In a historic agreement that serves as the first step in preventing further delistings from New York exchanges, the United States and China have agreed to permit American authorities to examine the audits of U.S.-listed companies with headquarters in China and Hong Kong.

By signing the agreement with the China Securities Regulatory Commission and the People’s Republic of China’s Ministry of Finance, the Public Company Accounting Oversight Board made it possible for inspectors from the PCAOB to fly to Hong Kong and start on-site audits by the middle of September.

Now that the agreement is in place, the PCAOB should, for the first time, have “full access” to choose which businesses it inspects, read all of the audit work papers, and speak with anyone connected to the audits being looked at. Officials point out that the agreement is merely one part of a strategy to keep 200 companies from being delisted from American exchanges.

According to PCAOB Chair Erica Williams, the agreement includes “no loopholes and no exceptions,” thus the real test will be whether the words agreed to on paper translate into complete access in practise.

The inability of the PCAOB to review the auditing of Chinese and Hong Kong-based companies listed on the New York Stock Exchange and Nasdaq has been a source of friction between Washington and Beijing for years.

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