On Wednesday, the top US audit watchdog said that US and China is nearing an agreement that will allow the US to review the audit work of accounting firms in the mainland. The development of the long-running dispute between the two countries with regard to the oversight of auditing firms came up during a hearing before the US SEC regarding the accounting watchdog's budget and policy initiatives for 2014, the South China Morning Post said in a report.

Public Company Accounting Oversight Board (PCAOB) Chairman Jim Doty said in its prepared remarks to the US Securities and Exchange Commission, "I am also optimistic that we will be able, during 2014, to sign a long-sought agreement to inspect the audit work of PCAOB-registered firms based in China."

The dispute between US and China escalated when a series of accounting scandals erupted involving Chinese companies listed in the US, SCMP said. The tension was further heightened when a US judge handed out a verdict suspending the China units of the top accounting firms in the world, called the "Big Four," temporarily from operating in the US. The Big Four are PricewaterhouseCoopers, KPMG, Deloitte and Ernst & Young.

Later, Doty clarified that PCAOB and Chinese regulators are still in the process of exchanging their draft agreements and have yet to agree on how the inspections should be conducted. Doty also revealed that during the regulator's discussions with China, the negotiators expressed their hesitance of having examiners from the US to conduct the future inspections in the mainland.

Doty added, "Without commenting on what we think we are going to get, there are various ways of dealing with that, including moving the papers, making people available outside of China, conducting inspections through other means. It may be that we do not necessarily need to be on the ground. Patience is limited for getting this solved. This is the end of the line."