The implosion of so many Chinese companies that traded via ADRs on U.S. exchanges has exacerbated a long-simmering regulatory dispute between China and the United States.

The Public Company Accounting Oversight Board (PCAOB) has a number of agreements in place that allow them to investigate accounting firms in other countries. However, China has long resisted any such idea on the grounds of protecting its sovereignty, which has prompted plenty of people on this side of the Pacific to roll their eyes. At a time when so many companies need to be probed for accounting regularities that have hurt U.S. investors, this state of affairs is especially frustrating for regulators.

Negotiations between the U.S. and China to end the impasse began last year, but no one thinks they are going well. In fact, they appear to have stalled. As for audit companies, they are in a tough spot, caught between U.S. regulators bent on investigating imploded companies and China regulators who hold powerful sway over the affiliates of U.S. firms.

Deloitte, for example, would like to comply with a subpoena that it turn over documents related to an audit of Longtop by its Shanghai affiliate. But it says that doing so might violated Chinese law. It sought permission from three regulators but did not even get a reply, according to China Realtime Report. It’s unclear how any of this will be resolved.

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