The House of Representatives is set to vote on a bill that would require Chinese companies, among other things, to undergo audits compliant with the Public Company Accounting Oversight Board (PCAOB) in order to be listed on U.S. exchanges, reported Accounting Today. It is the House version of a Senate bill that passed in May. The House bill requires that a foreign company either allow the PCAOB to inspect its audit firm for three consecutive years or, alternately, certify that it is not under control of a foreign government. If a company does not comply, it would be banned from U.S. exchanges.

The PCAOB has long struggled with lack of access to the auditors of Chinese firms listed on U.S. exchanges. Despite years of negotiations, talks to allow inspectors into Chinese firms eventually fell apart. A major sticking point in the talks was that what the PCAOB wanted ran afoul of Chinese laws that severely restrict what information can be given to foreign actors. The PCAOB, meanwhile, has expressed concern on numerous occasion about the accuracy of the numbers coming from Chinese audit firms on companies seeking to be listed on U.S. exchanges.

Accounting Today noted that the House bill will be considered Wednesday under a streamlined process that limits debate on the House floor, allows no amendments, and requires approval by two-thirds of members present and voting to pass. It seems unlikely House leaders would do this if they were not confident that the bill would pass this way; given that the Republican-dominated Senate passed the bill's first version before the Democratic House took it up, its passage in both chambers would indicate a strong bipartisan appeal for the measure.

The executive branch is also acting on this matter. The Securities and Exchange Commission is preparing to release preliminary rules that would, similar to the House and Senate bills, require Chinese companies to undergo PCAOB-compliant audits or else be delisted from U.S. exchanges. The proposal will likely be released sometime in December.