The six largest global accountancy firms have welcomed a co-operative agreement between US and UK audit regulators.
The heads of the six firms - BDO, Deloitte, Ernst & Young, Grant Thornton, KPMG and PwC - issued a joint statement welcoming the move, adding that the agreement will aid market confidence in the auditors' work.
On Monday the US Public Company Accounting Oversight Board (PCAOB) and the UK’s Professional Oversight Board (POB) inked a deal to facilitate cooperation in the oversight of auditors and public accounting firms that practice in the two regulators’ respective jurisdictions.
According to a POB spokesperson, the agreement came about as a result of the "Change in SOX [the Sarbanes–Oxley Act] to allow the US to exchange information through Dodd Franks together with an ‘adequacy’ decision in Europe in accordance with the requirements of the statutory audit directive."
The POB also confirmed to AccountingWEB.co.uk that the agreement was negotiated independently of any Ernst & Young/Lehman considerations.
However, the timing of the agreement could open the door for the PCAOB to look into Ernst & Young UK's role in the alleged accounting fraud involving the removal of tens of billions of dollars of fixed income securities from the Lehman Brothers balance sheet to deceive investors about the bank’s liquidity.