There are two articles out today reporting on an interview given by James Doty, Chairman of the PCAOB. Doty indicates in the interview that progress was achieved during his recent visit to China where he met with CSRC chairman Guo Shuqing and senior MOF officials.
"We ought to be able to observe the inspections they conduct in the late summer or fall, and certainly by the end of the year" Doty is reported to have said. Chinese regulators suggested that PCAOB inspectors observe Chinese inspections of the audits that are done in China of U.S. listed companies. Doty cautioned, however "one can never guarantee the outcome of this". Doty indicates that the PCAOB has a number of Chinese speaking inspectors.
Observations of Chinese regulators will not meet the statutory requirement of a PCAOB inspection of all auditors of U.S. listed companies, but it is a good start. This is an important step forward that may avert the disaster that would occur if the PCAOB were forced to deregister all Chinese auditors. There is still a lot of hard negotiating ahead, but this is the first good news in some time.