EU’s Schaub stands firm over US audit plan

Date: 03/07/03

By Jeremy Woolfe

THE European Commission was set to adopt a tough stance this week against US plans to control European auditing firms, as top Commission official Alexander Schaub was visiting the US Securities and Exchange Commission (SEC).

Schaub, the chief of the Commission's DG Internal Market, was expected to tell his American counterparts that the EU will not accept that US auditing rules apply to European firms.

The Americans want auditors in Europe and elsewhere brought under the umbrella of its new oversight board, the Public Company Accounting Oversight Board - the new body enforcing part of the controversial US Sarbanes-Oxley Act.

Internal Market Commissioner Frits Bolkestein stated, after a recent finance ministers' meeting, that "the EU cannot and will not accept the extra-territorial application of US law to EU audit firms. I think we can arrive at a satisfactory solution".

However, US officials have not shown much sign of compromise so far. Roel Campos, the SEC commissioner, defended in mid-June in Brussels the SEC's right to set the terms for allowing financial services firms access to US markets.

He did not seem to back the EU's wish for a mutual recognition agreement based on home country control.

The President of the Fédération des Experts Comptables Européens, David Devlin, wrote to the SEC Secretary Jonathan Katz on 30 June to point out that audit firms with only a few clients registered with the SEC might withdraw from the engagements on cost grounds - leading to concentration of the audit market.