Sino-US audit deal hailed, but questions remain(4)

Within the United States, fraud accusations were made by short sellers, and securities fraud lawsuits were filed by investors, which piled pressure on financial watchdogs.

Stakes were high for both sides. As China effectively shut down its domestic IPOs, many companies are looking overseas for capital.

The continued closing of the US capital markets will only work to the benefit of other Western capital markets, Frenkel said.

Concessions in the signed memo between Chinese regulators and the PCAOB were widely noted, as China took a step back in allowing file access, and U.S. inspections in the Chinese jurisdiction were not mentioned.

Now, all eyes are turned to further negotiations, especially over whether there will be a deal involving the SEC.

"United States regulators, particularly the SEC, are not used to being told 'no' by other international regulators. China stood up to the SEC and said, 'Your regulations cannot interfere with the sovereign laws of China.' That has been frustrating and embarrassing to the SEC," according to Frenkel.

"The challenge for Chinese regulators and Chinese companies is that the SEC believes that all audits of Chinese companies are not reliable. Such a mindset is not fair to quality Chinese companies with full and fair audits," he added.

PCAOB advisor Gillis expects "an SEC deal will come soon, and it will be very similar to the PCAOB deal."