The European Commission (EC) has recognised
the equivalence of US audit oversight and nine other non-EU
jurisdictions in a move that will allow watchdogs to share
inspection information and reduce duplication.

This is a positive step forward for the
oversight of firms that engage in transnational audit work as it
will reduce the burden of multiple inspections stemming from both
sides of the Atlantic Ocean.

The duplication of costly and time consuming
inspections has been a major source of frustration for global audit

EU member watchdogs will now be able to rely
on the supervisory work of the 10 oversight systems that have been
assessed as ‘equivalent’. The extent of information sharing will be
determined by co-operative arrangements.

The EC has also granted a transitional period
to auditors from 20 other countries allowing them to continue their
audit activities in the EU while further assessments are carried
out by the commission. The transition will only be granted to
third-country audit firms if they comply with minimum information
requirements necessary for maintaining investor protection levels
in Europe, according to the EC.

EC internal market and services commissioner
Michel Barnier said the decision is an important step towards
closer international co-operation on the supervision of auditors
and audit firms.

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“International cooperation on auditor
oversight is crucial to avoiding the overburdening of audit firms
and duplicating supervisory work, and above all, to promoting a
high degree of investor protection by ensuring high quality
audits,” Barnier said.

The countries assessed as equivalent are Australia,
Canada, China, Croatia, Japan, Singapore, South Africa, South
Korea, Switzerland and the US.