China should permit U.S. inspectors to review auditors in that country to improve investor confidence in the books of U.S.-listed firms, said James Doty, chairman of the Public Company Accounting Oversight Board, which oversees U.S.-registered auditors.
Doty told reporters at a conference in New York yesterday that the market mistrusts the value of the Chinese balance sheet.
Officials from the PCAOB and the Securities and Exchange Commission went to China in July to discuss the possibility of joint audit inspections. A follow-up meeting in the U.S. was canceled by the Chinese last month and hasn’t been rescheduled, Doty said.
Doty said the Chinese have expressed concerns that the inspections could reveal state secrets. He said he’s hopeful that the negotiations will be able to continue as Guo Shuqing, 55, takes over the China Securities Regulatory Commission.
The board is funded by audited companies and overseen by the SEC. It has the authority to block registration of China-based auditors or to de-register them.