The Public Company Accounting Oversight Board has released updated staff guidance to help accounting firms outside the U.S. to register with the board even if their countries do not allow the PCAOB to inspect them or answer some of the questions on a PCAOB application form.
The guidance comes in the form of questions and answers from the PCAOB staff. The PCAOB has encountered resistance in a number of countries to its inspection process. The list of affected countries includes 30 European countries that are required to follow the European Unions Directive on Statutory Auditors, in addition to China, Hong Kong and Switzerland.
The guidance alerts applicants from the affected jurisdictions that the staff intends to recommend that the PCOAB request certain additional information before acting on their applications, and it explains how an applicant can seek to avoid delay by including the information when it first submits the application.
The information includes identifying information about public company audits in which the applicant has recently played, or expects to play, any role, and identifying information about other PCAOB-registered firms in whose audits the applicant expects to play any role. The additional information will facilitate the PCAOBs understanding of the scope and nature of the applicant's activities related to SEC-reporting companies.
Under the Sarbanes-Oxley Act of 2002, auditors of financial statements that issuers file with the Securities and Exchange Commission must be registered with the PCAOB and must undergo regular PCAOB inspections to assess their compliance with U.S. law and professional standards in connection with those audits.
The PCAOB has conducted more than 1,300 inspections of registered firms in the United States and 33 non-U.S. jurisdictions but, due to positions taken by local authorities, has been prevented from conducting inspections in the European Union/European Economic Area, Switzerland, China and (to the extent an audit encompasses a company's operations in China) Hong Kong.
Information on the board's continuing efforts to conduct inspections in those jurisdictions is available on the PCAOB Web site, along with a list of issuers that have recently filed financial statements audited by registered firms in those jurisdictions. The revised staff FAQs include a complete list of the affected jurisdictions, which will be updated as appropriate.
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