EU/US Reach Accord on Auditing Rules

The EU and the US have hammered out a deal to address rules for auditing on both sides of the Atlantic.

The agreement will require auditors to register in both the US and the EU to work on publicly held companies in the US and EU, with one EU official calling their efforts to compromise as "working in parallel," Eupolitix.com reported.

"It's a done deal," said William McDonough, chairman of the US Public Company Accounting Oversight Board (PCAOB) after meeting with EU’s internal market commissioner Frits Bolkestein.

He added that he was pleased by the European Commission's announcement last week that it plans to overhaul the auditing profession adopted last week.

"We are very happy to be working with the 8th company directive," he told journalists.

After many months of strife, Bolkestein said he could now accept the US requirements for EU auditors. "I think we have a deal," he said, "Fears of extra-territoriality have been entirely allayed," he added, without giving details of the concessions to be made by the US authorities.

McDonough said the PCAOB will publish its final set of rules for non-EU companies that want to audit public firms in the US, which he said will "include some elements that were omitted from the last draft."

Beginning on July 15, EU companies that want to work on publicly held US companies will have to register with the PCAOB, which will inspect the firms every three years to make sure they are meeting US standards. This was originally a point of contention for the EU Commission, which had earlier claimed that registration in the EU should have been enough for the US. Now all of the issues appear to have been ironed out, with the UK the most affected with its auditors working on about 150 US companies, Eupolitix.com reported.

"If we require registration in the US, I cannot see in the name of reciprocity why we would object to registering over here," McDonough said at an earlier conference.

Last week the European Commission proposed stricter auditing standards in the fight against the corporate scandals that are now affecting Europe, after blowing up here in 2001 and 2002.

You may like these other stories...

The Public Company Accounting Oversight Board (PCAOB) on Tuesday adopted a new auditing standard and amendments in three areas of the audit that could pose an increased risk of material misstatement in company financial...
Read more from Larry Perry here and in the Today’s World of Audits archive.In my last article, I presented an overview of one of the first steps in the preplanning phase of an audit engagement: reviewing prior year...
Read more from Larry Perry here and in the Today’s World of Audits archive.AU-C Section 800, Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks (SPFs),...

Upcoming CPE Webinars

Jul 16
Hand off work to others with finesse and success. Kristen Rampe, CPA will share how to ensure delegated work is properly handled from start to finish in this content-rich one hour webinar.
Jul 17
This webcast will cover the preparation of the statement of cash flows and focus on accounting and disclosure policies for other important issues described below.
Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.