US/China Regulatory Dispute Intensifies

Author:Mr Thomas White
Profession:WilmerHale
 
FREE EXCERPT

Companies with operations in China, and their audit committees, should keep an eye on the dispute between securities and accounting regulators in the United States and China. Recently, the Securities and Exchange Commission sued five Chinese accounting firms (all associated with global accounting networks) for failing to produce documents related to SEC investigations of Chinese companies listed in the US. Meanwhile, members of the Public Company Accounting Oversight Board have expressed frustration about the PCAOB's inability to inspect Chinese registered public accounting firms that audit Chinese companies listed in the US. Both the SEC's and the PCAOB's efforts have been impeded by their inability to reach satisfactory cooperation agreements with the China Securities Regulatory Commission. China, for its part, has objected to disclosure of documents to US regulators and inspection of China-based accounting firms on sovereignty and state secrecy grounds.

The SEC's lawsuit seeks sanctions against the firms under its Rule 102(e), which can include barring the firms from auditing financial statements of US issuers. Members of the...

To continue reading

FREE SIGN UP