA, one of the signatories.