The European Commission has extended its cooperation agreement with the Public Company Accounting Oversight Board, allowing the PCAOB to continue exchanging confidential information with European audit regulators.
The agreement, which was originally signed in 2010, was due to expire on July 31 of this year, but has now been extended until July 31, 2016. It was approved last week, on June 10, by the European Commission, according to the PCAOB.
“This is a welcome development for the PCAOB, as it gives us the basis to renew existing bilateral cooperation agreements in Europe, to further strengthen the strong working relationships we have with our counterparts in the region, and to continue to expand throughout the jurisdictions where we need to inspect,” said PCAOB Chairman James R. Doty in a statement.
The approval will enable the PCAOB to seek extension of the existing six statements of protocol that it has with European Union member state regulators for conducting joint inspections in the United Kingdom, Germany, Netherlands, Spain, France and Finland, and to seek to conclude the statements of protocol with a dozen or so other EU member state regulators with whom the PCAOB must conclude such SOPs to inspect in those jurisdictions.
“From an investor protection standpoint, our six existing EU member state SOPs allows us to inspect those audit firms in the EU that issue opinions for issuers accounting for more than 90 percent of the market capitalization of all EU-based issuers,” said PCAOB spokesperson Colleen Brennan.
She noted that renewal of the 2010 agreement had depended on the Europeans being satisfied with the progress of the U.S.’s cross-border regulatory cooperation. Since 2010, the PCAOB has executed confidential information-sharing SOPs with regulators in the U.K., Netherlands, Germany, Spain, France and Finland (which are all EU member states) as well as Norway (a member of the European Economic Area). “Our joint inspections with those regulators have been very successful,” said Brennan. “The renewal—which remains effective for another three years—demonstrates the value to other regulators when we are able to cooperate across borders to protect and serve investors more effectively. We look forward to continuing to work closely with European regulators on joint inspections and other cooperative matters that improve audit quality.”