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19 May 2010
US authorities are being blocked from inspecting the audits of more than 60 UK-based multinational companies, amid fears American investors are being put at risk.
The US audit regulator, the Public Company Accounting Oversight Board (PCAOB), set up in the wake of the Enron scandal, inspects the auditors of US registered companies. The board, however, has been blocked from inspecting overseas auditors, which have US registrants as their clients, owing to a dispute over information sharing.
The PCAOB said no legal obstacle prevents a non-US regulator from coming to the United States to inspect a US audit firm and that it would will assist them, “to the extent of our authority”. However it is restricted by law from handing over internal working papers.
Reforms are currently being put before the US congress to free the PCAOB to share its papers with authorised authorities - including foreign regulators.
The UK contained one of the largest proportions of companies, second only to China and Hong Kong.
In a statement the board said it published the list to alert investors of companies whose audits are not subject to US oversight.
“As long as those obstacles persist, however, investors in US markets who rely on those firms' audit reports are deprived of the potential benefits of PCAOB inspections of those auditors,” the board said in a statement.
Among the UK companies are Vodafone, BHP Billiton, HSBC, Barclays and BT. The PCAOB is hoping new legislation, traveling through congress as part of the vast US financial reform bill, will allow it to share information with its EU counterparts.
If a solution can not be reached the PCAOB has the option to revoke the licenses of overseas audit firms, which will stop them from auditing US registrants.
Further reading: ISSUER AUDIT CLIENTS OF NON-U.S. REGISTERED FIRMS IN JURISDICTIONS WHERE THE PCAOB IS DENIED ACCESS TO CONDUCT INSPECTIONS
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Visitor comments Add your comment
Typical assymetry
As usual, the US wants one-way traffic, similar to the UK-US extradition treaty.
What's wrong with us wanting to look into their auditing processes if there is a need for them to look at ours?
In any case, the sloppiness that led to Enron was US based if you ask me, so this is all a distraction factor.
Posted by: Edward Cousons, 19 May 2010 | 00:00