To protect investors and to carry out the (Public Company Accounting Oversight Board) PCAOB’s mandate, our inspectors and investigators need consistent access across all jurisdictions to the audit work performed for public companies in U.S. capital markets, PCAOB Acting Chairperson Duane M. DesParte said in a December press release.
U.S. firms regulators with access to a foreign company’s financial documents for three years if they want to trade securities in the United States, WSJ reported.
However, in recent news, the Securities and Exchange Commission, the PCAOB and the China Securities Regulatory Commission have agreed to work together to allow certain Chinese companies, who China believes to be low risk with containing sensitive national security information, to facilitate inspections by the PCAOB.
As a result, Chinese companies are hiring U.S. registered accounting firms as their primary auditor as a means to be in compliance with the act. Regulators can then have access to the audit records for the accounting firm’s clients.