The Public Company Accounting Oversight Board today entered into a cooperative agreement with the Professional Oversight Board in the United Kingdom to facilitate cooperation in the oversight of auditors and public accounting firms that practice in the two regulators’ respective jurisdictions.
This agreement provides a basis for the resumption of PCAOB inspections of registered accounting firms that are located in the United Kingdom and that audit, or participate in audits, of companies whose securities trade in U.S. markets. The PCAOB previously conducted inspections in the United Kingdom with the POB from 2005 to 2008, but has been blocked from doing so since that time.
Acting PCAOB Chairman Daniel L. Goelzer welcomed the arrangement, which will lay the foundation for the PCAOB and POB to work together to promote public trust in the audit process and investor confidence in capital markets.
"The POB and the PCAOB both are committed to investor protection and to having a strong working relationship with each other," said PCAOB Acting Chairman Daniel L. Goelzer. "I am pleased that we have overcome the obstacles that have prevented PCAOB inspections in the United Kingdom since 2008. Investors in U.S.-listed companies increasingly rely on audit work performed outside the borders of the United States. Agreements like this one open the door for us to inspect that work and are essential to the Board’s investor protection mission."
This is the first cooperative agreement that the PCAOB has concluded since the passage of the Dodd–Frank Wall Street Reform and Consumer Protection Act, which amended the Sarbanes-Oxley Act to permit the PCAOB to share confidential information with its non-U.S. counterparts under certain conditions. That amendment removed one of the obstacles to PCAOB inspections asserted by European and certain other officials.
"This agreement reflects our important relationship with the POB and serves as an example of cross-border cooperation between the PCAOB and its counterparts abroad. 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," said Rhonda Schnare, PCAOB Director of International Affairs.
"We are currently working with other oversight bodies in several non-U.S. jurisdictions to establish similar cooperative arrangements," she added.
The Sarbanes-Oxley Act directed the PCAOB to oversee and periodically inspect all accounting firms that regularly audit companies whose securities trade in U.S. markets. More than 890 audit firms currently registered with the PCAOB are located outside of the United States, spanning 87 countries. There are 59 registered firms located in the United Kingdom.