Securities and Exchange Commission Chair Jay Clayton on Monday said major accounting firms should provide more oversight of Chinese companies as the coronavirus outbreak impacts the economy.
Many Chinese firms are state-controlled, meaning the Public Company Accounting Oversight Board cannot complete an audit of all their records.
"Late in the fall last year and in the last couple of weeks, I and my colleagues have met with the big four accounting firms and said, 'What are you doing to do more in light of the fact that the PCAOB can't go out and inspect these audits of these Chinese firms?'" Clayton told Fox Business on "Mornings with Maria" on Monday.
"Around the world, almost every country has allowed the PCAOB in to inspect the audits of public companies that are listed in the U.S.," he added. "In China, they have resisted that on a state secret basis. This has gone on for a while. We've been trying to explain this to U.S. investors."
Clayton said in a public statement last week the SEC met with senior representatives from the largest audit firms in the U.S. "to discuss audit quality across their global networks and certain of the challenges faced in auditing public companies with operations in emerging markets, including China."
They "also discussed this potential exposure of companies to the effects of the coronavirus and the impact that exposure could have on financial disclosures and audit quality, including, for example, audit firm access to information and company personnel. This remains a dynamic situation where the effects on any particular company may be difficult to assess or predict, because actual effects may depend on factors beyond the control and knowledge of issuers."
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