US clamour over Chinese auditing firms is increasing in volume. At the beginning of November James Doty, chairman of the US’s Public Company Accounting Oversight Board (PCAOB), called for the PRC to allow his staff to check the work of Chinese audit firms. Now politicians are weighing in, including Senator Charles Schumer, a Democrat on the Senate Banking Committee. Schumer wrote to Doty in November urging “immediate disciplinary actions against Chinese audit firms that continue to refuse to cooperate”.
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Currently 110 audit firms from mainland China and Hong Kong are authorized by the PCAOB to audit the accounts of US-listed companies. It is understood that the PCAOB authorized these firms in the expectation that it would eventually be allowed jointly to inspect them alongside the PRC authorities.
However, China has rejected this request, asserting that it has its own set of accounting rules and procedures. According to Doty, the PCAOB’s ultimate sanction would be to deregister Chinese audit firms. This could prevent them from auditing the accounts of the China subsidiaries of US-listed companies.
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