Chinese and US audit oversight authorities
have noted progress in bilateral talks designed to allow
cross-border inspections of audit firms.
Officials from the US Public Company Oversight
Board (PCAOB) and the Securities and Exchange Commission (SEC) met
up with the Chinese Ministry of Finance and China Securities
Regulatory Commission at a two day symposium recently.
The SEC-PCAOB delegation was headed by Lewis
Ferguson, a PCAOB board member and SEC deputy chief accountant Mike
“Our delegates are willing to share with our
Chinese counterparts the PCAOB inspection approaches as well as our
practices in joint cross-border audit oversight,” Ferguson said.
“In return, the US delegation expects to learn more, through future
exchanges, about the methodology and practices of accounting and
audit oversight in China.”
The two sides discussed a series of
arrangements aimed at building mutual understanding and
co-operation, including sending staff to observe the inspection of
accounting firms in each other’s jurisdiction to learn more about
each other’s inspection process and methodology. For example, the
US delegation invited the CSRC and the MoF to send delegates to
Washington, DC, to have further discussions on the topics of common
Both parties described the discussions as an
important step although details on exactly what progress has been
made are thin.
Since 2007, the PCAOB has been engaged in
discussions with Chinese counterparts regarding a bilateral
agreement that would enable the PCAOB to conduct inspections of
audit firms in China.
PCAOB registrants include more than 900 non-US
auditing firms from 87 jurisdictions, including 110 firms in China
and Hong Kong.
US legislation requires all firms who audit
SEC listed companies to undergo inspections by the PCAOB at least
once every three years, regardless of where the public company and
the audit firm are located.
Until now, the PCAOB has been blocked from conducting inspections
of 53 PCAOB registered firms in China, including Big Four
affiliates, due to Chinese sovereignty concerns.