Suggested checks on overseas audit firms out for consultation

Proposals on regulating overseas audit firms used by companies outside the EU
but which are listed in the UK have been released by the
Reporting Council

The Council wants feedback on its suggestions by the end of next month so it
can put in place regulation compliant with an EC statutory audit directive
agreed in 2006.

‘We are keen that audit regulators around the world should rely on one
another’s work to the maximum extent possible,’ said Paul George, oversight
board director at the FRC.

He said his organisation was pleased the EC had introduced ‘transitional
measures’ for countries which already have, or are planning, well developed
independent audit regulation. While still needing to register in the UK before
they sign a relevant audit report for UK purposes, audit firms from qualifying
jurisdictions will not be subject to the UK’s systems of inspection and

The FRC’s oversight board has until the end of July to draft detailed
arrangements for the registration and regulation of third country audit firms.

The Cayman Islands, China, Channel Islands, Hong Kong, Kazakhstan, South
Africa, Switzerland and the US are among the 33 countries outside the EU
affected by the directive.

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