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Bid to bar Chinese audit firms criticized

By Cai Xiao  (China Daily)

09:52, November 24, 2011

BEIJING - US Senator Charles Schumer's call to bar Chinese agencies from auditing firms trading on the US market is the latest reflection of the US government's protectionism in service trades and does not benefit either country, local companies and industry experts said on Wednesday.

"Schumer's proposal actually reflects protectionism in service trades. And I am afraid that cooperation between US accounting firms and Chinese ones will be affected," said Liu Dongdong, a partner at the China branch of Grant Thornton, a leading accounting and consulting organization

Liu told China Daily that many Chinese companies traded on the US market are audited by small US accounting firms and only a few audits are made by Chinese agencies.

Liu added that when China's accounting firms develop businesses abroad, they will seek foreign counterparts to cooperate or set up their own overseas branches, as foreign firms do in China. He is concerned that if the proposal were adopted, they would lose all work in the US.

The Wall Street Journal reported on Tuesday that Schumer said in his letter to the Public Company Accounting Oversight Board that it should suspend or revoke its registration of Chinese accounting firms that it has been blocked from inspecting, thus barring them from preparing audit reports on companies that trade on US markets.

According to the newspaper, Schumer criticized the oversight board's "failure to do what it was created to do - particularly in the face of Chinese corporate accounting scandals".

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