The Public Company Accounting Oversight Board today announced a cooperative arrangement with the Japan Financial Services Agency (JFSA) and Certified Public Accountants and Auditing Oversight Board (CPAAOB) of Japan for the oversight of auditors that practice in the regulators' respective jurisdictions.
"This exchange of letters with our Japanese counterparts confirms our mutual commitment to cooperation on cross-border audit oversight which I believe is critical to the improvement of audit quality given the globalized nature of the capital markets," said PCAOB Chairman James R. Doty. "We are pleased to add this agreement to those that we have reached with other important partners in the region, including Australia, Korea and Singapore," he added.
In addition to carrying out joint inspections with the regulators in Australia, Korea and Singapore, the PCAOB has been regularly conducting inspections of PCAOB-registered firms in other Asian countries, including Indonesia, Malaysia, New Zealand, Philippines, Taiwan and Thailand.
While the PCAOB has conducted inspections on its own of PCAOB-registered firms from Japan since 2007, the exchange of letters provides a basis to conduct on-site visits of the firms in Japan in close cooperation with the Japanese regulators.
The agreement also includes provisions governing the exchange of confidential information between the oversight authorities, consistent with the 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. counterparts under certain circumstances.
"The PCAOB highly values the constructive relationship it has enjoyed with the JFSA and CPAAOB over the years," said Rhonda Schnare, PCAOB Director of International Affairs. "We are currently working on concluding similar cooperative arrangements with other regulators around the world," 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 900 audit firms currently registered with the PCAOB are located outside the United States, spanning 84 countries. There are 16 registered firms located in Japan.