PCAOB Chairman Calls for More Global Cooperation on Audit Regulation
When national regulators cooperate and share information, investors everywhere benefit from the enhanced protection such communication provides, said PCAOB Chairman James Doty in a speech Thursday to the Federation of European Accountants (FEE) Conference on Audit Policy in Brussels.
“In a crisis, when a nation’s (or a region’s) economic well-being is in jeopardy, there can be a tendency to retrench and pull inward,” said Doty, making his first trip to Europe in his new role at the PCAOB. “This is not the right response. We must embrace cooperation, and close regulatory loopholes and the opportunities for regulatory arbitrage.”
Achieving such goals depends on continued communication and goodwill among regulators, Doty added. “We must have the courage to step forward and find solutions that best protect the public.”
To protect investors, inspections of cross-border audits need to be as “seamless as the audits are supposed to be,” Doty said. “At the PCAOB, we have seen firsthand the benefits of evaluating the various pieces of audits performed by different registered firms in multiple jurisdictions. Inspectors have found obvious errors that could have, and should have, been picked up by the principal auditor if communication between the two auditors had been more robust.”
During his presentation, Doty thanked FEE Commissioner Michel Barnier and his staff for their efforts in “breaking the impasse we had faced to conducting inspections of firms registered with the PCAOB but residing in Europe.”
Based on those efforts, earlier this year the PCAOB began joint inspections with U.K. authorities. The PCAOB also recently began joint inspections with Swiss authorities. And for several years, the PCAOB has conducted inspections either jointly with audit oversight bodies or in cooperation with local securities or financial regulators in more than 30 other countries.
“I believe we are close to reaching similar agreements with other European authorities,” Doty said.
One of Doty’s greatest priorities is gaining access to China to conduct inspections of PCAOB-registered firms. In an April interview with the JofA, he said that meaningful progress was made at the May 9 U.S.-China Strategic and Economic Dialogue that took place in Washington.
Besides his discussion of cross-border cooperation during his Brussels speech, Doty highlighted possible changes to the auditor’s reporting model that were outlined in a concept release the PCAOB issued June 21.
Photo by Sean McCormick/Sean McCormick Photography
Also read:
- PCAOB Set to Expand Under New Mandates, July 2011
- PCAOB Considers Four Approaches to Changing Auditor’s Report, June 21, 2011
- PCAOB OKs Temporary Rule to Govern Broker-Dealer Audits, June 14, 2011
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