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China and US concede cross-border audit inspections

US and China officials have pledged to undergo cross-border audit inspections in a agreement that could bring a long-term dispute between the securities regulators of each nation to an end, said a key US audit regulator.

The head of the Public Company Accounting Oversight Board, Jim Doty, said that the US audit watchdog is ready to perform the initial inspection of a mainland Chinese audit firm by 2015, according to Reuters.

Doty told Reuters that inspection protocols, which an agreement was made on earlier this month, are estimated to be complete within the next few months.

Chinese and US regulators have been at loggerheads over accessing the information of Chinese firms listed on the US stock exchange.

Earlier in 2014, a judge from the Securities and Exchange Commission gave a ruling that Chinese units of the Big Four accounting companies should no longer be able to conduct audits of US-listed firms. The ruling has now been implemented, but the companies have expressed their intent to appeal.

Two years ago, the Big Four, along with BDO’s Chinese affiliate, were accused by the SEC of breaking the law by withholding information regarding their audits of a number of clients based in China being investigated for fraud.

These actions came from a wider investigation into Chinese firms listening in on American exchanges.

Such a broad inspection may not seem relevant to a small business, but HM Revenue and Customs has a job to do too. An accountant in the Wirral is more than capable of handling a small firm’s books and ensuring that the numbers are up to date and accurate, so that any potential problems can be avoided.

Posted by Louise
July 24, 2014
Research & Statistics

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