China gives U.S. regulators access to audit records

China agreed to give a U.S. regulator access to documents from Chinese accounting firms, moving toward a resolution of a dispute that could have pushed the country’s companies to stop trading on U.S. stock markets.

The Public Company Accounting Oversight Board, the China Securities Regulatory Commission and China’s Ministry of Finance signed the agreement, the ministry said in a statement on its website Friday. The deal is a step toward resolving other disputes including one with the U.S. Securities and Exchange Commission.

The SEC last year accused affiliates of the world’s top four auditing firms of withholding documents from investigators probing potential fraud by China-based companies. Auditors that don’t comply with the regulator’s demands face temporary or permanent deregistration in the U.S., according to the rule under which the proceedings were brought, meaning they wouldn’t be able to audit U.S.-listed companies.

Deloitte Touche Tohmatsu CPA Ltd., Ernst & Young Hua Ming, KPMG Huazhen and PricewaterhouseCoopers Zhong Tian CPAs Ltd. refused to cooperate with accounting investigations into nine companies whose securities are traded in the U.S., the SEC said in an administrative order in December. BDO China Dahua Co. was also named by the SEC in the action.

The auditors had said Chinese law prevented them from meeting the SEC’s demands.

The agreement allows the accounting board to share the records with the SEC, which says it needs access to the documents to protect U.S. investors from fraud.