PracticeAuditUS warned over audit probes

US warned over audit probes

UK's audit watchdog warns its US counterpart not to intervene in audit probes overseas

The UK’s audit watchdog has warned its US counterpart not to intervene in
audit probes overseas.

The Public Oversight Board has told the US Public Company Accounting
Oversight Board to rely on foreign regulators.

In his letter, POB chairman Paul George said that he was concerned that new
PCAOB proposals indicated more significant involvement in inspections by its
staff than implied by the term ‘full reliance’.

‘In particular, it would not be appropriate for PCAOB staff to either visit
the firm to interview key personnel or request access to audit working papers
since this clearly falls short of a full reliance approach.

‘We would expect the PCAOB’s ‘observation’ role, to instead consist of
consultation with the non-US regulator about the inspection plan and inspection
findings relevant to US issuers,’ said George.

The PCAOB is drawing up new criteria for assessing overseas audit firms,
involving the adequacy and integrity of an oversight system, its independence of
operation from the auditing profession, independence of the system’s funding and
transparency of the system.

The POB, which is itself largely funded by contributions from the firms,
indicated concern about the ‘prescriptive nature’ of the criteria.

‘We believe’ the five principles are likely to have the effect of undermining
a principles-based approach in practice and therefore need to be reconsidered.
We support the underlying principles set out within the guidance and appreciate
that it is often necessary to provide further guidance as to how the principles
might be achieved in practice. ‘However, the criteria identified should in our
view be seen as indicators of what is necessary rather than as a series of
detailed requirements, each of which has to be met,’ the POB said.

The ICAEW called for the PCAOB to consider clarifying that it would only seek
to accompany non-US inspection teams to an audit firm or inspect audit working
papers in exceptional circumstances.

The PCAOB is to host a roundtable discussion in four weeks to discuss
responses to its proposals.

Related Articles

PwC found negligent by US judge over Colonial Bank's $2bn fraud

Audit PwC found negligent by US judge over Colonial Bank's $2bn fraud

2w Alia Shoaib, Reporter
Deloitte South Africa investigated over Steinhoff audits

Audit Deloitte South Africa investigated over Steinhoff audits

4w Alia Shoaib, Reporter
Top 5 audit fines of 2017

Audit Top 5 audit fines of 2017

1m Alia Shoaib, Reporter
PwC replaces EY as Domino's auditor

Audit PwC replaces EY as Domino's auditor

1m Alia Shoaib, Reporter
The ‘uncomfortable truth’ behind FRC’s Big Four fines recommendations

Audit The ‘uncomfortable truth’ behind FRC’s Big Four fines recommendations

1m Carl Johnson, Stephensons
BDO holds off Big Four to retain top position as AIM auditor

Audit BDO holds off Big Four to retain top position as AIM auditor

1m Alia Shoaib, Reporter
FRC urged to fine Big Four firms penalties over £10m

Audit FRC urged to fine Big Four firms penalties over £10m

2m Alia Shoaib, Reporter
EY to audit Standard Chartered bank

Audit EY to audit Standard Chartered bank

2m Alia Shoaib, Reporter