Audit firms based outside the
US could be prevented from auditing US companies following an
amendment to registration rules.

Non-Public Company Accounting
Oversight Board (PCAOB)-registered firms will find it much harder
to gain access to US companies if they are based in countries where
US inspections are not allowed.

The rules could affect the
global audit market because US companies will be deterred from
hiring unregistered auditors in those jurisdictions.

Grant Thornton International
global head of assurance Ken Sharp agrees firms may now be unfairly
chosen due to their registration status. He wants the rules to be
applied consistently, with all firms treated alike.

“If a country cannot provide
access to the PCAOB, directly or indirectly, then all firms should
be treated equally whether they are registered or not,” Sharp
said.

Leaders have previously
complained about regulation barriers and the extra cost it is
adding to the audit process. In some cases, firms have been asked
to break the law in one country to comply with another regulator’s
demands.

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By GlobalData

Sharp disagrees firms will
violate local laws but insists conflicts between lawmakers and
regulators must be resolved to ensure there is no pressure on firms
to bend the rules.

It is also impractical for
auditors to be inspected by two different authorities who could
hand down completely different outcomes.

While Sharp says the
profession supports independent regulation, mutual reliance between
countries would ease the burden.

“We don’t mind being reviewed
once,” Sharp says. “But we would rather not be reviewed 25 to 30
times, otherwise we spend more time being reviewed than doing the
audits to start with.”

The PCAOB said it is seeking
to strike deals with non-US audit regulators but ‘problems’ with
some jurisdictions forced it to re-evaluate its registration
approach.

It will continue to allow
applications to remain as ‘pending’ while the go-ahead for an
inspection is ascertained.

If an inspection is not allowed, it will issue a notice of
hearing and consider whether approval of the application would be
consistent with its responsibility under the Sarbanes-Oxley
Act.