The Public Company Accounting Oversight Body (PCAOB) chairman James Doty hopes the first inspection of a PCAOB-registered mainland Chinese audit firm could be conducted before the end of the year, following the meetings of the US-China Strategic and Economic Dialogue held in Beijing earlier this month.
Discussions about cross-border audit oversight, a topic included in the agenda by the US Treasury Department, continued with meetings between the PCAOB and both China’s Securities Regulatory Commission and Ministry of Finance, bringing progress to the negotiating table.
Expressing his own views for The Accountant’s forthcoming annual survey on the US profession, Doty said: "I believe, since I came on the scene in 2011, that this is win-win for both of us: We both have an interest in investor protection, related to market confidence and the integrity of audits."
Doty noted that the upsurge in Chinese initial public offerings, as well as the desire to see their securities accepted in other markets around the world, intensifies this mutual need to "seize this opportunity and move forward".
"This is a nine-year effort by people involved in both nations. It’s been worth the effort, especially if it comes to fruition. That would also benefit investors in China and the US," Doty told The Accountant.
The PCAOB, which has 46 Chinese registered audit firms, and its Chinese counterparts signed an agreement on May last year, which covered only cross-border enforcement cooperation but not inspections.
If finally signed, the inspection agreement with China would add to the 44 international deals already in place which have allowed carrying out inspections of registered non-US firms since the PCAOB started its international program in 2004.
Last week the PCAOB and the Danish Business Authority (DBA) agreed to a mutual oversight framework. Doty added further progress has been made in negotiations with regulators in new jurisdictions.
"The PCAOB is close to sign protocols with Belgium, Italy, Luxemburg and Portugal," Doty said.