PCAOB Reaches Inspection Deal with Netherlands

Friday, December 2, 2011 Print Email

The Public Company Accounting Oversight Board has struck a deal with Dutch regulators to carry out joint inspections of auditing firms.

The deal, which the PCAOB announced Monday, with the Netherlands Authority for the Financial Markets, aims for increased oversight of auditors who practice in the U.S. and the Netherlands. The two regulators intend to hold a signing ceremony next month.

"The agreement with the Netherlands is a key step forward in our effort to ensure effective cross-border audit oversight," PCAOB Chairman James R. Doty said in a statement. "We are pleased that we have been able to overcome obstacles to conducting inspections in certain European Union Member States, first with the United Kingdom, and now with the Netherlands."

The PCAOB has also signed cooperative arrangements with two other European countries, Switzerland and Norway. Cooperative arrangements have been reached with regulators in North America, the Middle East, and Asia. The board has also made it a priority to inspect auditing firms in China, but a deal has proven to be elusive so far.

The deal with the Netherlands could give the PCAOB inspectors entrée to firms that employ complex strategies such as the so-called “Dutch Sandwich,” which Google reportedly uses to help lower its U.S. taxes.

In addition to providing a framework for conducting joint inspections, the arrangement between the U.S. and Dutch regulators includes provisions governing the exchange of confidential information between the AFM and the PCAOB, consistent with provisions of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. Those provisions amended the Sarbanes-Oxley Act of 2002 to permit the PCAOB to share confidential information with its non-U.S. counterparts under certain circumstances. The arrangement also includes an agreement on data protection.

"The AFM has been vocal in insisting that firms improve audit quality," said PCAOB director of international affairs Rhonda Schnare in a statement. "The PCAOB looks forward to working with the AFM in pursuit of that goal. We are also pleased that we've found a way to move forward with a framework for joint inspections that satisfies the Netherlands' data protection laws."

The Sarbanes-Oxley Act directed the PCAOB to oversee and periodically inspect all accounting firms that regularly audit companies whose securities trade in U.S. markets. More than 900 audit firms currently registered with the PCAOB are located outside the United States, spanning 88 jurisdictions. There are 15 registered firms located in the Netherlands, including firms affiliated with the Big Four.

Login to ReadyRatios


Have you forgotten your password?

Are you a new user?

Login As
You can log in if you are registered at one of these services: