If regulators thought that shaping a system of overseas inspections and regulation was going to be easy, they won’t think so now.

European contributors to a US round table on regulatory oversight have put up a fierce defence against US regulators.

Pierre Delsaux, a director in internal markets at the EC, has told his US counterparts that they cannot simply inspect audits of European companies without offering the same freedoms to EU regulators working with US businesses.

He threatened using European legislation to block US access if there is no reciprocation.

‘Accessing audit working papers will be extremely complicated… because we have legislation preventing exchanges of these documents… if we don’t have some kind of agreement, many practical obstacles will exist,’ he warned.

Delsaux’s comments appeared to have shocked US investors.

But they’re not unexpected, considering that the Public Company Accounting Oversight Board has not committed itself to reciprocal sharing of audit working papers with its foreign counterpart oversight bodies – despite expecting this of others.

Taken aback was the Consumer Federation of America’s director of investor protection, Barbara Roper.

‘In many cases [the barriers have] been erected since Sarbanes-Oxley, in what appears to be an attempt either to ignore the PCAOB’s obligations to Sarbanes-Oxley under US law, or to make it impossible for it to comply with US law.

‘When Sarbanes-Oxley was debated, these issues were on the table. It [US Congress] has discussed these issues and rejected this [full reliance] approach because they said it would create an unacceptable investor protection loophole.’

The meeting has left many baffled. But Peter Wyman, global head of regulatory affairs at PricewaterhouseCoopers, captured the current state of things best: ‘There’s a very real risk now that all the world will inspect all the rest of the world... a multiple duplication of effort and ultimately at a great deal of cost for no useful purpose whatsoever.’