Effective auditing of companies' financial statements is important for investor confidence, but Chinese companies traded in the U.S. don't get U.S. oversight of their audits as other companies do. And that could be a risk for investors.

The Public Company Accounting Oversight Board, the U.S. audit regulator created to restore confidence in financial reporting after accounting scandals of the early 2000s, isn't allowed to inspect the work of China-based accountants.

That lack of access is a concern to the PCAOB, the Securities and Exchange Commission. and some members of Congress. They have introduced legislation to crack down on China if it doesn't let audit inspectors in.

Bloomberg Tax's Amanda Iacone spoke with Paul Gillis, who teaches at Peking University’s school of management in Beijing, about the significance of the problem and what may lie ahead.

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