Parmalat harms PCAOB relations
The fallout from the Parmalat scandal could cause the US Public Company Accounting Oversight Board to toughen its stance on the oversight of non-US firms, writes Paul Grant.
Bold: GT gave Italian arm the all clear
European regulators had hoped the PCAOB would rely on the oversight procedures of other countries, in cases where non-US firms perform the audits of listed companies from the US.
But the alleged fraud at Parmalat and the roles played by Deloitte and Grant Thornton in the affair could convince US sceptics that the board needs to take a hard line when dealing with foreign auditors.
‘What has happened at Parmalat will further convince the US regulators that only they can supervise the oversight of international audit firms,’ said a well-placed industry insider. ‘It is likely to damage long-term attempts to get a system of mutual recognition put in place, which is the way forward rather than having a global regulator.’
Previously, PCAOB board member Charles Niemeier had hinted that if controls in individual nations were strong enough, then the board may opt for complete reliance on foreign oversight systems. It is now unclear whether this will remain the case in the wake of Parmalat.
A spokeswoman for the PCAOB said that it was too early to say whether the Parmalat scandal would have a direct effect on oversight procedures. The board had noted reports that Italy would be beefing up its oversight procedures in the wake of Parmalat and would be following this closely.