E&Y: ‘a lot more to still be done on convergence’

The European Union and US Public Company Accounting Oversight Board’s
landmark move this week in launching a roadmap to discuss cooperation between
the two regions has been hailed as a ‘triumph for common sense’ by Ernst &
Young partners.

Staff of the both the PCAOB and EU
Internal Markets and Services offices have been mandated to begin work on
convergence, set to be reviewed at the their next meeting.

But Jan Babiak, managing partner
regulatory & public policy for E&Y, warned that there is still a need to
broaden the debate beyond pure auditor oversight.

‘The EU and US need also to reach agreement on the equivalence of
International Auditing Standards with US Generally Accepted Auditing Standards
and the equivalence of the IFAC Independence rules with the SEC’s own rules on
auditor independence,’ she said.

E&Y’s global director of regulatory & public policy, Jeremy Jennings,
said that the Statutory Audit Directive would still require US audit firms to
perform audits of US companies with shares listed in the EU in accordance with
ISA and to comply with EU rules on auditor independence even if it were possible
to avoid US audit firms having to register in the EU and be subjected to EU

‘And, of course, the USA is only one of over 60 countries with domestic
companies that have an EU listing. So its one down, sort of, and 59 to go.

‘All that said, it is a very important development (and one which we have
been anticipating) which, I am sure, will accelerate convergence of auditor
oversight regimes for the benefit of all – regulators, audit firms and,
ultimately, the capital markets,’ said Jennings.

The US and EU hope to move towards full reliance on each others’ oversight
systems by 2009. Both sides will take stock and review progress in October 2007.

Further reading:

SEC mulls IFRS for non-US firms

Regulators to scrap dual inspections for
audit firms

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