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Audit watchdog raises coronavirus concerns

Accountancy regulator the Financial Reporting Council (FRC) has raised the alarm over the potential impact of the coronavirus crisis on the audit of multinationals with considerable operations or subsidiaries in China. 

The FRC has begun talks with major audit firms about possible delays in approving clients’ accounts, Sky News reports. 

This is due to Chinese data protection law, which requires the auditing of companies to be conducted within the country. The Chinese government does not allow audit papers to leave China or be viewed remotely online. 

The FRC has asked audit firms to identify audits that may be at risk of delay beyond the statutory deadline.

Earlier this month Burberry said it had been forced to close 24 of its 64 Chinese stores and that that the coronavirus outbreak has resulted in a “material negative effect” on luxury demand in the Chinese market. 

Sportswear giant Nike also announced the temporary closure of half of its stores in China as the coronavirus outbreak continues to develop.

The FRC has been contacted for comment. 

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