July 15, 2014 / 9:22 PM / 5 years ago

U.S. audit watchdog says Chinese inspections may start this year

(Reuters) - The top U.S. auditor regulator said it expects to conduct its first inspection of a mainland Chinese audit firm by the end of the year, under an expected deal to resolve a long-running dispute between the United States and China regarding accounting oversight.

Officials from the two countries committed to cross-border inspections during high-level annual talks held last week in Beijing, said James Doty, head of the Public Company Accounting Oversight Board, the main U.S. auditor watchdog.

Protocols for the inspections are expected to be hammered out in coming months, Doty told Reuters on Tuesday.

The PCAOB has been struggling for years to gain access to China to inspect auditors of mainland companies that sell shares in the United States.

The issue took on urgency amid a wave of accounting scandals at U.S.-listed Chinese companies that saddled American investors with billions of dollars in losses in recent years.

Auditors that check the books of U.S.-listed firms must be registered with the PCAOB and open to inspections, but China had barred U.S. inspectors for years over sovereignty concerns.

The commitment on inspections came during meetings between the PCAOB, senior Chinese securities regulators and officials from China’s Ministry of Finance at the U.S.-China Strategic and Economic Dialogue last week, Doty said.

A recent resurgence of initial public offerings by Chinese companies in the United States has made it more important to resolve the inspections issue, he said.

The PCAOB was formed by Congress to police the auditing industry in the wake of accounting scandals at Enron and WorldCom.

Reporting by Matt Miller in Beijing; Writing by Dena Aubin in New York; Editing by Kevin Drawbaugh and Diane Craft

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