China, US in Talks About Future Audit Regulations
Chinese and US financial regulators have gathered on Monday in a symposium that will define the future of audit regulations.
The Sino-U.S. Symposium on Audit Oversight held in Beijing on July 11-12, 2011 was attended by officials of the China Securities Regulatory Commission (CSRC), the Chinese Ministry of Finance (MOF), the U.S. Public Company Accounting Oversight Board (PCAOB), and the U.S. Securities and Exchange Commission (SEC).
This followed an earlier dialogue between the SEC and the Capital Markets Board of Turkey, in which both regulators renewed their relationship to enhance cooperation and collaboration aiming to promote investor protection, foster market integrity, and facilitate cross-border securities activities between the two countries.
The regulators said the symposium, which was contemplated by the outcomes of the third US-China Strategic and Economic Dialogue (S&ED), represented an “important step” toward copperation between China and U.S. on audit regulations of public companies.
At the symposium, the officials briefed each other on their respective audit oversight system and inspection procedures. They also exchanged views on how to deepen cooperation on cross-border audit oversight.
CSRC Chairman Shang Fulin said: “The CSRC and MOF welcome constant communication and good cooperation with both the SEC and PCAOB.
“The regulators of both countries share common objectives in protecting investors’ rights and interests, raising the quality of accounting and auditing standards, and improving the transparency and disclosure of public companies.
“Therefore, the regulators of both countries should enhance cooperation on the basis of mutual trust and respect.”
Chairman Shang met with the SEC-PCAOB delegation headed by Lewis Ferguson, PCAOB Board Member, and SEC Deputy Chief Accountant Mike Starr, prior to the symposium.
In a letter to Shang, PCAOB Chairman James Doty said he is expecting for constructive discussions in Beijing and for enhanced cooperation between China and the U.S. on cross-border audit oversight in the near future.
“The development of an effective cross-border oversight system is essential to market integrity and investor protection, and the PCAOB and CSRC share a common goal of promoting fair, open, and sound markets,” Doty said in the letter.
Meanwhile, Ferguson said: “Our delegates are willing to share with our Chinese counterparts the PCAOB inspection approaches as well as our practices in joint cross-border audit oversight.
“In return, the U.S. delegation expects to learn more, through future exchanges, about the methodology and practices of accounting and audit oversight in China.”
After the third US-China Strategic and Economic Dialogue, both sides welcomed continued dialogue concerning the oversight of accounting firms providing audit services to public companies in the two countries to enhance mutual trust and strive to reach an agreement on cross-border audit regulations.
During the two-day symposium, the PCAOB representatives explained how the Board works with foreign regulators on cross-border audit oversight cooperation, with input from the SEC delegation, including officials from the SEC’s Office of International Affairs.
The PCAOB representatives also gave detailed presentations on the background and organizational structure of the PCAOB, and its inspection process.
Senior officials from the CSRC and the MOF provided an overview of the audit regulations framework governing China’s capital markets, supervision arrangements, and inspection methodology and process for accounting and auditing firms. Subsequently, the two sides discussed initial arrangements for follow-up collaboration.
A series of arrangements that aim to build mutual understanding and cooperation in the near future was also discussed, including sending staff to observe the inspection of accounting firms in each other’s jurisdiction to learn more about the inspection process and methodology of one another.
The U.S. delegation invited the CSRC and the MOF to send delegates to Washington, D.C. to have further discussions on the topics of common concern.
Both parties believe that strengthened cooperation on audit oversight is an important part in implementing the S&ED outcomes.
“The parties share the view that increasing cooperation on cross-border audit oversight will help improve the quality of auditing and accounting information of public companies, protect the rights of investors, and assist in safeguarding of financial markets in both countries,” regulators said.