US and China commit to cross-border audit inspections

US and China commit to cross-border audit inspections

US audit watchdog expects to conduct inspections of mainland Chinese audit firms by the end of the year

OFFICIALS from China and the US have committed to cross-border audit inspections in a deal that could end a long-running dispute between the two countries securities regulators, a leading US audit regulator has said.

Jim Doty, head of the PCAOB, said the US audit watchdog expects to conduct its first inspection of a mainland Chinese audit firm by the end of the year, Reuters reported.

Protocols for the inspections, which were agreed last week, are expected to be finalised in the coming months, Doty told Reuters.

US and Chinese regulators have been in dispute over access to auditing documents of Chinese companies listed on the US stock exchange.

In January, a Securities and Exchange Commission judge ruled that Chinese units of the Big Four accounting firms should be banned from conducting audits of US-listed companies. The ruling has yet to come into effect and the firms said they intended to appeal the ruling.

In 2012, the SEC accused the Big Four, and BDO’s Chinese affiliate, of breaking securities laws by refusing to produce documents related to their audits of several China-based clients under investigation for fraud.

The actions stemmed from a broader inquiry into Chinese companies listed on American exchanges.

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