UK auditors received a double boost this week after the US Public Company Accounting Oversight Board said that it may take a back seat in its oversight of UK auditors, and the government launched a consultation into the issue of liability legislation.
Link: PCAOB puts non-US proposals out for comment
In a significant concession, PCAOB member Charles Niemeier told Accountancy Age that, under new proposals relating to non-US firms working with US clients, those operating under strong oversight procedures in their own country could avoid interference from the US side altogether.
‘Firms will have to register with the board, that is a point of law, but if oversight in a firm’s own nation is sufficiently robust and independent then it is possible we could rely on this,’ said Niemeier.
Niemeier also admitted that, although the recent extension of the deadline to 19 July 2004 for non-US firms to register should be sufficient, the board would consider a further postponement if approval of the new rules takes longer than expected.
The board has put forward a sliding-scale measurement of reliance based on tests of the oversight measures of various nations.
It has devised five key principles on which this is based. These are the adequacy and integrity of the system, its independence from the auditing profession, the nature of the system’s funding, the transparency of the system and its historical performance.
The move came as the UK government said it would look at reforming the laws surrounding the contentious issue of auditor and director liability.
On Tuesday, it published a consultation document that could limit the civil liabilities of auditors.
The proposals include options to limit liability based on a multiple of the audit fee, total fees paid to the auditor, a multiple of the auditor’s turnover or a fixed level cap.
Former ICAEW president Peter Wyman, who is working with the institute and the DTI on post-Enron issues, said he was still doubtful that the PCAOB would be willing to take a back seat.
‘There is no doubt the UK would meet all the tests that the board has set out,’ said Wyman. ‘But it still seems to me that the PCAOB intends to have quite an involvement in the oversight process.’
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