26 January 2004

FEE: PCAOB & Oversight of Non-U.S. Firms

FEE is in favour of high level principle-based standards but regrets that the proposed rules do not support “mutual co-operation with other high quality regulatory systems that respects the cultural and legal differences of the regulatory regimes that exist around the world” announced in the PCAOB Briefing Paper on “Oversight of non-U.S. Public Accounting Firms.”

FEE is of the view that robust oversight is most effectively provided in the public interest at national level, provided that within the EU there is also a body charged with co-ordination and that there is effective global co-operation.

The stance taken by the PCAOB on oversight will be a crucial element in a successful outcome in terms of public and investor confidence in the audit function in the EU. However, limited co-operation, based only on the PCAOB model, offers a difficult prospect and bears a risk of unseemly litigation between European firms or oversight bodies and the PCAOB, driven by the imperatives of some future scandal and conflicts between PCAOB rules and national law.

By contrast, FEE supports a co-operative approach that builds on what has already been achieved in the European Union and, if judged necessary, identifies how regimes in individual EU countries could meet the highest level of PCAOB’s specific assessment within a short period of say three years.

Representative organisation for the accountancy profession in Europe
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