Tuesday, October 25, 2011

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U.S. watchdog warns on China audits

(Reuters) - Any attempts by China to bar Massive 4 auditors from shipping summaries of Chinese audits beyond that country for evaluation within the United States or elsewhere would constitute "a long-arm interdiction" involving the actual firms' internal work, the top U.S. audit business watchdog stated on Monday.

From a frank assessment of an dispute over inspecting audits of U.S.-listed Chinese companies, U.S. Public Business Accounting Oversight Board Chairman James Doty stated talks among U.S. and Chinese officials had hit "new bumps within the road."

Chinese officials have postpone meetings within the matter that was scheduled because last summer, Doty said in a very speech to the National Association of State Boards of Accountancy.

Citing news accounts of latest meetings in between Chinese regulators and global audit firms, Doty said any Chinese moves to restrict the flow of audit work papers "would go well beyond keeping PCAOB inspectors due to China."

The PCAOB and SEC have already been negotiating because of their Chinese counterparts for various months over the concern of joint audit inspections. Recent auditing problems at U.S.-traded corporations situated in China have shone a spotlight on any concern.

Globalization has stretched the frontiers of auditing and weakened investor protection. Doty stated.

As a result, he stated, "U.S. markets and investors have been unfairly taken benefit of by people who want the rewards of yankee markets although not American rules."

Chinese regulators have asked china arms in the world's biggest audit firms to review their work on U.S.-listed Chinese companies and present details concerning the information and facts they may have provided to overseas regulators, two sources told Reuters a couple weeks ago.

The unprecedented move followed a string of accounting scandals at U.S.-listed Chinese providers. It may well throw a wrench into Chinese expansion efforts with the Large 4 auditors: Deloitte, KPMG, PricewaterhouseCoopers and Ernst & Young LLP.
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