The European Commission has suspended plans that it says would improve the regulation of audit firms, citing a lack of cooperation from the U.S.
Charlie McCreevy, the commissioner for the internal market and services, circulated a draft decision in January that would let Europe’s national audit regulators cooperate with their counterparts in the U.S., Japan, and Canada.
But now he has put the plan on hold. “Before making a decision ... we need more time to ensure that the United States, in particular, is ready to cooperate with us fully, based upon mutual trust and mutual assistance,” he said in a statement
The EU’s new Auditing Directive required member states to create national oversight bodies and instructed the Commission to set up a policy model that would allow them to cooperate both with each other and with their counterparts overseas. The idea is that eventually one regulator will be able to rely fully on the quality of an inspection done in another country: EU regulators would not need to inspect U.S. audit firms, and U.S. regulators could leave EU firms alone, for example.
Such a system requires mutual trust, said McCreevy, adding that Canada and Japan “seem to be open toward such an agenda, [but] the same is not true for the United States.”
McCreevy said talks about the cooperation plan are on hold until he hears whether the Obama administration supports the idea.