Despite on-going talks with the European Commission to reach an agreement for all European Union nations, PCAOB chairman William McDonough has indicated that the board is likely to look at the state of oversight in individual nations before deciding on its involvement.
The PCAOB has the power to submit auditors that are registered with it to its own inspections. Non-US auditors working for US clients are required to register with the board by April next year, sparking fears over the level of control the board will have over European firms.
Little progress looks to have been made by the EC in its talks with the board over gaining some form of exemptions or establishing a system of mutual recognition. Now the PCAOB has suggested that firms based in nations with sufficiently robust oversight controls in place are likely to suffer less intrusion.
Sources close to the debate suggested that individual countries will have to undertake their own discussions and come to individual arrangements with the PCAOB once the EC’s discussions have concluded.
However, the fear is that the discussions may prove to be very one-sided, with the PCAOB holding almost all the power.
Individual nations seem to have little left to do but convince the PCAOB of the strength of their existing oversight systems. Even if this scenario does arrive, it is thought that the strong oversight in the UK will mean it will suffer least.
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