US regulators said on Monday that they have made progress with their Chinese counterparts on allowing American inspections of Chinese audit firms, the Wall Street Journal reported. Inspectors from the US Public Company Accounting Oversight Board (PCAOB) want to be able to apply the same level of scrutiny to Chinese firms which audit companies attempting to list in the US as they do to US audit firms. But Chinese authorities have not yet allowed PCAOB inspectors into China to evaluate local audit firms, including domestic affiliates of large multinational auditors. The PCAOB has called the policy “a gaping hole in investor protection” following a wave of scandals surrounding US-listed Chinese companies, which stand accused of a variety of corporate governance problems ranging from misstatements of financial condition to outright fraud. A PCAOB member referred to the recent meetings as a “trust-building exercise.” However, the announcement was vague on particulars and there has been no equivalent comment from the Chinese side, which wants the PCAOB to rely entirely on Chinese inspectors instead of sending US inspectors to work in tandem with Chinese regulators.