Europe faces off against US over audit inspections

A row between Europe and the US over audit inspections looms after the EC suspended its work on co-operation with non-EU audit oversight bodies over fears that the US is not ready to make the same leap.

Internal market commissioner Charlie McCreevy said last week that discussions with the EU’s 27 member states had been halted as more time was needed to ensure that the US was ready to rely on the work of oversight bodies in other countries, according to the Financial Times.

‘While some of our trading partners, notably Canada and Japan seem to be open towards such an agenda, the same is not true for the US,’ said McCreevy.

‘As things stand at the moment, the EU will commit itself to facilitate US inspections but we currently have no guarantee that the US will do the same for us, This is not good for the confidence of our investors here in the EU - nor does it send the right signal for the EU’s own oversight bodies which we here in the EU have worked hard to put in place.’

European accounting firms have lobbied for a system of mutual reliance between international audit oversight bodies since the inception of the US Public Company Accountancy Oversight Board. Its inspections, it was claimed, duplicated the work of native oversight boards and ran the risk of ‘double jeopardy’, with firms potentially being hauled over the coals twice for the same transgression by different bodies.