Published: Wednesday, 11 Jan 2012 | 6:26 PM ET
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By: Reuters
The top U.S. audit watchdog said U.S. and Chinese regulators must come to an agreement by late 2012 on joint auditor inspections, as a delegation from China began talks with officials in Washington.
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James Doty, chairman of the Public Company Accounting Oversight Board, discussed the round of negotiations with reporters shortly after the U.S. Securities and Exchange Commission voted at a meeting on Wednesday to approve the PCAOB's 2012 budget.
The SEC and PCAOB have been working with the Chinese to try to hash out a deal in response recent accounting scandals at several Chinese companies listed on U.S. stock exchanges.
In a number of cases, auditors have resigned after discovering accounting irregularities at the companies, some of which became listed on U.S. exchanges through a back-door process known as a reverse merger.
During the question-and-answer portion of the SEC's open meeting, Doty told commissioners there are 36 China-based auditors which are issuing audit opinions and "have not performed the basic obligations."
The SEC and Justice Department are investigating the accounting problems, and the SEC has taken a number of enforcement actions in this area.
"I'm confident of only one thing... it is in their interest to get to joint inspections. We will not be in a position to go forward and do what we should without some agreement," Doty said. "If we are not inspecting in the fall in China, I am not optimistic about it."
Later, an SEC spokesman confirmed that Chinese officials had met with their SEC counterparts on Wednesday.
