SEC chairman Jay Clayton
SEC Chief Accountant Sagar Teotia
PCAOB chairman William D. . Duhnke III
In recent years, exposure to U. . S.. . Investors and our capital markets for companies with significant activity in emerging markets, including China, have grown.  This increased commitment poses a number of significant risks and challenges, many of which are discussed in our Dec.. December 2018  and in our most recent joint statement with fellow SEC employees, Emerging Market Investments Entail Significant, disclosed disclosure, financial reporting, and other risks; The remedial actions are due on Jan.. April 2020 limited. 
Among other relevant issues related to investing in emerging markets, we found that the Public Company Accounting Oversight Board (PCAOB) continues to be prevented from reviewing the audit work and practices of PCAOB-registered audit firms in China on a comparable basis to other non-U- Review company. S.. . Jurisdictions. This inspection restriction also includes PCAOB access to audit work and practices from Hong Kong-based audit firms if their audit clients are based in mainland China.
High quality, reliable financial statements are the bedrock of our disclosure-based regulatory ecosystem, and audit quality is a key driver of high quality financial information disclosure. PCAOB inspections are an integral part of our regulatory efforts to improve the quality of financial reporting and ensure audit quality. Ensuring that investors and other market participants have access to high quality, reliable disclosures, including audited financial statements, is at the core of the SEC’s mission. The SEC and the PCAOB are committed to promoting high quality financial reporting and auditing, including through meaningful principled oversight and enforcement.
In recent years, as part of our broader efforts to protect U. . S.. . Investors and promote high quality financial reporting in emerging markets, including China. We took a number of steps, including:
Our previous discussions with global network auditing firms about audit quality in emerging markets have highlighted the need for effective and consistent global oversight of member firms. In previous meetings with these accounting firms, we made it clear that we were expecting U as the PCAOB is limited in its inspection efforts in China. S.. . Accounting firms to devote adequate attention and resources to their internal and cross-network quality control processes. These sessions addressed a variety of global auditing quality issues, including acceptance and retention policies, independent internal and cross-network review processes, training, and benchmarking.
Last week we held additional meetings with the four biggest U’s. S.. . Accounting firms on these important issues. In those meetings, we discussed the steps companies have taken since our previous meetings to promote audit quality in emerging markets, including China. These discussions centered on (1) factors considered by any company in making decisions about customer acceptance and customer continuity; (2) the results of completed and ongoing internal inspections; (3) Training by every U. . S.. . Accounting firm for local corporate engagement teams in emerging markets; and (4) other observations of audit quality as companies near the end of the calendar year of their annual financial reporting season.
We also discussed audit firms’ efforts to protect and promote audit quality in light of the operational and other challenges of COVID-19. Companies generally reported that they and their audit clients were well adjusted to remote working. Given the expectation that work would be largely remote by the end of the calendar year, they described how they operated to address, for example, existence and valuation (e.g.. G. , Inventory) and ensuring the quality of the exam more generally.
We will continue to promote exam quality in emerging markets, including China, through all of the actions outlined above, including ongoing discussions with global network exam companies. These efforts are aimed at protecting investors and other market participants who depend on access to high quality, reliable audited financial statements.
 See SEC Economic and Risk Analysis Division, U. . S.. . Investor Exposure to Chinese Domestic Issuers (Jul. 6, 2020), available at http: // www. sec. gov / files / US-Investors-Exposure-to-Domestic-Chinese-Issuers_2020. 07. 06. pdf.
 See SEC Chairman Jay Clayton, former SEC Chief Accountant Wes Bricker, and PCAOB Chairman William D. . Duhnke III, Statement on the Critical Role of Exam Quality and Regulatory Access to Exams and Other Information International Discussion of Current Challenges in Accessing Information Relating to U. . S.. . Listed companies with significant activities in China (Dec.. . 7, 2018), available at https: // www. sec. gov / news / public-statement / statement-vital-role-audit-quality-and-regulatory-access-audit-and-others.
 See SEC Chairman Jay Clayton, PCAOB Chairman William D. . Duhnke III, SEC chief accountant Sagar Teotia, SEC division of corporate finance director William Hinman and SEC division of investment management director Dalia Blass, Investing in emerging markets involves significant disclosures, financial reporting and other risks; The remedial actions are limited (Apr. . 21, 2020), available at http: // www. sec. gov / news / public-statement / Emerging-Market-Investments-Disclosure-Reporting.
 See President’s Working Group on Financial Markets, Report on Protecting US Investors from Significant Risks of Chinese Companies (Jul. 24, 2020), available at https: // home. Treasury. gov / system / files / 136 / PWG report on protecting US investors from significant risks posed by Chinese companies. pdf; see also SEC Chairman Jay Clayton, SEC Division of Corporate Finance Director William Hinman, SEC Division of Investment Management Director Dalia Blass, SEC Division of Commerce and Markets Director Brett Redfearn, SEC Office of International Affairs Director Raquel Fox, SEC Chief Accountant Sagar Teotia, Statement on SEC Response to President’s Working Group Report on Financial Markets, Aug.. . 10, 2020), available at https: // www. sec. gov / news / public-Statement / Statement-Presidents-Working Group-Financial Markets.
 See SEC Corporate Finance Division, Disclosure Guide: Issue No.. 10: Disclosure Considerations for Issuers Based in China (Nov. . 23, 2020), available at https: // www. sec. gov / corpfin / disclosure-considerations-china-based-issuers.
 See the SEC’s Emerging Markets Roundtable website, available at http: // www. www. tpps. com // www. wwwwwwww. wwww. sec. gov / page / Emerging Markets Roundtable.
 See footnotes 2 and 3.
 See press release, SEC Chairman Clayton, PCAOB Chairman Duhnke, and SEC staff meet with auditing firm representatives to discuss audit quality in emerging markets and countries (Nov.. . 4, 2019), available at http: // www. sec. Government / News / Press Release / 2019-228.
 See SEC Chairman Jay Clayton, SEC Division of the Corporation’s Treasury Director, William Hinman, SEC Chief Accountant Sagar Teotia, and PCAOB Chairman William D. . Duhnke III, Statement on the Continued Dialogue with Representatives of Accounting Firms on Audit Quality in China and Other Emerging Markets; Coronavirus – Reporting Considerations and Possible Relief (Feb. . 19, 2020), available at https: // www. sec. gov / news / public-Statement / Statement-Audit-Quality-China-2020-02-19.
 See SEC Chief Accountant Sagar Teotia, Statement on the Importance of Quality Financial Reporting Given the Significant Impact of COVID-19 (April). 3, 2020), available at http: // www. sec. gov / news / public-Statement / Statement-Teotia-Financial Reporting-covid-19-2020-04-03
SEC – The US Securities and Exchange Commission released this content on Jan.. November 2020 and is solely responsible for the information contained therein. Distribution by the public, unedited and unchanged, on 24. November 2020, 21:02:08 UTC
U. . S.. . Securities and Exchange Commission, Accounting Firm, Accounting, Emerging Markets
World News – AU – SEC US Securities and Exchange Commission: Statement of Third Meeting with Accounting Firm Representatives on Emerging Markets Audit Quality and Recent Developments
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