US audit watchdog gains access to UK auditors

THE US AUDIT WATCHDOG will be allowed to inspect UK firms who represent companies on the US markets, in a groundbreaking deal.

The Public Company Accounting Oversight Board (PCAOB) has agreed a deal with the Professional Oversight Board (POB) that allows the two bodies to swap information under certain conditions.

The agreement could allow the PCAOB to look into Ernst & Young UK’s work on Lehmans’ Repo 105 transactions, which kept debt off the collapsed bank’s balance sheet.

Obstacles to the sharing of information were lowered when Sarbanes-Oxley legislation was amended under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which freed up the PCAOB to share information.

The two bodies had previously shared information between 2005 and 2008.

Dame Barbara Mills, POB chair and a co-signatory of the statement of protocol, said: “The POB and PCAOB share the common objectives of seeking improvements to audit quality, protecting investors and promoting efficient capital markets. This agreement builds on the excellent working relationship our two organisations have developed in recent years and reflects the increasingly global nature of the audit market.

“The agreement will improve our respective access to information, for example relating to US audit firms registered in the UK, and UK firms registered in the US, thereby helping us to discharge our responsibilities. This will both strengthen and streamline the process of audit market inspections, increasing the efficiency and effectiveness of the oversight regime.”

“This agreement reflects our important relationship with the POB and serves as an example of cross-border co-operation between the PCAOB and its counterparts abroad,” said Rhonda Schnare, PCAOB director of international affairs.

“We look forward to resuming our work with the POB in the United Kingdom and to assisting the POB should it conduct inspections in the United States.”