In its quest to try and stop such financial scandals as Enron and WorldCom happening again, the board’s proposals require the registration of all accounting firms that undertake audit work for companies with a US listing, including non-US firms.
This has not gone down well with the Big Four who see the issue as complex, costly and with significant legal hurdles. Roger Davis, UK head of professional affairs at PricewaterhouseCoopers, said while the firm supports the objectives of the board, ‘their application to overseas firms gives rise to complicated practical issues, such as with client confidentiality obligations and data privacy laws’.
These legal concerns were put to the board at a joint public roundtable meeting with the SEC at the end of last month. According to Neil Lerner, UK head of risk management at KPMG, the SEC and the board were ‘clearly listening’ to what the non-US firms had to say. ‘The message came over clearly that there would be significant legal difficulties if the proposals were applied unchanged,’ said Lerner.
While there are hopes that the board will soften its stance, most do not expect plans for registration of non-US firms to be dropped. Instead both PwC and KPMG have asked for a one-year extension before non-US firms have to register to resolve any legal and practical difficulties.
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