One of the cited risk factors in Alibaba Group Holding's filing to go public is the possibility that investors could lose confidence in the quality of its reported numbers, as the Public Company Accounting Oversight Board is not permitted to conduct audit inspections in China. The company said in its filing that shareholders "may be deprived of the benefits" that can result from such inspections.
Recent comments by the Public Company Accounting Oversight Board's chief auditor about audit failures are misleading and needlessly alarming investors, write Mark E. Peecher, an accounting professor at the University of Illinois at Urbana-Champaign, and Ira Solomon, dean of the A. B. Freeman School of Business at Tulane University.
The Public Company Accounting Oversight Board published a list of countries in which it has inspected registered audit firms, and China is notably absent. The board is still working to establish a joint inspection program with China. The PCAOB
also provided an update on trouble it has had with international inspections, such as in Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, Ireland, Italy, Luxembourg, the Netherlands, Poland, Portugal, Spain and Sweden.