*EPF316 10/29/2003
Text: U.S. to Limit Oversight of Some Non-U.S. Accounting Firms
(Deadline for firms to register with accounting board is extended) (680)

The U.S. board created by Congress to oversee the accounting profession has announced that non-U.S. accounting firms will, if possible, be inspected by their own domestic authorities.

In an October 28 news release, the Public Company Accounting Oversight Board (PCAOB) also extended to July 2004 the deadline for non-U.S. firms to register with it. The PCAOB rules apply only to foreign firms that audit companies listed on U.S. stock exchanges.

Congress created the PCAOB in 2002 following a wave of corporate accounting scandals that led to the bankruptcy of several major U.S. firms and severely shook investors' confidence in the stock market. The Board's aim is to improve oversight of accounting profession and restore investor confidence in the accuracy and reliability of corporate reporting.

In recent months, authorities from the European Union (EU) and elsewhere have objected to U.S. regulation of their accounting firms.

The Board has now released a briefing paper outlining a "cooperative" approach with non-U.S. firms that would permit varying degrees of reliance on the firm's home country regulation system, and thus less oversight and inspection by U.S. authorities.

"The more independent and robust a home country system, the higher the reliance on that system," the PCAOB release said.

In the briefing paper, the Board said it envisioned a "principles-based approach" that would consider the adequacy and integrity of a firm's home-country system; the independence of the system's operation from the auditing profession; the independence of the system's source of funding; the transparency of the system; and the system's track record.

The Board said that in addition to avoiding unnecessary duplication of work by regulatory authorities in different countries, its cooperative approach "respects the cultural and legal differences of the regulatory regimes that exist around the world."

The text of the PCAOB briefing paper is available on the Internet at:
http://www.pcaobus.org/rules/Release2003-020.pdf

Following is the news release:

(begin text)

Public Company Accounting Oversight Board
October 28, 2003

Board Releases Briefing Paper on Oversight of Non-U.S. Accounting Firms

Washington, DC, October 28, 2003 -- The Public Company Accounting Oversight Board [PCAOB] today released a briefing paper that describes the broad parameters of the Board's approach to the oversight of non-U.S. accounting firms.

The briefing paper describes the Board's plans for oversight of non-U.S. registered public accounting firms, based on cooperation with appropriate non-U.S. auditor oversight authorities. This cooperative approach would allow the Board to fulfill its responsibilities to protect the interests of investors and to further the public interest, in keeping with the statutory authority granted to the Board.

The plans described in the briefing paper include:

A framework to permit varying degrees of reliance on a firm's home country system of inspections, based on a sliding scale: the more independent and robust a home country system, the higher the reliance on that system.

A modification to the PCAOB's registration form to permit, where applicable, the inclusion of certain information about a non-U.S. firm's home country oversight system, in order to facilitate coordination between the PCAOB and non-U.S. oversight systems.

A 90-day extension of the Board's deadline for non-U.S. firm registration in order to allow sufficient time for the Board to have final rules in place in this area, as well as permit non-U.S. firms a reasonable amount of time to understand and prepare for registration.

The full text of the briefing paper can be found under Rulemaking on the Board's Web site, www.pcaobus.org.

Media Inquiries: Public Affairs, 202-207-9227

The PCAOB is a private sector, non-profit corporation, created by the Sarbanes-Oxley Act of 2002, to oversee the auditors of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audit reports.

(end text)

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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