PCAOB Strikes Deal on Norway Audit Inspections
The Public Company Accounting Oversight Board has reached an agreement with Norway’s Financial Services Authority that will allow the regulators to conduct joint inspections of PCAOB-registered audit firms in Norway.
The cooperative agreement allows the two countries to resume joint inspections of PCAOB-registered accounting firms located in Norway and that audit, or participate in audits, of companies whose securities trade in U.S. markets. In 2008, the PCAOB conducted a joint inspection in Norway with the FSA, but has since been blocked from inspections there.
The PCAOB has been pushing other countries to allow it to inspect accounting firms in their countries that audit companies whose shares trade on U.S. markets. In particular, the regulator has been pushing for access to auditing firms based in China after accounting problems were uncovered at numerous Chinese companies that merged with U.S. shell companies in order to gain access to the public markets. PCAOB officials have begun meeting with their Chinese counterparts to try to resolve the situation, but last week the SEC subpoenaed Deloitte's member firm in Shanghai to gain access to audit workpapers for one Chinese company, Longtop Financial Technollogies, whose American depositary shares were delisted in May on the New York Stock Exchange. But the regulator has also been trying to get more access in Europe. In April, the PCAOB reached an agreement with Swiss regulators to allow for joint inspections.
“With this agreement, Norway's FSA and the PCAOB are joining forces to improve audit quality and protect investors,” said PCAOB Chairman James R. Doty in a statement. “I am pleased that the PCAOB is continuing to make progress in overcoming the obstacles that have in the past prevented PCAOB inspections in Europe. It is particularly important in these challenging economic times that regulators work together to protect investors in the global financial markets.”
The agreement with the Norwegian regulator also includes provisions governing the exchange of confidential information between the oversight authorities, consistent with the 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 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 U.S., in 84 countries. There are five registered firms in Norway, which are affiliated with BDO, Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers.