A meeting between the bodies could be the last chance to resolve an issue that could have serious consequences for auditors across the globe and could result in bad blood between financial regulators of the US and Europe.
Under the Sarbanes-Oxley Act, all foreign auditors who undertake work with companies that have a US listing must register with the PCAOB, currently led by the tough talking former federal Reserve chairman William McDonough.
This means that the firms could be subject to investigation from the board and also be disciplined. These requirements have caused consternation from individual nations and the European Union.
Talks have already been held in an attempt to resolve the dispute, with the EC aiming to get the requirements of Sarbanes-Oxley toned down or removed completely. So far all that has been managed is a six-month extension to the deadline for registration for non-US firms. This expires next April and, according to sources, if anything is to be resolved it needs to happen sooner rather than later.
‘It is getting towards crunch time,’ said an industry insider. ‘There will be meetings between the PCAOB and the EC in the next couple of months but they may or may not get us anywhere.’
It had been hoped that a system of ‘mutual recognition’ could be set up between the EU and the US, where both sides would recognise the oversight practices of each other’s regulators as sufficiently robust.
This means EU auditors would automatically fit the requirements of Sarbanes-Oxley. But the best that is now hoped is for a joint system where foreign oversight processes can be slotted into the US system, reducing the administrative burden for firms.
There is still potential for failure, but the UK has plans to appeal to the US as a separate country. This would provide relief for UK auditors but could cause further ructions within the EU.
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