Still no agreement on inspections of Chinese auditors.
After a decade of on-again, off-again negotiations, the PCAOB has still not reached an agreement to inspect Chinese accounting firms with clients listed on U.S. stock exchanges. During a hearing of the U.S.-China Economic and Security Review Commission (USCC), a panel created by Congress to examine bilateral issues, some financial professionals said the PCAOB needs to consider a new approach, given the country's determined resistance to examining audit firms on Chinese soil. “The PCAOB could follow the lead of the European Union and negotiate regulatory equivalency under which the PCAOB would accept the work of Chinese regulators as their own,” said Paul Gillis, author of the China Accounting Blog, during a January 26 hearing of the USCC. To address the obvious shortcomings of inspection equivalency, Gillis said the PCAOB could try to get Chinese regulators to agree to a process that would allow the U.S. board to examine the Chinese inspectors.
Planned auditor report rule on hold until SEC has new chairman.
PCAOB Chairman James Doty has said the audit regulatory board will not finalize its rules for an expanded auditor's report until the SEC's next chairman is sworn in. On January 4, incoming President Donald Trump named corporate attorney Jay Clayton, a partner with Sullivan & Cromwell LLP, to head the agency. Clayton must be confirmed by the Senate, but the Banking Committee has yet to announce a confirmation hearing. “It seemed to be a good idea as the work became complete to give a new chair a chance to know where we are,” Doty said during a brief interview after he moderated a panel discussion at the Center for Audit Quality's 10th anniversary event on January 30 in Washington.