Regulators to scrap dual inspections for audit firms

Auditing firms will no longer be subject to dual inspections by US and
European accounting regulators, according to plans under a ‘roadmap’ agreed on
between the European Union and US Public Company Accounting and Oversight Board.

The latest announcement, from Europe’s
internal market and services commissioner, Charlie McCreevy, is another sign of
international efforts to increase harmonisation between the two regions, the
FT reported.

Companies have increasingly become hostile about overseas regulator
inspections, more especially from the PCAOB, which passed a rule in 2004
allowing for reliance on overseas auditor watchdogs to perform inspections of
non-US audit firms, but rarely applied the rule in the absence of oversight
bodies in several European countries at the time.

At a conference in Washington, McCreevy called for both sides to ‘push
forward across a broader front’ in their efforts.

‘We want to move towards full reliance on our respective auditor public
oversight systems, in the same spirit as in accounting.

‘Equivalence does not require systems and standards to be identical but
robust enough to ensure investor confidence,’ McCreevy told the US Chamber of
Commerce.

PCAOB chairman, Mark Olson, said yesterday the agreement was made easier as a
result of the growing number of auditor oversight bodies.

‘As more countries around the world take steps to protect the integrity of
their own capital markets by strengthening auditor oversight, regulators must
find ways to rely reasonably on each other in accomplishing our shared
objective,’ he said.

Further reading:

SEC mulls IFRS for non-US firms

Olson,
McCreevy Target 2009 for Convergence