Sunday, September 23, 2012

PCAOB in tentative deal to observe China official auditor' inspections

Chicago Tribune reported that the a tentative agreement has been reached by PCAOB of U.S. to observe official auditor inspection in China.


After the infamous Sino Tech Engergy Ltd incident, US investors are cautious in dealing with the trading of China-based companies listed on U.S. Exchanges. PCAOB announced that “We are working toward and have tentatively agreed on observational visits".

This is a move for PCAOB to observe the audit firms’ quality control over the auditing industry within China.

We, Accounting & Auditing blog, view this move positively. As the observation will allow PCAOB to develop understanding of the audit firms’ quality, high level understanding of audit procedures’, controls exercised by China relevant regulatory authority. Any difference in expectation may be communicated by PCAOB to China authority, in order to allow the China authority to close any gap.

In the long term, we expect close border listing to become more common and frequent, an overview by the authority from U.S. stock exchange may assist in clearing the obstacles / anxiousness the market may have towards the China-based company. We hope to hear more good progress in the future.

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