Auditing

Eleventh Hour for Foreign Auditors

By today, all firms that audit U.S.-listed companies must surmount some ''onerous'' requirements and register with the PCAOB.
Stephen TaubJuly 19, 2004

A number of foreign auditing firms are scrambling to meet a deadline for registering with the Public Company Accounting Oversight Board.

By today, July 19, all such firms that audit companies with shares listed on U.S. exchanges must be registered with the U.S.-based overseer.

About a week ago, six Japanese firms received registration approval from the PCAOB, according to CBS MarketWatch, citing the Nihon Keizai Shimbun. They include ASG Audit Corp, BDO Sanyu & Co., and ChuoAoyama Audit Corp.

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Meanwhile, in South Africa, most firms will meet the deadline “in spite of some of the onerous registration requirements,” according to Claude O’Flaherty, the chief executive of the country’s Public Accountants’ and Auditors’ Board, reported the website of South Africa’s Sunday Times.

He reportedly observed that some of those requirements “could have been regarded as an infringement of privacy and therefore in contravention of [South African] labor practices.” Added O’Flaherty, “The options were quite simple: register, face sanctions from the PCAOB or lose the business.”

Late last month, PCAOB chairman William McDonough said in congressional testimony that his agency had registered 164 foreign firms to work in the United States and expected as many as 400 non-U.S. firms eventually to register with the PCAOB.

McDonough reportedly told members of a Financial Services subcommittee that the PCAOB had given “considerable thought” to treatment of non-U.S. firms. The Sarbanes-Oxley Act, he noted, specifies that such firms are subject to PCAOB rules “to the same extent as a public accounting firm that is organized and operated under the laws of the United States.”

He pointed out that last October, the PCAOB outlined a framework for oversight that depends on cooperation among regulators. McDonough also said that his agency has enjoyed “fruitful discussions” with auditor oversight authorities in Canada, France, Switzerland, Germany, Australia, and Japan.

“We hope to be able to rely to a great extent on the inspection work of other regulators, and it is in that regard that we especially welcome the establishment of new, independent oversight systems outside the United States,” he added.

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