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SEC Approves PCAOB Oversight Of Foreign Auditors

Compliance Week | September 8, 2004

In late August, the Securities and Exchange Commission approved the Public Company Accounting Oversight Board's rule proposal governing the oversight of foreign accounting firms.

Under Sarbanes-Oxley, non-U.S. accounting firms are required to register with the PCAOB just like domestic firms, and they are subject to the similar types of inspections and investigations. The registration provision caused considerable frustration overseas, as foreign firms resented both the threat of U.S. oversight and the prospect of duplicative registration requirements.

In working with European securities commissions and EU accounting industry overseers, the PCAOB ultimately proposed a rule that would enable it to rely on the work of "non-U.S. oversight systems" to conduct inspections and investigations. The degree of reliance would be based, in part, on the PCAOB's analysis of the "...

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