UK audits beyond reach of US regulators
US audit regulator publishes list of companies it is being blocked from inspecting
US authorities are being blocked from inspecting the audits of more than 60
UK-based multinational companies, amid fears American investors are being put at
risk.
The US audit regulator, the Public Company Accounting Oversight Board
(PCAOB), set up in the wake of the Enron scandal, inspects the auditors of US
registered companies. The board, however, has been blocked from inspecting
overseas auditors, which have US registrants as their clients, owing to a
dispute over information sharing.
The PCAOB said no legal obstacle prevents a non-US regulator from coming to
the United States to inspect a US audit firm and that it would will assist them,
“to the extent of our authority”. However it is restricted by law from handing
over internal working papers.
Reforms are currently being put before the US congress to free the PCAOB to
share its papers with authorised authorities – including foreign regulators.
The UK contained one of the largest proportions of companies, second only to
China and Hong Kong.
In a statement the board said it published the list to alert investors of
companies whose audits are not subject to US oversight.
“As long as those obstacles persist, however, investors in US markets who
rely on those firms’ audit reports are deprived of the potential benefits of
PCAOB inspections of those auditors,” the board said in a statement.
Among the UK companies are Vodafone, BHP Billiton, HSBC, Barclays and BT. The
PCAOB is hoping new legislation, traveling through congress as part of the vast
US financial reform bill, will allow it to share information with its EU
counterparts.
If a solution can not be reached the PCAOB has the option to revoke the
licenses of overseas audit firms, which will stop them from auditing US
registrants.
Further reading:
ISSUER
AUDIT CLIENTS OF NON-U.S. REGISTERED FIRMS IN JURISDICTIONS WHERE THE PCAOB IS
DENIED ACCESS TO CONDUCT INSPECTIONS
