The deadlock between the USA and China over the long held dispute on audit inspections of USA listed Chinese companies might finally be broken, as it is reported that the PCAOB will be able to inspect the audits of Alibaba Group Holding Ltd.and Baidu Inc.
Chinese tech giants the Alibaba Group and Baidu Inc and their audit firms are preparing for inspections by the USA audit regulator, the Public Company Accounting Oversight Board (PCAOB), according to the Wall Street Journal. While Baidu is audited by Ernst & Young (EY), Alibaba is audited by PricewaterhouseCoopers (PwC).
This would be the latest development in an on-going dispute which goes back years as the Chinese Big Four firms refused to show their audit papers of USA listed companies to the USA regulator on the basis that Chinese regulation prohibits foreign regulators to inspect Chinese data, citing it as an infringement of sovereignty. However, the USA argues that Chinese firms must disclose the necessary information under the US Sarbanes-Oxley Act.
In 2014 the USA SEC issued a ban on the Chinese Big Four which was subsequently appealed and a settlement was reached in February 2015, allowing for further discussions between authorities of both countries.
a spokesperson for the PCAOB said: "The PCAOB continues to work toward obtaining access to the information we need in order to conduct the necessary inspections of registered firms in China and Hong Kong, but we do not disclose, or confirm or deny rumors about, specific audits reviewed in any inspection."
EY declined to comment on the matter when contacted by International Accounting Bulletin.
At the time of publication PwC had not responded to our enquiries.
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