Key Points:
·　Chinese companies listed on U.S stock exchanges and Chinese accounting firms should strengthen their confidentiality and archives management, in particular, they should lawfully identify and protect information on state secrets and other archives;
·　They should ask the Chinese archives authorities to provide more legal certainty.
·　They should also consider negotiating the confidentiality clause of their auditing services agreement in a more reliable manner.

　　Introduction

　　Following the Enron debacle, the Public Company Accounting Oversight Board （PCAOB） was established pursuant to the Sarbanes-Oxley Act of 2002 （Act） in order to oversee the audit of public companies that are subject to the securities laws, and related matters, in order to protect the interests of investors and further, the public interest, in the preparation of informative, accurate, and independent audit reports for companies the securities of which are sold to, and held by and for, public investors.[①] It is mandated by that Act that all accounting firms, either domestic or foreign, that prepare or issue, or participate in the preparation of audit reports for companies listed on U.S. stock exchanges must be registered with the PCAOB, and the PCAOB should have the authority to conduct a continuing programme of inspections to assess the degree of compliance by the accounting firms with the Act, the rules of the PCAOB, the rules of the Securities and Exchange Commission （SEC） or professional standards, and punish any violations. [②]

　　For that purpose, the PCAOB is required to inspect and review selected audit and review engagements of the firm; evaluate the sufficiency of the quality control system of the firm, and the manner of the documentation and communication of that system by the firm; perform such other testing of the audit, supervisory, and quality control procedures of the firm as are necessary or appropriate.[③] In practice, such inspections largely involve inspecting the auditing working papers of the firm.