Today, Congressman Blaine Luetkemeyer (R-MO) questioned the Securities and Exchange Commission (SEC) Chairman Gary Gensler on multiple issues related to his role including the enforcement of the Holding Chinese Listed Companies Accountable Act.

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“Chairman Gensler, the 2022 PCAOB inspection reports of mainland China and Hong Kong accounting firms, which audit U.S.-listed Chinese companies, were scathing and a reminder that financial statements produced by CCP-controlled companies should never be trusted.

“Both reports showed unacceptable rates of Part I.A deficiencies, which are deficiencies so large that PCAOB staff believe the audit firm failed to obtain sufficient audit evidence to support its work on the public company’s financial statements. Essentially, the audits were useless.

“Is it correct that under the Holding Foreign Companies Accountable Act, those two firms, which failed so spectacularly here, will not be inspected again by the PCAOB for another two to three years?” Rep. Luetkemeyer said.

“I’m not familiar enough with the PCAOB’s rotating schedule. It is accurate that when the PCAOB goes in to inspect an auditing firm in any country they sometimes aren’t able— they sometimes don’t have the staff to go in on an annual basis,” Chair Gensler said.

“The premise is correct there, where they only have to do it every two to three years, and so Mr. Sherman and I introduced a piece of bipartisan legislation to require them to have an annual audit. As we saw in 2020, there were a thousand companies on the exchange, now stand between 250 and 300. A lot of them were shell companies and when we threatened to audit, suddenly they disappeared. Funneling of our capital to Chinese companies/the Chinese government and Communist Party has got to stop,” Rep. Luetkemeyer said.