US auditors tentatively gain observer access to China

Chinese and US authorities tentatively agreed to allow US observers increased access to Chinese auditors, an area of dispute in recent years as foreigners are typically shut out of the process, Reuters reported. Lewis Ferguson, a board member of US watchdog Public Company Accounting Oversight Board (PCAOB), released a statement saying that PCAOB inspectors will watch as Chinese officials examine audit firms’ quality control. It will be a “trust-building exercise” as the US Securities and Exchange Commission and the PCAOB seek broader rights to obtain documents from Chinese companies in their investigations, the statement said. The PCAOB has been trying to gain access in China in response to a growing number of scandals at US-listed Chinese companies since 2010. China argues that any foreign regulation raises sovereignty concerns, despite the fact that such regulation is a condition of listing in the US.