PCAOB Issues Release on Consideration of Registration Applications from Firms in Non-U.S. Jurisdictions Where There are Unresolved Obstacles to Inspections
The Public Company Accounting Oversight Board today issued a release to provide notice of a development in its approach to registration applications from firms in non-U.S. jurisdictions where, because of asserted legal restrictions or objections of local authorities, the PCAOB is denied access to information from PCAOB-registered firms that is necessary to inspect those firms.
Effective for all pending and future applications from accounting firms in such jurisdictions, the Board will ask the applicant to state its understanding of whether a PCAOB inspection of the firm would currently be allowed by local law or local authorities. The applicant may choose to keep its application pending until it can respond, with confirmation from the appropriate authority in the jurisdiction, that PCAOB inspection is permitted. If the applicant, in order to obtain earlier action on its application, responds that PCAOB inspection would not currently be allowed, the Board will issue a Notice of Hearing to consider whether, in light of the obstacle to inspection, approval of the application would be consistent with the Board's responsibility under the Sarbanes-Oxley Act of 2002.
"Since 2004, the Board has approved registration applications of non-U.S. firms with the expectation that any potential obstacles to inspections would be resolved through cooperative efforts with foreign regulators," said PCAOB Acting Chairman Daniel L. Goelzer. "Although we are still pursuing those efforts, the continuing obstacles to inspections in some jurisdictions have forced us to re-evaluate that approach to registration."
The PCAOB and regulatory authorities in several non-U.S. jurisdictions have worked together to overcome potential obstacles to PCAOB inspections. Since 2005, the PCAOB has inspected registered firms in 34 non-U.S. jurisdictions, including in seven jurisdictions where PCAOB inspections have been conducted in coordination with inspections by the local authority.