So let me make sure I understand this.
The International Accounting Standards Board believes that the United States should acquiesce to a sort of harmonic convergence with regard to accounting standards and principles in order to be in lockstep with the rest of the globe.
But regulators from Canada, Europe and Asia feel that non-U.S. companies (read: big, influential international companies) should be exempt from certain features of Sarbanes-Oxley.
To me that’s a bit like getting a table at the Four Seasons in New York clad in jeans and a tank top and justifying it by saying you’re ordering take-out from Burger King and therefore not subject to the dress code.
To hear David Wright, tell it, rules written in the U.S. don’t always work all that well abroad. Wright, who carries the title of director of foreign markets for the European Commission, must have been referring to traffic rules, not accounting standards. I mean how many people in the U.S. can quote the restrictions governing U-turns in Liechtenstein?
But back to the matter at hand.
Basically the EC wants companies – and oh yes, accountants – in its 15 member countries to be exempt from seven rules of Sarbanes-Oxley ranging from auditor independence to oversight by the Public company Accounting Oversight Board.
Our international consortium even managed to get an audience with the Securities and Exchange Commission to voice their concerns with a straight face.
• China, which claims to have a dearth of CPAs, said that auditor rotation would result in a spike in failed audits if inexperienced accountants were deployed.
• Sarbanes-Oxley’s alumni prohibition, which mandates a specific time period before auditors can be hired by former clients is unconstitutional under some murky statute in Chile.
• Germany and France said that the rules which stipulate that audit committees must have independent members "conflict" with practices in those countries.
• Meanwhile in the United Kingdom, firms are worrying they may have to abandon tax work for audit clients.
Gee, none of the U.S. accounting firms are worried about that, either.
Let’s hope that in what may well be one of his last acts as SEC chair that Harvey Pitt tells them Sarbanes-Oxley is our rule and unlike a sticker price on a new car, it can’t be negotiated. Companies outside the U.S. fall within its parameters if their shares are sold to U.S. investors.
Any discussion beyond that hopefully will be to warn our overseas dissidents not to let the door hit them on the way out.
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