Negotiations over the possible exclusion of European auditors from certain provisions of the Sarbanes-Oxley Act ended in compromise. European Union (EU) Internal Market Commissioner Frits Bolkestein said Europe might consider forming its own U.S.-style accounting oversight board.
The concession was made after U.S. Securities and Exchange Commission (SEC) Chairman Harvey Pitt signaled he would consider some exemptions for EU auditors, if the EU were to set up its own common regulatory system.
Chairman Pitt also reportedly said that if sufficient convergence between the U.S. and EU standards is achieved by 2005, the SEC may waive the requirement that EU registrants reconcile their financial statements to U.S. accounting standards.
The negotiations follow closely on the heels of renewed calls for Chairman's Pitt's resignation over events related to the U.S. accounting oversight board. The calls escalated after the SEC Chairman backed down on offering the chairmanship of the U.S. board to John Biggs following a lobbying blitz reportedly orchestrated by large accounting firms and the American Institute of CPAs.
The Financial Times reported that Congressman Michael Oxley, Republican chairman of the House financial services committee, acknowledged that lobbyists for the accounting profession had been "whispering in his ear" before he expressed his reservations about the appointment of Mr. Biggs as chairman of the U.S. oversight board. ("How top accounting regulator job came unstuck," October 9, 2002)