The Public Company Accounting Oversight Board today announced that it has entered into a cooperative arrangement with the German Auditor Oversight Commission (AOC) relating to the oversight of audit firms subject to the regulatory jurisdictions of both regulators. The agreement takes effect immediately.
"This agreement with the German audit regulator is a very significant step forward in our pursuit to improve audit quality and protect investors,” said PCAOB Chairman James R. Doty. "We are pleased with our continuing progress in overcoming obstacles to conducting inspections in European Union member states."
The PCAOB has previously entered into cooperative arrangements with regulators in two other European Union member states, the United Kingdom and the Netherlands, as well as in Switzerland and Norway. It is continuing to negotiate with regulators in numerous other European countries. Cooperative arrangements have been reached with regulators in North America, the Middle East and Asia.
In addition to providing a framework for conducting joint inspections, the arrangement includes provisions governing the exchange of confidential information between the AOC and the PCAOB, consistent with certain provisions of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. Those provisions amended the Sarbanes-Oxley Act of 2002 to permit the PCAOB to share confidential information with its non-U.S. counterpart regulators under certain circumstances. The arrangement with the German AOC also includes an agreement on data protection.
"The German AOC has been a strong advocate for bilateral and international cross-border audit cooperation," said Bruce Wilson, PCAOB Director of International Affairs. "We are pleased that we have found a way to move forward with a framework for joint inspections that satisfies Germany’s data protection laws."
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 900 audit firms currently registered with the PCAOB are located outside the United States, spanning 88 jurisdictions. There are 36 registered firms located in Germany.