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Should China Auditors Reveal True Identities?

A proposal would require auditors to sign their reports.

In part due to the influx of accounting scandals - particularly those involving China-based companies - regulators are floating a proposal that would require the people conducting audits to sign their reports, The Wall Street Journal says.

The Public Company Accounting Oversight Board is currently looking for public opinions on the suggestion to require disclosure of who conducts an audit, to share the names of any other individuals or firms that were also involved and to make changes to the Board's Annual Report Form. In the proposal, the board says that the engagement partner is the one responsible for the audit and its performance, meaning he or she also has to supervise any other people or firms working on the report.

"Generally, however, little, if any, of this is transparent to investors," the board proposal reads. "The audit report typically contains no information about who served in the role of engagement partner, or whether the firm issuing the report actually performed all of the work."

Board member Daniel Goelzer told Reuters that it has become more common for small accounting firms in the U.S. to audit foreign companies, but that they often contract out some of the work to companies in China. Investors are none the wiser, and that's the problem, he said.  

Comments

Barrett Peterson
Title: Senior Manager, Actg Stnds & Analysis
Company: TTX
(Senior Manager, Actg Stnds & Analysis, TTX) |

Their use and name should be clearly stated, together wiht any "network of firms" of which they are part, if any.