In an unusual public roundtable discussion held on March 31, the members of the Public Accounting Oversight Board, as well as SEC Chairman William Donaldson and the four SEC members heard from representatives of accounting organizations around the world about a requirement of Sarbanes-Oxley that would require non-US accounting firms to register with the US accounting body. The world’s accounting organizations had a singular message for the Board – "we support what you are trying to do but don’t jump in with regulations that will step on our toes."
In what sometimes sounded like a United Nations roundtable discussion, representatives from the United Kingdom, European Union, Germany, Japan and Latin America all expressed their support for the concept of audit reform, and all indicated that they were working on their own reform systems in their respective countries.
The concern expressed to the Board is that several countries have labor laws, data protection laws and privacy issues that directly conflict with the requirements of Sarbanes-Oxley, therefore requiring non-US firms to register and be under the rules of Sarbanes-Oxley would be a conflict of law.
Additionally, the countries sent a clear message to the PCAOB that state sovereignty and home-country oversight is the preferred way to go forward. "We are prepared to cooperate with the PCAOB and the SEC ... Mutual cooperation is important, not mutual infringement," said a representative of Japan’s Financial Service Agency.
Representatives from around the world have suggested a one-year delay in any foreign registration requirements to best understand how to get the countries to work together in audit reform, rather than requiring all to fall under the rules of the United States.
Charles D. Niemeier, acting chairman of the board, said the issue strikes at the heart of the board's mission. "A great deal of the U.S. markets now involve companies and auditors that are not in the United States. . . . We believe registration is extremely important for us to be able to fulfill our mandate."
The discussion was broadcast live on the Internet for interested observers to listen to. You may access the recorded Webcast online for free.
The PCAOB has until April 26 to suggest rules to the SEC for implementation of the Sarbanes-Oxley Act.