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PCAOB adopts rules for oversight of non-US firms

  • PCAOB (US Public Company Accounting Oversight Board) (dark gray) Image

10 Jun 2004

The US Public Company Accounting Oversight Board (PCAOB) has adopted rules relating to oversight of non-US public accounting firms that audit companies registered with the US SEC.

The rules set out a framework under which, with respect to non-US audit firms, the PCAOB could implement the provisions of the Sarbanes-Oxley Act by relying, to an appropriate degree, on a non-US oversight system. SEC approval is required before the new rules take effect. Click for: The PCAOB's new rules summarise the Board's oversight approach as follows:

The Board's rules on inspections (PCAOB Rules 4011 and 4012) provide a foreign registered public accounting firm an opportunity to minimize the unnecessarily duplicative administrative burdens of dual oversight by requesting that the Board rely – to an extent deemed appropriate by the Board – on inspections of the registered firm under the home country's oversight system. Under the Board's rules, a firm would first provide the Board with a one-time statement asking the Board to rely on a non-US inspection. At an appropriate time before each inspection of a non-US firm that has submitted such a statement, the Board would determine the appropriate degree of reliance based on information about the non-U.S. system obtained primarily from the non-US regulator regarding the independence and rigor of the non-US system. The Board would also base its decision on its discussions with the appropriate entity or entities within the oversight system concerning the specific inspection work program for the non-US firm's inspection at hand. The more independent and rigorous a home country's system, the higher the Board's reliance on that system. A higher level of reliance translates into less direct involvement by the Board in the inspection of the non- US registered public accounting firm.

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