Sarbanes Bill row escalates
Moves in Washington to arm US regulators with the power to demand papers from auditors in the UK and Europe threaten to escalate into a diplomatic row.
The British ambassador has informed US lawmakers of grave concerns over the Sarbanes Bill, recently passed by Congress, which would bring all foreign audit firms, including those in the UK, under the jurisdiction of US courts if they work for listed companies across the Atlantic.
Concern is also deepening at home where experts now believe the bill is enforceable. Lord Sharman, former chairman of KPMG International, said the bill would require any company whose stock was listed and traded in the US to register with a proposed new accounting oversight board – foreign auditors would also be required to register.
‘If it doesn’t, it would be illegal for the stock of that company to be traded,’ Sharman said. The ICAEW has already described the bill as ‘worrisome’ and ‘troubling’.
Lord Sharman will next week quiz the government over its stance on the proposed legislation.
Concern in the UK focuses on the ‘extra-territoriality’ of the bill which the UK ambassador has taken directly to the Congressional conference currently working on the issue.
As Accountancy Age went to press, the conference – a grouping of members from both US legislative houses – continued to hammer out a compromise between the Sarbanes Bill, and a less radical bill passed by the House of Representatives.
It is understood Fritz Bolkenstein, EU internal markets commissioner, has written to the congressional conference claiming the US legislation could expose directors and auditors of EU-based companies to prosecution in the US. The EU feared there could be an overlap between its own legislation and the powers proposed for the new US oversight board.