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Clash of the Balance Sheets

The US Security and Exchange Commission strives to prevent investment fraud. Firms issuing public stock must submit to annual audits, confirmed independently. Since the Enron scandal in 2001, auditors are monitored by the Public Company Accounting Oversight Board. The US Securities and Exchange commission has charged Chinese affiliates of five accounting firms for refusing to hand over information on Chinese companies, reports Patrick Chovanec for Foreign Policy, who points out that foreign companies “submit themselves to SEC regulation in order to tap U.S. and global investors for funds via U.S. markets.” Concerns have emerged about holding structures of some Chinese firms as well as reports of curtailment of short-selling research in China. China claims the oversight board violates national sovereignty. If Chinese auditors are de-registered, hundreds of firms could be delisted from US exchanges, reducing value of those investments. The move would also complicate business for multinationals that earn substantial revenues in China, which must be verified by authorized Chinese auditors for the US audits. – YaleGlobal

Clash of the Balance Sheets

The big showdown between China and the US is at the US Securities and Exchange Commission, with an investigation of audit practices
Patrick Chovanec
Foreign Policy , 11 December 2012
Foreign Policy reports on an SEC investigation of audit practices.

Patrick Chovanec is associate professor of practice at Tsinghua University's School of Economics and Management in Beijing and US-registered Certified Public Accountant.

Source:Foreign Policy