The Public Company Accounting Oversight Board has reached a deal with France’s audit regulator allowing for joint inspections of auditing firms and the exchange of confidential information.
The cooperative agreement with the French High Council for Statutory Auditors, also known as H3C, relates to the oversight of audit firms subject to the regulatory jurisdictions of both regulators and takes effect immediately.
The PCAOB has been working to reach inspection agreements with other countries in Europe, Asia and other parts of the world. So far, four other European Union member states — the United Kingdom, Germany, the Netherlands and Spain—have signed agreements similar to the one with France, and the PCAOB has agreements with Switzerland and Norway and several non-European regulators. One of the main countries where the PCAOB has not yet been able to strike a deal is China, although it has been making progress on its efforts.
“France, which is home to a number of companies that have a significant impact on U.S. and global markets, is an important partner in Europe,” said PCAOB chairman James R. Doty in a statement. “This agreement with the H3C is yet another step forward in our continuous effort to strengthen investor protection across borders.”
The agreement with the H3C provides a framework for joint inspections and allows for the exchange of confidential information in accordance with the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 in the U.S. and applicable French law. The provisions of the Dodd-Frank Act amended the Sarbanes-Oxley Act of 2002 to permit the PCAOB to share confidential information with its non-U.S. counterparts under certain circumstances. An agreement on data protection is also part of the cooperative arrangement with France.
"The agreement we have reached with the H3C shows the clear commitment to strong audit oversight that our organizations share," said PCAOB director of international affairs Bruce Wilson. "The PCAOB is looking forward to building upon the close relationship we have developed with our French counterparts."
Under the Sarbanes-Oxley Act, the PCAOB oversees and inspects all accounting firms that regularly audit public companies whose securities trade in U.S. markets. More than 900 audit firms currently registered with the PCAOB are located outside of the United States in 87 jurisdictions. Currently, 25 registered firms are located in France, including affiliates of the Big Four.