Is this our worst fear realised?

Fear was rife that the much-publicised powers the Public Company Accounting Oversight Board would gain meant too much interference in other countries’ affairs. We could end up, argued some, with a US regulator overseeing foreign auditors simply because it had clients with US links.

We have now reached the point where the board’s first registration deadline has passed. But reflecting on the situation it is fair to say that, although fears have been allayed slightly since the initial outrage, the concerns that were suggested at the time haven’t really gone away.

Talks between the EC and the PCAOB do not seem to have had the desired effect, at least from a European perspective.

Any chance of exemptions or a system of mutual recognition for any European country looks to have all but disappeared.

And while the PCAOB has hinted it would look at a country’s system of oversight before deciding how hard to go in on its firms, it still looks as though it could, if it wished, go as far as Sarbanes-Oxley otherwise permits.

Add to this the fact that the Act could also influence the auditing of firms outside the board’s remit. Sarbanes-Oxley section 404 requires auditors to attest a management statement on the effectiveness of internal control.

There are fears that investors will demand this statement as best practice.

We could end up blindly following US regulations instead of our own, very robust and recently improved code of practice.

It’s fair to say that most here in the UK and elsewhere are not happy with the situation the way it is, but unfortunately there seems to be few concrete suggestions about just what to do about it.

Auditors may now have to weigh up the hassle of registering with the PCAOB and all the issues that incurs against the potential loss of business.

This may or may not be an indicator, but some firms in the US have already decided to ditch their listed clients for this reason.

• Paul Grant is senior reporter on Accountancy Age.