The US-China Audit Agreement: Understanding What it Entails
The US-China audit agreement is an agreement between the United States and China, which seeks to improve the quality of audit work in both countries. The agreement was signed in May 2013, and it has had significant implications on the auditing profession in both countries.
The background of the agreement
The agreement was signed following a dispute between the US regulatory bodies and Chinese auditors of US-listed companies. The dispute was centered on the quality of audit work of Chinese auditors who were responsible for auditing US-listed companies.
The US regulatory bodies were concerned that Chinese auditors were not conducting their audit work in accordance with the US auditing standards. In addition, the regulatory bodies were concerned that Chinese auditors were not providing access to their audit workpapers, which was necessary for the US regulatory bodies to perform their regulatory duties.
The implications of the agreement
One of the main implications of the US-China audit agreement is that it allows US regulators to gain access to audit workpapers of Chinese auditors. This ensures that US-listed companies audited by Chinese auditors are held to the same standards as those audited by US auditors.
In addition, the agreement also requires Chinese auditors to cooperate with US regulators during investigations, thereby providing greater transparency in the auditing process. This has helped to restore confidence in US-listed Chinese companies, which had previously suffered reputational damage due to concerns about the quality of their audit work.
Another implication of the agreement is that it has spurred competition in the auditing profession in both countries. Due to the increased scrutiny of Chinese auditors, US investors are now more likely to demand that US-listed companies have their audit work conducted by US auditors. This has resulted in an increase in demand for US auditing firms, which has helped to create new job opportunities.
Conclusion
The US-China audit agreement has had significant implications on the auditing profession in both countries. It has ensured that US-listed Chinese companies are held to the same standards as those audited by US auditors and has helped to restore confidence in these companies. Furthermore, it has spurred competition in the auditing profession, which has created new job opportunities. Overall, the agreement has been a positive development for the auditing profession in both the US and China.
