The European Commission has said it has reached an agreement with the United States over the oversight of auditing firms, ending an impasse which had threatened to create a new transatlantic quarrel.
European commissioner for the internal market Frits Bolkestein and Bill McDonough, president of the Public Company Accounting Oversight Board, announced the accord Thursday.
Bolkestein said: “In substance our European approach to the regulation of the audit profession and that of the PCAOB are now quite convergent.”
He said the EU and the US agree on independent public oversight, audit quality assurance, more frequent rotation and ensuring that auditors have no conflicts of interest such as supplying non-audit services.
The PCAOB was established following the financial scandals of Enron, WorldCom and others, which highlighted the weakness in the checks on the accounts of listed companies.
Last July, the European council of ministers said they were concerned about the extraterritorial ambitions of the Americans, prompting a period of intense negotiations between the two sides.
Bolkestein explained in a joint news conference with McDonough that “all the fears which had been manifested because of the extra-territoriality have been calmed.”