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PCAOB Negotiations with China Fall Apart

Chris Gaetano
Published Date:
Nov 9, 2015
ChinaNegotiations between the Public Company Accounting Oversight Board (PCAOB) and the Chinese government have fallen through, despite years of talks that the board had hoped would eventually result in a joint inspection agreement similar to the ones it had already drafted with countries like the U.K., Switzerland and Israel, according to Bloomberg. However, the Chinese were apparently uncomfortable with such an idea, as the terms they offered on the deal were considered too narrow to be worth pursuing further, according to Bloomberg. This is a dramatic shift from the board's previous assessment on negotiations, with Chair James R. Doty saying last year that a deal was almost complete and that inspections on Chinese audit firms could soon begin. A major sticking point in negotiations was that a program of the type the PCAOB was proposing would have run afoul of China's strict laws on sharing information with foreign entities. The PCAOB, meanwhile, has expressed concern on numerous occasion about the accuracy of the numbers coming from Chinese audit firms on companies seeking to be listed on U.S. exchanges. With the breakdown in negotiations, it's unclear what will happen now, though Bloomberg said a spokeswoman with the PCAOB stated that the board will continue to work on a resolution.  

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