The Public Company Accounting Oversight Board today announced that it has entered into a cooperative arrangement with the Netherlands Authority for the Financial Markets (AFM) for the oversight of auditors that practice in the regulators' respective jurisdictions. The two regulators plan to hold a formal signing ceremony in January.
"The agreement with the Netherlands is a key step forward in our effort to ensure effective cross-border audit oversight," said PCAOB Chairman James R. Doty. "We are pleased that we have been able to overcome obstacles to conducting inspections in certain European Union Member States, first with the United Kingdom, and now with the Netherlands," he added.
The PCAOB has also signed cooperative arrangements with two other European countries, Switzerland and Norway. 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 AFM and the PCAOB, consistent with 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 arrangement also includes an agreement on data protection.
"The AFM has been vocal in insisting that firms improve audit quality," said Rhonda Schnare, PCAOB Director of International Affairs. "The PCAOB looks forward to working with the AFM in pursuit of that goal. We are also pleased that we've found a way to move forward with a framework for joint inspections that satisfies the Netherlands' 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 15 registered firms located in the Netherlands.