Frits Bolkestein, the European commissioner for financial services, has written to SEC chairman William Donaldson demanding that EU audit firms working for US-listed companies be exempted from registering with the Public Company Accounting Oversight Board. By registering, firms would effectively be brought under the board?s remit.
In the letter, Bolkestein said the proposals were ‘ineffective, unnecessary, disproportionate, likely to cause distortions in the market and prejudicial to future EU policy-making on audit issues’.
He then warned that ‘it would be difficult to avoid call for reciprocity and requirements whereby the US [firms] would have to register with all our member states’, adding that this could mean undergoing the process up to 25 times.
The oversight board has already heard protests from Big Four firms on the proposals, and ICAEW president Peter Wyman is hoping to earn some concessions for the profession in the UK. But a blanket exemption for all EU firms is thought highly unlikely, and Brussels is under pressure to leave the negotiation of exemptions to individual member states.
Resolving the issue of non-US audit firms working with US-listed companies will be one of the first tasks for the new oversight board chairman William McDonough, who was appointed to the position last week.
McDonough is currently the president of the First Reserve Bank of New York, a position he has held since 1993, and has a long history in the banking industry.
Following the controversy of the appointment of his predecessor William Webster, McDonough will not take up the position until a thorough background investigation of him has been undertaken.
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