PCAOB, SEC to Meet With Chinese Officials on Auditing Oversight

July 7, 2011

 

The PCAOB said Wednesday that a joint PCAOB-SEC delegation will meet next week in Beijing with representatives of China’s Ministry of Finance and the China Securities Regulatory Commission (CSRC) to discuss issues relating to auditing oversight. 

 

“This meeting is the commencement of our accelerated efforts with the People’s Republic of China to forge a cooperative resolution to cross-border auditing oversight,” PCAOB Chairman James Doty said in a news release. “I believe we share a common objective with Chinese regulators to protect investors and safeguard audit quality through our mutual cooperation.”

 

The delegation will be led by PCAOB member Lewis Ferguson and include staff from the PCAOB Office of International Affairs and Division of Registration and Inspections, and the SEC Office of International Affairs and Office of the Chief Accountant. The delegation will meet with senior leadership of China’s Ministry of Finance and the CSRC.

 

“The purpose of this meeting is to provide an opportunity to exchange information about how each country conducts inspections of auditing firms and to move toward a bilateral agreement providing for joint inspections of China-based auditing firms registered with the PCAOB,” Ferguson said in a release.

 

Since 2007, the PCAOB has engaged in discussions with its Chinese counterparts regarding a bilateral agreement that would enable the PCAOB to conduct inspections of auditing firms in China. Recently, both the PCAOB and Chinese authorities have committed to accelerating their efforts to reach an agreement.

 

The Sarbanes-Oxley Act of 2002 requires all public companies whose securities trade on U.S. exchanges to use an audit firm that is registered with the PCAOB, regardless of where the public company and the audit firm are located. To date, the PCAOB has been blocked from conducting inspections of auditing firms in China due to sovereignty concerns raised by Chinese regulators.

 

Currently, PCAOB registrants include more than 900 non-U.S. auditing firms from 87 jurisdictions, including 110 firms in China and Hong Kong.

 

One of Doty’s greatest priorities is gaining access to China to conduct inspections of PCAOB-registered firms. In an April interview with the JofA, he said that meaningful progress was made at the U.S.-China Strategic and Economic Dialogue that took place in Washington on May 9.

 

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